Page 51 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Consumer

there and plans to produce two pure-electric restricting the issuance of new license plates. In
cars, including the iX3 SUV, starting in 2020. those metropolises, simply acquiring the right
Yet some companies will struggle to reach the to purchase a car can be pricey. A plate for a tra-
goals under their own steam. “Carmakers are ditional gas guzzler costs as much as $14,000 in
both technically and commercially not ready for Shanghai. But if a consumer decides on an EV
a ramp-up in EV production to the level of the instead, it’s free. ● Electric vehicle sales
quotas,” says Sophie Shen, an automotive ana- BNEF already expects 2.5 million passenger ◼ China
lyst at PwC in Shanghai. EVs to be sold in China in 2022. But if similar ◼ Rest of the world
So they’re turning to a wide range of solutions restrictions take off in other cities, particularly
to avoid falling short. Ford Motor Co., which the rapidly growing industrial hubs of the interior, 400k
lost $378 million in China in the third quarter, is EV growth could be even more dramatic.
teaming up with Zotye Automobile Co., a minor For the moment, domestic models will mostly
domestic player, to jointly produce cars eligi- remain confined to the Chinese market. “Right
ble for the credits, Asia-Pacific President Peter now a lot of the cars selling in China have zero 200
Fleet said in October. Ford will introduce at least brand value outside of China,” says Janet Lewis,
15 hybrids and EVs in China by 2025. Vehicles the head of industrials and transportation
sold through the Zotye partnership will have a research for Asia at investment bank Macquarie
new brand name. Capital. But the EVs that are successful in the 0
Some rivals, however, are putting their names early-adopting mainland market may eventually Q1 ’11 Q2 ’18
on the same generic car. Toyota, Fiat Chrysler help China develop the manufacturing and brand-
Automobiles, Honda Motor, and Mitsubishi ing expertise it will need to export more vehicles
Motors all plan to sell the same electric SUV, to other countries, experts say.
developed by Guangzhou Automobile Group, to China undoubtedly will tweak its credit-
Chinese drivers. Other than brand- specific pric- and-subsidy regime as it seeks to encourage an
ing and specifications, the models will be largely electric- first domestic auto industry. The mini-
identical. That’s not ideal in an industry that mum thresholds of the cap-and-trade system for 37
prizes distinctive marketing, but it’s a necessary 2021 and beyond haven’t been laid out, though
compromise until the companies develop their they’ll have to rise rapidly to meet government
own technologies. sales targets for NEVs.
While carmakers have plenty of regulatory rea- It’s a direction of travel that couldn’t be more
sons to flood Chinese showrooms with EVs, it’s different from that of the Trump administration.
not clear that consumers will want them. Electric But for global carmakers, it’s increasingly clear
cars remain considerably more expensive than that policymakers in Beijing, not Washington,
their gasoline counterparts everywhere; in China, are in the driver’s seat. <BW> �Matthew Campbell
where gasoline cars such as Chongqing Changan and Tian Ying, with Yan Zhang, Keith Naughton,
Automobile Co.’s Benben Mini model sell for as lit- Christoph Rauwald, and Oliver Sachgau
tle as 29,900 yuan ($4,300), the difference can be
especially pronounced.
For now, government subsidies for EVs cover
much of that gap, running to as much as $7,900 E-Commerce
for an all-electric vehicle with a range longer than
400km. That can offset almost one-third of the
sticker price of a BYD e5 electric car.
The incentives, though, are being phased out ▷ Russia’s fragmented e-tailing market is poised
and will disappear in 2021. That could mean a for rapid growth—and consolidation
risky several years for automakers, since bat-
tery costs aren’t expected to be truly price-
competitive with internal combustion engines In most countries, e-commerce is dominated
until 2024 to 2028, depending on a vehicle’s by one or two behemoths, such as Amazon
type and the region of the globe where it’s sold, in the U.S. and Britain, Alibaba in China, and
according to BNEF. MercadoLibre in Brazil. In Russia, where the larg-
Still, the government has other levers should est web store has less than 7 percent of the mar-
demand fall short. Several of the largest cities, ket, at least a half-dozen companies are in the
including Beijing, Shanghai, and Shenzhen, running to become the king of online shopping.
limit the number of cars on their roads by That’s set to change as the country’s