New energy vehicles driving into fast lane

Creation date: 28 July 2009

Developing energetically the new energy vehicle is the need for China's energy security, environment protection and the great-leap-forward and sustainable development of automobile industry. At the same time, new energy vehicle will also become the new growth point of listed automobile companies. On June 11th, 2009, the opening date of 11th Chongqing International Auto Industry Fair, Changan declared the formal launch of Jiexun hybrid car, indicating that new energy vehicle will gradually come to ordinary families.

On June 2nd, Dongfeng Motor Group Co., Ltd. purchased the business and relevant assets of its independent brand passenger vehicle by RMB797 million Yuan. The important reason for the purchase is Dongfeng's expansion in new energy vehicle field. Hu Xindong, Investor Relationship Department of Dongfeng Motor Group, said that new energy vehicle production will become an important factor for Dongfeng Motor Corporation Passenger Vehicle Company (DFPV) to attract investment and improve the profitability of listed company. Except for traditional gasoline vehicle production, new energy vehicles shall become an important part of DFPV.

The Plan on Adjusting and Revitalizing the Auto Industry issued on March brought forth requirements on the development of new energy vehicles. Later, all of the top four auto groups in China, namely FAW Group, Saic Group, Dongfeng and Changan, have set new development goals of new energy vehicles in succession. Their common goal is to realize industrialization of new energy vehicles around the year of 2012.

Analysts reckon that the hybrid vehicle combines the advantages of pure electric vehicles and gasoline vehicles. It could well satisfy the overall requirement of low emission, low fuel consumption and high price performance. At present, domestic fuel supply is in shortage and environment protection pressure is heavy. With regards to the situation in China, hybrid vehicle is having a bright prospect in domestic market. Listed new energy vehicle companies, which are good at capturing business opportunities, have already had their own layouts and started the competition with each other.

The difference between new energy vehicles and ordinary vehicles lies in the power. The industrial chain of new energy vehicles is based on complete vehicle manufacturers, and is extended to upstream and downstream. Complete vehicle, recharging equipment, relevant core components and upstream resources are therefore benefited. For example, the development of new energy vehicles opens domestic market space for power battery; listed companies then invest in the field one after another. Guotai-Huarong New Chemical Materials Co., Ltd., holding subsidiary of Guotai International Group, and mainly producing lithium battery electrolyte as well as silane coupling agent, has taken up over 30 percent of domestic lithium battery electrolyte market. Moreover, Citic Guoan Information Industry Co., Ltd., and Ningbo Shanshan Co., Ltd. also have association with lithium battery. Besides producing lithium battery, Hunan Corun New Energy Co., Ltd. devotes to the production of foam nickel (raw material of nickel hydrogen battery) and nickel series battery. The company used funds raised to invest in the construction of nickel-hydrogen battery energy packet production line of its controlled subsidiary, Hunan Keba Automobile Power Battery Co Ltd.

According to the analysis of Shenyin & Wanguo Securities Co., Ltd., the State has recently issued lots of detailed policies supporting the development of new energy vehicle; with enforcement and speed both beyond the market anticipation. There is still a wide space for follow-up policy support, which will be one of the impetuses that drive new energy vehicle to surpass the market continuously. Being the core component of new energy vehicle, it is noteworthy that the market space of power battery shall be increased from more than RMB 1 billion Yuan at present, to around RMB3.25 billion Yuan in 2012. But are new energy vehicles able to come to ordinary consumers' lives? This will depend on a number of factors. Li Shengmao, automobile industry analyzer of China Investment Consulting, pointed out that, in spite of its advantages, there is still a long way for new energy vehicles to go to realize scale commercialization; with three big bottle-necks ahead, namely technology, market and supporting facilities.
 

Modern advanced diesel vehicles are more environment friendly than gasoline vehicles, which have total greenhouse gas emission 45 percent higher than diesel engine. Diesel engine could save around 30 percent fuel, as well as being more powerful and flexible. Along with the requirement on energy saving and emission reduction get higher, both diesel engines and new energy vehicles will have a broad market space.

Source: http://en.ce.cn/Insight/200907/28/t20090728_19645134.shtml