Since the introduction of the automobile in the late 1800’s, the internal combustion engine (ICE) has emerged as the dominant vehicle propulsion technology. However, at the end of the 19th century, it was the electric vehicle (EV1) that actually outsold all other types of cars. In fact, the EV was introduced several decades earlier than ICE-powered cars. However, ICE eventually surpassed the EV due to its virtues of speed, power and range.
Call Girls in Malviya Nagar Delhi 💯 Call Us 🔝9205541914 🔝( Delhi) Escorts Ser...
Leading The Transition To New Energy Vehicles En
1. Perspective Bill Russo
Tao Ke
Edward Tse
China’s Automotive
Opportunity
Leading the Transition
To New Energy Vehicles
2. Contact Information
Beijing
Bill Russo
Senior Advisor
+86-10-6563-8300
bill.russo@booz.com
Shanghai/Beijing
Edward Tse
Senior Partner
+86-21-2327-9800
+86-10-6563-8300
edward.tse@booz.com
Tao Ke
Principal
+86-21-2327-9800
tao.ke@booz.com
Booz & Company
3. EXECUTIVE Since the introduction of the automobile in the late 1800’s,
the internal combustion engine (ICE) has emerged as the
SUMMARY
dominant vehicle propulsion technology. However, at the
end of the 19th century, it was the electric vehicle (EV1) that
actually outsold all other types of cars. In fact, the EV was
introduced several decades earlier than ICE-powered cars.
However, ICE eventually surpassed the EV due to its virtues
of speed, power and range.
Since the 1970s, there has been a oil consumption was contributed
growing awareness of the lack of to transportation. Statistics of
sustainability of petroleum-based IEA show that transportation will
consumption. Rising concerns over account for more than 62% of global
the impact of carbon emissions on oil consumption by 2020, while
the environment have increased the emerging markets, such as China,
pressure on finding alternative energy are the major forces driving the
technologies that can eventually increase in global oil consumption.
replace the ICE. Recent technological The Energy Economics and
advances are bringing new energy Strategy Research Center of China’s
vehicles back into the spotlight. We National Development and Reform
believe a new era of alternative energy Commission (NDRC) estimates that
technology will emerge in the 21st oil demand will be nearly 560-600
century automotive industry, million tons in China by 2020.
and this represents a key opportunity
for China and its domestic car Continuous global warming results
companies to assume a leading role in in increasingly worsened living
this transition. environment. According to scientists,
global average temperatures will
Global daily oil consumption is still increase between 1.4 and 5.8 degrees
increasing steadily. According to a Celsius by 2100. Rising temperature
BP report, it is estimated that global is likely to cause catastrophic
daily oil consumption will reach 93 results, such as rising sea levels due
million barrels by 2020. In 2007, to melting polar ice caps (18-59
over half (57%) of global daily centimeters in 2100), and more
Booz & Company 1
4. HUGE MARKET China is the world’s largest auto
market and will keep a rapid growth
POTENTIAL FOR rate over a quite long period of time.
NEW ENERGY As the balance of global economic
power has been shifting eastward
VEHICLES (NEV2) to places like India and particularly
IN CHINA China, the attention of most of the
automotive industry development has
in recent years been concentrated on
the Asia-Pacific region where China is
expected to capture over a half of the
growth in the next ten years. China’s
automotive market has doubled its
size since 2003 – with annual sales
soaring from 4.56 million to 9.67
million in 2008. During this period of
time, the market share of passenger
frequent natural disasters (i.e. floods, vehicles (excluding buses, trucks
droughts). Global warming is mainly and other commercial vehicles) has
caused by the world wide increase increased from 50% to 60%.
in CO2 emissions, which is more
significant in developing countries. To address the economic crisis, the
China is one of the biggest emitters of Chinese government launched a
CO2. According to EIA, China’s CO2 series of stimulus initiatives in an
emissions per capita is increasing full effort to achieve a targeted GDP
speed and will catch up to 1/3 of the growth of 8%. These initiatives have
US’s in 2030.
Cost is still the major barrier in EV.
As the power source of EV, battery
technology has been a major barrier
for the development of EV. However,
recent progress has pushed the
technology to the minimum threshold
of consumer acceptance. In addition,
the energy density of electric battery
has been continuously increasing and
is approaching the minimal threshold
for market acceptance.
2 Booz & Company
5. had a remarkable impact on the while China’s self-sufficiency rate of environment. Ten years ago, Bejing,
automotive market in the first half of crude oil continues to decrease. Xi’an, Shenyang, Shanghai and
2009. A large proportion of Chinese Guangzhou were already listed among
auto consumers are composed of As the leading automotive market, the Top Ten cities with the worst air
first-time buyers who have actively China has the opportunity to drive pollution. The massive growth of the
leveraged preferential policies on the standards and architecture for the automotive market only adds to the
their purchases in the form of tax global auto industry and has problem. Additionally, China imports
incentives. For the overall calendar a clear and compelling need to two-thirds of its oil, and its
year of 2009, China’s market grew reinvent the propulsion technology ever-increasing thirst has had a
beyond 13 million units against 10.4 of the automobile. dramatic impact on global energy
million in the US. prices. Based on the current growth
Intensified stress from traditional trend, China will possess 1.5 billion
China’s automotive industry will energy supply and environmental vehicles and consume 2.5 billion tons
continue to experience strong growth protection. As the size of the auto of oil by the year 2020. No doubt,
over the foreseeable future. Global market inexorably expands, China China has a clear and compelling
Insight has forecast that over the will play an increasingly significant need to reinvent the propulsion
next ten years China will account for role in the development of new technology of the automobile.
more than half of the growth of the automotive technologies. China’s
Asia Pacific region with annualized emergence as the leading automotive “To start from scratch” and lead the
growth of 6% through 2018. It is market in terms of sales has several transition to new energy technology.
also noteworthy that while China is implications. While most attention China may lag over a decade behind
experiencing the growth of the auto has been paid to relative sales the leaders in the development of
market, environmental pollution has performance of the foreign and advanced automotive industry.
mounted and a decrease in home- domestic companies, what is arguably However, given its advantages
exploited crude oil has been observed. of more long-term significance is the on costs and markets, China has
As China’s auto market continues to impact of China’s market expansion developed the potential to take the
grow, pollution significantly increases on energy consumption and lead in the development of new
China’s automotive industry will
continue to experience strong growth
over the foreseeable future.
Booz & Company 3
6. energy vehicles market where each a solid market share of 34% in the adjustment is needed in consumer
player is essentially starting from global lithium ion battery market, driving habits. Moreover, Chinese
scratch (see Exhibit 1). of which BYD has rocketed into citizens rely much more on public
the top five largest manufacturers. transportation. Public transportation
Regarding the technologies on At present, China has evolved into companies will be more willing to
lead-acid batteries, NiMH batteries one of the largest global lithium ion switch to new energy vehicles even
and lithium ion batteries, a large battery manufacturing bases, one if private consumers are reluctant to
number of players have developed that accounts for 17% of the global buy EVs.
their core technologies and product output in 2008.
portfolios. For example, China has The popularization of NEV and EV
abundant resources and technologies On the issue of consumer acceptance, largely relies on the relevant services,
for lithium ion battery production consumer habit in China is still in the infrastructure and facilities, such as
and has stepped into the rapid forming process due to a relatively repair and maintenance, construction
growth stage since 2001, facilitated short driving history. China has of infrastructure (i.e. Recharging
by the quick emergence of large very low car ownership penetration Station) and new specific services (i.e.
enterprises specializing in lithium ion compared with developed countries. insurance for NEV), which are still at
battery production, e.g. BYD, B&K As a result, the realistic and potential a preliminary stage.
and others. In the last few years, cost of switching from a traditional
Chinese enterprises have achieved vehicle to NEV is lower and less
Exhibit 1
Comparing to mature markets, China appears ready to address the challenges in introducing electric vehicles
READINESS FOR EV KEY FORCES IN CHINA
Mature Market China
1
Ample resources to achieve low cost production
Technology More battery manufacturing experience with larger scale, i.e. lithium
battery for cell phone
2
Relatively short driving history makes it easier to cross over to new
products
Consumer Less stringent requirement on performance due to short community
Acceptance distance and crowd traffic
3
China faces much greater environmental pressure, there is huge need to
switch into cleaner energy
Infrastructure The Chinese government has been a strong driving force behind the
& Legacy development of industry technology and infrastructure
Local VMs are looking to leverage EV to get ahead in the automotive
market, thus resistance from market incumbents is low
Source: Booz & Company analysis
4 Booz & Company
7. EVOLUTION OF In recent years, the Chinese
government has accelerated the
initiated the “Air Purification
Program: Clean Auto Action” to
NEV IN CHINA pace of energy structure adjustment, promote clean energy vehicles in
given the ever-increasing oil price 19 cities, which were either most
and environmental pressure resulting polluted or had resource advantages.
from industrialization. In fact, over a In this phase, the government did not
decade ago, the Chinese government put forward specialized requirements
became the driving force in the for NEV; and NEV did not serve a
development of NEV with a stronger national strategy.
focus. There are three phases in
the development. Phase 2: Electric Vehicle Key Project
(2002-2006) with an investment of
Phase 1: Clean Auto Action (1999- 880 million RMB
2002) with an investment of 100 From the perspective of development
million RMB strategy of the national automobile
In 1999, Beijing, Xi’an, Shenyang, industry, the Tenth Five Year Plan
Shanghai and Guangzhou were listed introduced the goal to commercialize
in the World Top Ten Cities with the and industrialize EVs. The National
worst air pollution. To mitigate air 863 Program set the Electric
pollution, big cities implemented a set Vehicle Project and identified the
of initiatives, such as improvement of FCV, EV and HEV as the priorities
the emission of fossil fuel vehicles to for the development of HEV. The
meet Euro II Standard, CNG and LPG Government cooperated with
vehicles’ R&D and demonstration, businesses, academies and research
as well as other CAFV3’s R&D. A institutions, to conduct R&D jointly.
total of 13 ministries, including the
Ministry of Science and Technology,
Booz & Company 5
8. A “3X3” R&D mechanism (3 vehicle R&D discipline, and proposed Phase 3: Energy Saving and New
Horizontal Plans: FCEV4, HEV5 and a basic principle of development Energy Vehicle Key Project (since
EV; 3 Vertical Plans: force assembly, oriented, key component and related 2006) with an investment of 1.1
driving electric motor and dynamic materials linked, infrastructure billion RMB
battery) was initiated in the project development aligned, and policies, The Energy Saving and New Energy
(see Exhibit 2). It focused on the technical standards and assessment Vehicle Key Project was initiated
establishment of a rigorous process techniques simultaneously developed. in the 863 Program in the Eleventh
that is in alignment with whole Five Year Plan (see Exhibit 3), which
Exhibit 2
3×3 R&D mechanism and achievements
Milestone in phase 2: Electric Vehicle Key Project in 863 Program during 10th five-year Plan (2002-2006)
Government Investment: 880 Million RMB
3×3 R&D Mechanism Achievements
FCEV HEV BEV 6 Vehicle Prototypes of BEV, HEV and FCV developed
Whole Development BEV and HEV are qualified to be produced
Vehicle
Platform
Powertrain Control System
Demonstration BEV and HEV started demonstration in 7 cities
Electric Drive Motor
Key
Tech
26 national standards established
Traction Battery Others 796 patents applied
Source: MOST; Booz & Company analysis
6 Booz & Company
9. Exhibit 3
Energy saving and new energy vehicle key project
Milestone in phase 3: Energy Saving and New Energy Vehicle Key Project in 863 Program during 11th five-year Plan (2006-2010)
Government Investment: 1.1 Billion RMB (for 2006-2008)
New R&D Mode of 863 Project in 11th Five-Year-Plan
Product Development All types of vehicle products
FCEV HEV BEV CAFV
Vehicle Platform
Battery Technology Fuel cell engine, traction battery, ultracapacitor...
engi ultracapac
Key Technology
for CAFV
Electric Drive System Drive motor, motor driving system, engine...
e m engine.
Basic Technology New material, new component, infrastructure...
rastructu
Public Support Platform Test, standard, policy, demonstration, financing, intellectual property, technology Information
Source: MOST; Booz & Company analysis
Booz & Company 7
10. included the R&D for all types of motor and fuel cell engine, as well as development of key technologies, but
vehicle products and identified the the application of technical standards more effort is needed on the OEM7
new R&D model. The project covered and tests. side (see Exhibit 4).
the R&D of energy saving and new
energy technologies, research of key With this structure, China has
components such as traction battery, made significant progress in the
Exhibit 4
Progress in development of key technologies
10th Five-Year-Plan 11th Five-Year-Plan
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
National 863 Electric Vehicle Key Project National 863 Energy Saving and New Energy Vehicle Key Project
Car: small scale production and export overseas Car: OEMs and universities developed more prototypes
BEV
Bus: demonstration on Beijing city bus line Infrastructure: State Grid are considering charge station construction
Car: prototype developed Car: Most local OEM released HEV launch plan
HEV
Bus: 400,000km demonstration in Wuhan Bus: Two types are listed on the product bulletin
Car: prototype developed by Tongji University Demonstration: UNDP in Shanghai and Beijing
PCEV
Bus: prototype developed by Tsinghua University Infrastructure: 2 filling station in Shanghai and Beijing
A few models were developed under government project More and more OEMs are involved in initiative
More efforts for commercialization are made
Source: MOST; Booz & Company analysis
8 Booz & Company
11. LONG ROAD The global economic crisis is a
triggering event that freezes debate on
technology for use in government
fleets, including buses, postal and
AHEAD FOR NEV whether change is needed and creates sanitation vehicles; give priority to the
DEVELOPMENT opportunities for collaboration
between government and industry.
EV and promote collaboration with
businesses to develop infrastructure to
IN CHINA Such collaboration is essential for support NEV.
the successful transition from the
conventional ICE to NEV technology. For example:
To impel the energy saving and • Beijing: purchased 800 hybrid
industrialization of NEV, the Ministry buses from Beijing Foton
of Science and Technology, working
with the Ministry of Finance and • Shanghai: hydrogen fuel cell car
the National Development and project was initiated by Shanghai
Reform Commission, is sponsoring Major Project Promotion Office as
an ambitious plan to promote the a 2008 Olympics project
use of NEVs, initially targeting 13
pilot cities, which includes Beijing, • Jinan: promotes NEVs and plans
Shanghai, Chongqing, Changchun, to use HEV buses to replace some
Dalian, Hangzhou, Jinan, Wuhan, of the old bus system to meet the
Shenzhen, Hefei, Changsha, Kunming, requirement of National Sports
and Nanchang. The plan includes Meeting
support for the development of
energy-saving technology for use in • Shenzhen: is going to establish a
government fleets, including buses, charging station in the downtown
postal, and sanitation vehicles. The area for NEVs; and the F3DM
plan targets the deployment of 60,000 duel mode EV was first launched
energy saving vehicles in China by in Shenzhen which is the first mass
2012. produced duel mode EV in the
world
National governments and global
OEMs also took notice of China’s • Wuhan: becomes new energy
commitment to fund the development resource experimental unit for
of its NEV infrastructure. About Nissan, and Nissan will contribute
45% of China’s $588 billion USD 300 hybrid buses to the city
stimulus plan is to be invested in
projects related to developing China’s • Chongqing: purchased hybrid buses
infrastructure, which includes support from Chang’an Group
for a variety of clean car technologies.
As a result, local governments support • Changchun & Dalian: partnered
the development of energy-saving with FAW
Booz & Company 9
12. Meanwhile, local vehicle Moreover, universities also respond - and GM’s EV1 program provides
manufacturers (VM8) in China are proactively to the government’s us with a good example. Launched
viewing NEV as an opportunity to initiatives. For example, Tsinghua in December 1996, EV1 was a
catch up with foreign counterparts, University established a laboratory pilot small electric car with a total
thus are actively engaging. Local for alternative power system production volume of 1,000. The
OEMs fall far behind foreign development. fiberglass made vehicle (600 kg) was
counterparts in the conventional equipped with 32 lead acid batteries
automotive market: the domestic top In view of the large market potential (400 kg) as main power source. The
twoVMs are merely 12% of the size in China, foreign OEMs are 102 KW motor provided a range from
of Toyota in sales; and most advanced prioritizing NEV development in 40 miles (in Northeast states in the
ICE technologies are controlled by China. For example, Toyota supports winter) to 90 miles (in California).
global players. Therefore, NEV might the HEV R&D work of CATARC GM had invested $350 million on
give local VMs a chance to catch while GM established two NEV R&D development. In spite of the costly
up because there is no large gap in centers in China and cooperates efforts of GM to develop and promote
relevant technology, while local VMs with SGM and PATAC to develop the car, the high cost of ownership of
enjoy some natural resource and new HEV. the EV1 ultimately limited its market
development cost advantages. acceptance. Ultimately, GM withdrew
China’s push for electric cars was the EV1 from the market.
In line with government mandate, clearly on display at the Shanghai
many local brands, some with support Motor Show in April 2009, as BYD has recently introduced the first
of foreign partners, participate in alternative propulsion technologies mass produced plug-in EV that uses
NEV development and integrate the became the hottest exhibition themes. a home outlet, yet market acceptance
corresponding plan into their long- Local manufacturers, such as BYD, remains challenging. On December
term strategy. For example: Geely, Great Wall, Brilliance and 15, 2008, BYD launched F3DM,
• SAIC: invested RMB 2 billion for Chery, introduced many EVs and a dual-mode EV, in Shenzhen and
NEV development other energy-saving vehicles. accepted fleet orders from China
Construction Bank and the Shenzhen
• Chang’An: established NEV JV and At present, energy consumption of Municipal Government. Retail sales
plans first hybrid car for 2009 Chinese consumers is lower than that began in September 2009 with a
of their peers in developed markets, MSRP of RMB 149,800. As an EV
• FAW/DFM: have hybrid buses in and the Chinese government could, with a 125 KW power output, nine
pilot operation through proper guidance, encourage seconds for 0-100km/h acceleration,
them to pay more attention to a seven hours charging time with a
• Chery: introduced plans for the energy efficiency. But how could normal household power outlet, and
hybrid car A5 and electric car S18 policymakers promote energy-saving 100 km of maximum distance for one
vehicles in the domestic market? The charge; F3DM is available in 14 1st-
• BYD: introduced plans for the existing promotion of NEVs in 13 tier and 2nd-tier cities in China.
F3DM dual-mode electric car pilot cities is a good beginning to
lead and influence the individual car After over a decade of development,
According to the China Association buyers. Chinese policymakers may the NEV industry in China has
of Automobile Manufacturers, also consider promulgating additional made some breakthroughs in terms
the top ten local VMs in terms of financial and policy incentives: of technology and infrastructure.
sales, including SAIC, FAW, DFM, stronger credit and fund support Though consumer environmental
Chang’an, GAIG, BAIC, Brilliance, for manufacturers to develop NEVs consciousness is apparent, economic
Chery, CNHTC and JAC, will and batteries, more subsidy for considerations still remain the key
seek opportunities to collaborate individual NEV buyers and more decision criteria. In fact, Chinese
in NEV development. They will developed infrastructure such as consumers make their buying
not only cooperate to develop key charging stations. decisions with a focus on the price to
powertrain and component, but also performance ratio and overall cost
jointly set the standards for EV and However, environmentally friendly of ownership. On these measures,
components. Initially required by vehicles must offer tangible customer VMs must continue to pursue both
government, now developing NEV is benefits or they will ultimately fail. further breakthroughs in order to gain
gradually integrated into the long- Forcing revolutionary technology into marketplace acceptance of
term strategy of many Chinese VMs. the market can be counterproductive NEV technology.
10 Booz & Company
13. A HEALTHY Innovations in both technology
and business models will be needed
in order to increase production size
and drive down cost.
WIN-WIN to succeed in the EV industry.
INDUSTRY Consumers’ greatest concerns
about EV over ICE are cost,
Using a “Cooperation model”. In
order for the technological innovation
ECOSYSTEM IS performance and infrastructure. To to achieve performance and cost
KEY TO SUCCESS win over consumers, simultaneous
technological and business model
balance, the cooperation model
is a sound approach. Potential
innovations are needed. Technology shortfalls in going alone may include
innovation could provide a solution compatibility issues resulting in
that balances performance (power, great compromises on vehicle
range, etc) and cost. Business model performance, and negative impact
innovation could meet the needs on achieving critical mass due to
of consumers while benefiting lack of standardization, thus making
all stakeholders in the industry it difficult to drive down costs.
value chain (see Exhibit 5, page However, joint R&D opportunities
12). From the EV manufacturers’ could leverage the “Know-How”
viewpoint, they must start by setting of each party to improve vehicle
up appropriate technology and performance, reach critical mass
business innovation models and work and drive down cost. In May 2009,
backwards to win over consumers. Volkswagen signed an understanding
memorandum with BYD to seek the
BYD’s technological innovation possibility of joint development in the
has brought a huge cost advantage fields such as Li-ion battery for hybrid
while improving performance. In electric and full electric vehicles.
addition, BYD also innovates its Such cooperation can allow the
business model. By integrating partners to bring their complementary
battery and EV R&D, while resources to bear and to address the
other OEMs do it separately, it requirements of capital, technology
integrates battery manufacturing and market, while reducing the
with the role of a traditional VM costs and risks to realize the mass-
to capitalize on the current battery production of EVs.
and auto manufacturing resources
and facilities. Moreover, BYD Build up sufficient infrastructure.
also prioritizes the role that local Replacing traditional ICE with other
government (or utility) plays by technologies—such as hybrid electric,
approaching local government as full electric, hydrogen powered
the first customer base to create the vehicles or clean diesel - requires
market and working closely with collaboration between businesses
these partners to develop the market and the government to develop the
Booz & Company 11
14. infrastructure in tandem with the As the largest automotive market, the vehicle itself—but the need for
development of the technology. The and because the China government invention of the infrastructure for
economics of the product itself and has the capacity and willingness to delivering renewable sources of
ultimate market acceptance is very invest in the infrastructure for the electricity and installation of battery
much dependent on the availability new energy technology, we have charging/replacement stations. As
of the infrastructure to recharge or every reason to believe that China’s the largest car market, and the
replenish the fuel. It is not realistic NEV market will reach significant place with the largest need for
to expect a company to reinvent scale. When it does, the Chinese car alternative energy solutions, we can
the technological underpinnings companies will begin to close the expect to see China place a heavy
of the automobile, unless there gap relative to the industry leaders. emphasis on development of the EV
is a concurrent development and What makes the development of infrastructure. The country that leads
investment in the infrastructure to alternative propulsion technology the development of this infrastructure
support that new technology vehicle. particularly challenging is not simply will undoubtedly lead in attracting
Exhibit 5
The value chain of the EV industry – a new ecosystem
Product Flow
Cooperation or Contract
Key Stakeholders of the EV Industry
After-Market
R&D Sourcing Assembly Distribution Retail
Services
Auto Part
OEM
R&D VM Distributor Dealership Consumer
Battery OEM
Utility Battery Leasing & Recharging
Government may have more active engagement over the value chain
Government – Enact relevant industry policies
– May take the initiative to invest in the construction of EV infrastructure, i.e. charge stations
Source: Booz & Company analysis
12 Booz & Company
15. Endnotes
1 EV = Electric Vehicle
2 NEV = New Energy Vehicle About the Authors
3 CAFV= Combustion Alternative Fuel Vehicle
4 FCEV = Fuel Cell Electric Vehicle Edward Tse is
5 HEV = Hybrid Electric Vehicle Booz & Company’s senior
6 BEV = Battery Electric Vehicle partner and chairman for
7 OEM = Original Equipment Manufacturer Greater China, specializing in
8 VM = Vehicle Manufacturer definition and implementation
of business strategies,
organizational effectiveness,
and corporate transformation.
He has assisted several
hundred companies—head-
quartered both within and
outside China—on all aspects
of business related to China
and its integration with the rest
of the world.
Bill Russo is a senior advisor
the investment in development of to purchase NEV. As 85% of with Booz & Company. He has
more than 25 years extensive
the technologies that plug in to that Chinese consumers are first time
experience in the automotive
infrastructure. car buyers, with less experience
industry most recently serving
with gasoline-powered cars, and as Vice President of North East
Business model innovation should are already accustomed to short Asia automotive operations for
address the interests of different distance, low-speed commuting Chrysler having specialized in
stakeholders, thus a transition from conditions, these factors are very new business development,
“paying for hardware” to “paying for favorable for the acceptance of the product and business strategy,
mileage” would be practical. Utility less-performed electric cars. The performance management,
corporate governance and
companies, such as State Grid, are Chinese government’s willingness to
post-merger integration.
well-positioned to act as a battery invest in the infrastructure to support
leasing and charging vendors: another alternative propulsion technology Tao Ke is a project principal
revenue generation source as a battery will ultimately help drive demand with Booz & Company and is
owner, large existing customer base, side market acceptance. This is where a member of the automotive
mature infrastructure and networks China has the opportunity to take competance center leadership
in place to serve potential EV clients, the lead, and that will drive supply team in Greater China. He has
side investment in new technology. more than 10 years’ consulting
amendment to the revenue fluctuation
experience in a broad range
from current product portfolio. For the development of NEVs, the
of strategy, operations,
On the other hand, consumers are infrastructure must come first—and organization, and risk
unwilling to own battery as it takes this will drive supply-side innovation. management assignments,
up a huge part of the entire vehicle It takes a combination of business covering the automotive,
budget, its life cycle tends to be short and government working together to financial services, consumer,
and value depreciation is severe and make such a transformational change and telecom industries.
individual battery product may have possible—and nowhere in the world
compatibility issues with recharging is there a closer link between business
station networks. and government than in China.
In summary, consumer acceptance Energy saving, carbon reduction
of new energy vehicles is a major and pollution abatement are not
challenge. While the infrastructure only development trends around the
investments already described world, but priorities for the Chinese
will help tip the scales in favor of government. Without awareness of
new energy vehicles, consumers these, Chinese vehicle manufacturers
must also be convinced that the will be left behind or even defeated,
price and performance of the new by their global rivals. China should
energy vehicle can in fact meet leverage the existing advantages to
their expectations. As a national success in a new battlefield—the
priority, we can expect the Chinese EV market.
government to help by offering
incentives for the retail consumer
Booz & Company 13
