Who Will Win Electric Vehicle Race – the U.S. or China?

by Jon LeSage, edi­tor of Green Auto Mar­ket

The future of Fisker Auto­mo­tive might be viewed as a sym­bol­ic tale of where eco­nom­ic alliances – and com­pe­ti­tion – now stand between the US and Chi­na.

Two Chi­nese investors are vying to take over the trou­bled US mak­er of the lux­u­ry, extend­ed range Fisker Kar­ma. A court­room con­fronta­tion will take place on Jan­u­ary 10 where US Bank­rupt­cy Court Judge Kevin Gross will like­ly decide whether investor Richard Li and Hybrid Tech Hold­ings LLC can close the deal with its pro­posed $25 mil­lion; or whether Wanx­i­ang Group, a major Chi­nese auto parts com­pa­ny and new own­er of the A123 Sys­tems lithi­um bat­tery com­pa­ny, should win the deal with its recent­ly filed $24.725 mil­lion bid with assump­tion of some of Fisker’s lia­bil­i­ties.

Either bid from these Chi­nese investors is much less than what Fisker has owed the US Depart­ment of Ener­gy (DOE) for its orig­i­nal loan; but the fed­er­al gov­ern­ment would like to wash its hands of it.

While the actu­al EV sales fig­ures in either coun­try are high­ly unlike­ly to meet the mil­lion unit EV mark set by Pres­i­dent Oba­ma with­in the next two years, the race is still being run. Cul­ti­vat­ing EV sales through gov­ern­ment incen­tives and fed­er­al fleet acqui­si­tions – and through cap­i­tal investors with merg­ers and acqui­si­tions – con­tin­ues to be of high impor­tance in the US and Chi­na.

Chi­na has been extreme­ly impor­tant for glob­al automak­ers and investors to see growth, espe­cial­ly as the Euro­pean auto mar­ket has been shrink­ing. EVs have been a big part of that strat­e­gy and Chi­na has been the top sell­ing mar­ket for over­all new vehi­cle sales for a few years.  The invest­ments have been impres­sive:

  • An elec­tric ver­sion of the Saab 9–3 is crit­i­cal for Saab a year out of its bank­rupt­cy pro­ceed­ings; Saab’s new own­er, Nation­al Elec­tric Vehi­cle Swe­den, is tar­get­ing its home mar­ket of Chi­na.
  • Tes­la Motors has been work­ing hard to get its web­site domain name back in Chi­na; for now, Tes­la is using the “Tou­sule” name for its web­site since the “Tesla.cn” domain was reg­is­tered to a Chi­nese com­pa­ny in 2006. The web­site is tak­ing pre-orders and reser­va­tion fees for the Mod­el S and the upcom­ing Mod­el X elec­tric crossover mod­el. Tes­la is plan­ning on begin­ning deliv­er­ies to Chi­na of the Mod­el S in the first quar­ter of 2014. That web­site fol­lows the recent open­ing of a Tes­la Motors show­room in Bei­jing.
  • Ford will pur­sue the pro­duc­tion and sale of hybrids and EVs in Chi­na. The glob­al automak­er will build more fac­to­ries and expand in that grow­ing mar­ket. Ford CEO Alan Mulal­ly made the announce­ment dur­ing a tele­vi­sion inter­view in Chi­na.
  • War­ren Buf­fett and his Berk­shire Hath­away firm have made a siz­able invest­ment in Chi­nese automak­er BYD – and EVs play a big part of the gam­ble.
  • Geely Hold­ing Group took over Vol­vo Cars from Ford in 2010 and joint EV projects play a role in that alliance – such as the Vol­vo C30 Elec­tric and Geely’s Kan­di brand offer­ings.
  • Last month, actor Leonar­do DiCaprio announced he’s form­ing a team to par­tic­i­pate in a new EV rac­ing cir­cuit that will launch its inau­gur­al sea­son in Bei­jing next Sep­tem­ber. There’s a lot of hope that enthu­si­asm for own­ing EVs will come from it; in 2012, there were only 11,000 EVs sold in Chi­na.

EVs – and oth­er alter­na­tive fuel vehi­cles and clean­tech ven­tures – play a sig­nif­i­cant role in the future of the US econ­o­my, accord­ing to the Oba­ma admin­is­tra­tion and sev­er­al oth­er enti­ties. Chi­na will con­tin­ue to be a focal point for the US econ­o­my – and for glob­al eco­nom­ic con­di­tions.

These mar­ket dynam­ics have been tak­ing on the form of both com­pe­ti­tion and coop­er­a­tion – a trend that’s been seen in a num­ber of glob­al indus­tries for sev­er­al years now (such as smart­phones). Trade agree­ments between the US and Chi­na have been a sore spot, but busi­ness deals con­tin­ue to be cut. US investors and com­pa­nies – and those based in oth­er places such as Japan, Korea, and Europe – see the huge poten­tial and chal­lenges in China’s EV mar­ket.



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