January 12th, 2009
Electric cars level automaker playing field
So the Auto Show is all the news this week. Which brings to mind the Auto Bailout, which, while a given in the broadest outlines, is still open for important tweaking on how best to move the industry to simultaneously address global warming, appeal to 21st century consumers and put themselves into the black.
The Wall Street Journal reports that the push to reduce energy dependence, coupled with new technology, is leveling the playing field for automakers for the first time since the 1960s. Consider BYD Co., a Chinese battery and carmaker. Their new electric hybrid, the F3DM, plugs in to home outlets, includes a small gas engine and sells in China for $22,000 — and will be introduced at a similar price in the U.S. in 2010.
Compare that to GM’s long-awaited Volt, to cost $40,000.
Few products are as complex to develop and produce as gasoline-powered automobiles, which are assembled with thousands of precisely engineered parts. But electric cars use only basic motors and gearboxes, and have relatively few parts. Aside from perfecting the battery itself, they’re far easier and cheaper to build — and that makes for a level playing field.
“It’s almost hopeless for a latecomer like us to compete with GM and other established auto makers with a century of experience in gasoline engines,” said Mr. Wang in an interview, pacing and juggling calls in BYD’s headquarters on the outskirts of Shenzhen. “With electric vehicles, we’re all at the same starting line.”
In fact, companies like BYD are probably better positioned than GM for the electric future. BYD has 10 years of experience in developing batteries. It’s the world’s second-largest producer of lith-ion batteries.
GM doesn’t have that kind of experience; they make cars, not batteries. Only now … it’s no longer hard to make cars; it’s all in the battery. GM is relying on A123 Systems’ technology, which appears to be similar to BYD’s. So here’s a typically American response:
Individuals close to A123 say the company plans to take apart BYD’s battery cell to see if BYD has infringed on any of its technology. Officials at A123 declined to comment.
OK, back to the bailout. Massive funding for battery R&D. Major injections into small car companies. A one-time loan to Detroit: don’t even think about coming back. Call it … competetition … not with Toyota and Honda, but with actual American companies.
Otherwise, we’ll just be trading in Priuses for BYDs. And America will continue to be a consumer market for countries that actually produce things worth buying.
