International electric car makers to face challenges in China

International electric car makers to face challenges in China

Staff Reporter

2014-03-02

With the worsening environmental situation in China, the government has stepped up support for the electric car sector, with international producers also trying to tap into the the world’s largest potential market for electric vehicles.

Volkswagen plans to produce electric cars starting from 2016 and supply the Chinese market with 10 different models by 2020. In the meantime, Volkswagen’s luxury brand Audi also plans to launch a hybrid model, reports Tencent’s finance portal.

One of Toyota’s hybrid cars targeting the Chinese market is set to go into mass production next year, while Honda is working with Dongfeng Motor and the Guangzhou Automobile Group to begin producing hybrid cars in China in 2016.

Tesla Motors opened its first directly operated store in Beijing and its Model S sports car is set to go on sale in March. The US-based company also plans to open at least 10 new stores in China this year.

China is the world’s largest car market with total sales touching about 22 million vehicles in 2013. However, sales for electric cars are less than 20,000 units.

Given the new pressure for environmental protection efforts in the country, demand for electric cars is expected to increase rapidly. However, overseas electric car producers will have a number of challenges ahead. As most domestic electric car companies rely heavily on subsidies provided by local governments, competitors from overseas may find themselves struggling against protectionism at the local level.

Shenzhen-based BYD enjoys subsidies of 70,000 yuan (US$11.350) from the city government for its Qin model electric car but it can only get half that from the central government in Beijing.

Shanghai Automotive Industry Corporation, FAW Group Corporation, Dongfeng Motor and Chang’an Automobile Group have also introduced hybrid cars in China.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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