China's Auto Industry Embraces Green

Just the Facts:

• World Expo 2010 in Shanghai showcases cars of the future.
• A variety of green cars are among those on display.
• GM and its Chinese partner SAIC share a pavilion that's open to the public.

SHANGHAI, China — At the World Expo 2010 in Shanghai, the joint pavilion of General Motors and its Chinese partner Shanghai Automotive Industry Corp (SAIC) is proving to be one of the most popular.

Every day, visitors from all over the world stand in line for up to three hours to get into the auto pavilion. They are anxious to see the cars of the future and how they will change the way people drive.

For businesses, the pavilion offers a sneak preview of future opportunities evolving in the fields of zero emissions and traffic control.

General Motors exhibited three EN-V concept cars. The two-wheeled, vacuum-cleaner-shaped model runs only on electricity generated by lithium-ion batteries and is also equipped with advanced features such as a global positioning system, vehicle-to-vehicle communications and distance-sensing technologies.

The SAIC concept YeZ, previewed earlier this year as the Leaf, showcased a vehicle that can absorb carbon dioxide and water molecules in the air and, like a leaf, convert them into power through a series of chemical reactions.

The auto pavilion underscores the world's pursuit of low-carbon technologies aimed at addressing the problems of urban pollution and energy shortages. Big cities such as Shanghai, with fast-expanding vehicle numbers, are facing increased pressure to develop fuel-saving, emission-free alternatives.

Shanghai is seizing on the sea change to help restructure its industrial base and become a world leader in advanced new technologies. Its blueprint for change targets nine industries, including new industrial materials, alternative-energy vehicles, information technologies and biological pharmaceuticals.

Shanghai was among the first five cities nationwide to offer national subsidies for the purchase of fuel-efficient vehicles. People who buy cars that save 20 percent on fuel consumption are eligible to receive $441. According to a draft policy for promoting green vehicles in Shanghai, the city is planning to offer an extra $2,900 to those who buy a plug-in hybrid and $7,340 to those buying electric cars, Liu Jianhua, head of the city's new-energy promotion office, said recently. Companies developing new technologies are also expected to enjoy favorable tax breaks and low-interest loans.

Liu said the measures are part of the Shanghai government's efforts to encourage production of 100,000 green vehicles per year by 2012, of which 60,000 units will be passenger cars and 20,000 will be EVs. The city also targets having 25,000 charging stations and nearly 50 charging stations.

SAIC Motor Corp, the nation's biggest automaker, will bring out a semi-hybrid version of its Roewe 750 sedan this year. By 2012, the Roewe 550 plug-in full hybrid, using 50 percent less gasoline, will be introduced, followed by a fully electric car. Within five years, SAIC plans to increase its market share in the green car segment to 20 percent, the same proportion it now enjoys in the gasoline-powered market, said Hu Maoyuan, chairman of SAIC.

The carmaker has provided nearly 1,000 green vehicles to the World Expo, including hybrids, electric vehicles, fuel-cell cars and vehicles powered by supercapacitors.

Early this year, the carmaker set up a new subsidiary for developing fuel-efficient, lower-emission vehicles. A group of 200 engineers is working on core spare parts for both electric and hybrid vehicles. The development of greener commercial vehicles is also underway.

Shanghai GM, which has already introduced the Buick LaCrosse Eco-Hybrid and Cadillac Escalade Hybrid, said additional hybrids and EVs will be rolled out over the next five years, with the Chevrolet New Sail electric vehicle prototype set to make its debut this year. In 2011, the new Buick LaCrosse Hybrid, with 20 percent better fuel economy than the standard model, will be available.

General Motors will export the Chevrolet Volt to China, making the country among the first recipients of the vehicles outside the U.S. GM also announced this month that it will team up with SAIC to jointly develop other fuel-efficient technologies, including small-displacement gasoline engines and new front-wheel-drive transmissions.

Shanghai Volkswagen has introduced turbo technologies and double-clutch gearboxes in domestic production, which could help reduce fuel consumption and carbon emissions significantly, and said it will invest in research of new-energy vehicles to meet rising market demand.

A spokesman from China's new-energy promotion department confirmed that no pure electric cars or plug-in hybrids have been sold since the national subsidy took effect in June. "Sales of the cars subject to the highest subsidies have not started yet," he said.

BYD's F3DM plug-in hybrid is now sold only within its home market in Shenzhen. Company officials said marketing in Shanghai is expected to begin next month. Delivery waiting periods may be as long as four months.

A survey of 606 auto buyers in Shanghai found that 75 percent of respondents said they intend to buy a green car within three years, according to a report from research firm Ipsos.

In another poll of 1,478 vehicle owners and potential buyers nationwide, the same proportion expressed buying interest. They cited low operational costs and environmental benefits as their reasons, according to Nielsen.

Inside Line says: As the concept of new-energy vehicles is beginning to sweep across the globe, Chinese consumers are showing more interest in the new technologies than their counterparts in many other countries. — Vivian Jin, Correspondent