Will Detroit Get Shut Out Of China’s Electric Vehicle Market?
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during a fellowship sponsored by the East West Center in Hawaii. At the time, the factory, a joint venture between Changan, a local car maker, and the Ford, employed 7,000 workers, and produced about 260,000 cars a year, including various Volvo models and the Ford S Max.
Factory officials told me they couldn’t hire enough workers to meet demand. As China gets richer, urban middle class professionals are buying homes and cars, the ultimate symbols of the country’s growing prosperity.
“The Chinese people get real rich, they are very eager,” the factory official said. “They want a house to themselves. After they have their own house, the next step is to buy a car.”
To encourage economic development, the Chinese government is also moving hundreds of millions of rural workers to the cities, creating enormous demand for buses and taxis.
By 2030, China is expected to produced 30 million vehicles a year, compared to 13.4 million vehicles two years ago.
The American auto industry has benefited from these trends. Detroit-based General Motors and its joint venture partners today control 12.3 percent of China’s auto market, tops in the country, compared to 3.4 percent in 2000.
Earlier this month, Dearborn, MI-based Ford, said China sales in the first half of 2011 rose 14 percent compared to the same period a year ago.
But looking ahead, China sees itself a major manufacturer of electric vehicles, analysts say, not just to meet domestic demand but also to sell overseas.
Domestically, China is trying to cut carbon dioxide emissions, particularly in cities like Beijing where air pollution is especially bad. But China also wants to compete against foreign automakers in markets outside the country.
The Chinese have one big advantage: the country is home to substantial deposits of rare-earth metals like lithium that are crucial to batteries and electric engines. Neodymium accounts for 30 percent of the material cost of permanent magnet motors, one of the key motor types used in electric propulsion systems.
“This raw material dominance, along with China’s relative labor cost advantage, has resulted in an emerging extended supply chain in motor technology and production,” according to a recent World Bank report. “The result of these advantages in batteries and motors could provide an overall advantage for Chinese companies in electric drive train components and may position Chinese automakers to assume global leadership in electric vehicles.”
In 2009, the Chinese central government launched the Ten Cities, Thousand Vehicles initiative to stimulate … Next Page »
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