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China’s Engine Of Growth

April 3rd, 2009

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Is China’s push to develop electric cars really a means of getting out of an oil squeeze? The Economist published a small piece on its Free Exchange site suggesting that industrialists are making a conscious effort to get away from combustion:

The Chinese are growing wealthier and demanding automobiles by the tens of milions, but the demand for oil they create is likely to send petrol prices soaring again before long, making driving unaffordable for most Chinese families. It’s no wonder, then, that the Chinese government is anxious to develop electric automobile technologies. Not only would this allow Chinese families to continue driving as petrol prices soared, it would also allow China to sell into foreign markets similarly afflicted by dear oil—including America. China recognises this and is heavily subsidising efficient automobile purchases and production.

Battery technology hasn’t changed much in decades. The real challenge with going electric is in bringing down the cost of electric power (and, as we all know, Mainland China enjoys an advantage in this area). Some interesting figures from American Statesman:

Ford estimates that supplying batteries for an electric vehicle adds $12,000 to $15,000 to the cost of the same vehicle with a gasoline engine. Until that cost difference is brought down, the automaker doesn’t expect to sell high volumes of electric cars. 

You know, I’ve always been amazed to see how Chinese manufacturers will drop a Japanese engine into a China-made automobile, motorcycle or ATV. The shell is the easy part, it’s the internal mechanism that’s more of a challenge. Isn’t it possible that the push to produce electric vehicles is in part about the R&D hurdle for combustion, that it’s a workaround? Those banging the drum for Chinese innovation might want to consider the implication…

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