Smaller, cheaper EVs may trump pricey Tesla

Amid high sales expectations, Tesla may be hoping to spark China's stagnant new-energy vehicle market, but experts believe the US carmaker won't be shift the industry into high gear.

"Although heavy smog is an issue in many major Chinese cities, and there is a market waiting for solutions, you can't count on Tesla to make an electric revolution happen," said Yang Yusheng, a batteries expert and an academician at Chinese Academy of Engineering. "An electric sedan is not for everyone, not to mention Tesla is a premium brand reserved for high-end customers," he added.

Yang spoke at a forum on electric vehicles held Sunday in Beijing.

Tesla caused quite a stir in China with its splashy debut earlier this month, but Yang said it will be homegrown, low-speed electric vehicles that will ultimately steer the industry rather than the American upstart.

Priced at about 30,000 yuan ($4,960), low-speed electric vehicles (including two-wheelers) have a strong presence in China. Experts forecast that more than 300,000 low-speed electric cars were sold in 2013, more than 10 times the total in 2009.

China is now home to more than 200 million electric two-wheelers, creating about 100 billion yuan in value, according to Ma Zhongchao, president of China Bicycling Association.

"The growth in both low-speed electric cars and bikes is higher than expected. It is surprising coming at a time when the economic outlook is not exactly promising," he said.

Zhang Tianren, chairman of the Hong Kong-listed Tianneng Group, one of China's largest battery producers, said there are mature technologies to control pollution released during the production of lead-acid batteries. He called on the government to set up technical standards for the industry.

"The EV industry is too large to be neglected. It needs the support of government, including subsidies and relevant policies, to kick-start it and to direct it in the right way," said Zhang, who is a representative for the upcoming two sessions of the National People's Congress and Beijing Committee of the Chinese People's Political Consultative Conference.

"Of course, as a key link in the industrial chain, battery companies also benefit from it."

China has been actively promoting the use of environment-friendly vehicles in recent years. The Ministry of Finance announced last September a long-anticipated renewal of its incentive program for the use of new-energy vehicles.

The ministry also demanded that local authorities speed up improvements to infrastructure and banned preferential treatment for local automakers.

Xu Yanhua, deputy general secretary of China Association of Automotive Manufacturers, predicted that the National Development and Reform Commission is likely to announce the EV regulations within the next few months, opening the possibility of subsidies to boost the sector.

But the market in general still needs a period of cultivation because of lack of infrastructure and mature technology, she added.

"The products at the moment are unable to meet the market's expectations, which are also the problems that the mainstream electric carmakers are dealing with," she said.

China's sales of new- energy vehicles stood at only 17,642 in 2013, which still represented a rise from the 12,791 sold the previous year. The 2013 numbers included 14,604 electric cars and 3,038 plug-in hybrid vehicles, China Association of Automobile Manufacturers data showed.

Whether cheaper low-speed electric vehicles will be a major trump card for the Chinese remains unknown, but experts said the EV industry in China can grow in rural and suburban areas, where people are likely to have a garage for charging a vehicle, and then expand later into urban centers.

"In some cases, government should let the market decide who wins or loses and, in the EV sector, all we want is to have permission from the government to let us grow in the sunlight," said Lin Lianhua, vice-general manager of Shandong Shifeng (Group) Co Ltd, an electric car manufacturer. "After all, the sector is already playing an important role in the growth of China's homegrown car industry," he said.