China wants to lead the world in the manufacture and use of clean-energy cars, and to achieve this it will need to ensure research and development in battery production. Batteries have become vital to the manufacture of clean energy cars. As part of China’s industry development plan (April 2017), the government pledged to promote research and development of key battery cell parts and improve management structures in the industry.
Batteries are at the heart of clean energy vehicles because they are better at providing long-distance trips at cheaper costs. China has more than 100 electric vehicle battery suppliers now, with about four or five leading companies. At present, the battery accounts for 30–50% of the entire electric car cost. General Motors, in tandem with Chinese partner SAIC Motor Co., is opening a battery plant in Shanghai later in 2017.
Earlier this year, SAIC Motor established a joint-venture companies with the Chinese lithium battery manufacturer Contemporary Amperex Technology Co, based in Ningde, Fujian Province. The aim is to create cars with longer battery life and easier charging. Locally made lithium-ion cells are used in more than 90% of the vehicles produced by Chinese manufacturers.
GM said it is introducing out at least ten new energy vehicles in China between 2016 and 2020. Other partnerships include Volkswagen AG and Anhui Jianghuai Automobile Group, and Ford Motor Co and Anhui Zotye Automobile Co.
Foreign carmakers are also planning to introduce models from the US or Europe into the Chinese market to shorten the development process. The traditional development process is relatively long for car manufacturers. It can take three to five years to develop a car model. Even introducing an existing product takes time—it takes one year to 18 months for a car manufacturer to introduce models from abroad. US firms already have new-energy vehicle models in their home market, and they can introduce those products to China to plug the gap until new models are developed.
The Volvo Car Group is developing a new brand, the Polestar, which focuses on high-performance electric vehicles. The company will build a manufacturing site in Chengdu, Sichuan Province, with plans for its first model, the Polestar 1, to roll off the assembly line in 2019.
In addition, the American electric carmaker, Tesla Inc, has been in communication with the Shanghai government about building a plant in the city. Tesla faces two possible routes to invest in China as the country forbids fully foreign-owned car manufacturers. Tesla could set up a joint venture with a domestic partner, in which it would share profits and, potentially, technology. The other route would be to produce in Shanghai’s free trade zone, which will allow the company to own its plant, but still be subject to a 25% import tariff. In October 2017, Tesla opened a massive 50-stall supercharger station in the city’s Pudong New Area, which it said is the company’s largest supercharger station worldwide. Tesla’s electric charging network already covers more than 170 cities in China, where it has built over 700 superchargers. That number is expected to exceed 1,000 by the end of 2017.
The Chinese government is committed to clean energy vehicles. In 2017 it issued a regulation requiring 10% of vehicle manufacturers’ sales to be electric or plug-in hybrid vehicles in 2019, rising to 12% in 2020, and 20% by 2025. Over 500,000 clean energy cars were sold in 2016.