With fossil fuel bans, e-cars shift into higher gear

|     Tangi Quemener     |

FRANKFURT AM MAIN (AFP) – Beijing’s announcement that it is considering joining France and Britain in banning petrol and diesel cars from its smog-clogged roads promises to accelerate a push towards electric vehicles — a race in which Chinese carmakers have everything to gain.

As the global auto industry braces for a shake up, here’s what you need to know.

What’s it all about?

While France and Britain have said they plan to outlaw sales of new diesel and petrol cars by 2040, Beijing has not yet set a date for its proposed ban.

But if China, the world’s largest car market, turns its back on fossil-fuel powered cars, it could change the auto industry forever.

With annual sales of some 24 million vehicles, China is home to one in every four new cars on the planet. By 2024, analysts at AlixPartners forecast sales will climb to 42 million annually, accounting for 36 per cent of the global market.

By comparison, France and Britain each record sales of some two million new cars per year.

“If China says no more ICE (internal combustion engine), the rest of the world will follow because the rest of the world can’t lose China’s market. It’s too big,” says Bill Russo, managing director of Gao Feng Advisory Group in Shanghai.

The mooted driving bans promise to be a hot topic of discussion at the Frankfurt International Motor Show (IAA) this week, Europe’s top industry showcase.

A view of traffic in Beijing, April 14. China, the world’s biggest auto market, is considering a ban on fossil fuel cars in a major boost to the production of electric vehicles as it seeks to ease pollution. Xin Guobin, vice minister of industry and information technology, told a forum on the weekend of September 10, 2017 that his ministry has started ‘relevant research’ and is working on a timetable for China. – AFP

What does it mean for carmakers in China?

By law, foreign carmakers are required to team up with Chinese companies if they want to do business in the country.

With China also mulling quotas for electric vehicles – another move that could jolt the industry, traditional auto giants from Europe, the United States and Japan have no time to waste in expanding their ranges of hybrid and electric cars, experts say.

“European carmakers will have to step up their efforts in electric vehicles if they don’t want to be chased out of the market, because their current offerings are insufficient,” says analyst Stefan Bratzel, head of Germany’s Center of Automotive Management.

Electric cars only account for 1.7 per cent of total sales in China at the moment, but spurred by government incentives the figure has been growing steadily and could skyrocket in coming years.

Chinese carmakers have bet big on the cleaner engines of the future, and account for 96 per cent of electric vehicles sold in the country – compared to a market share of just 43 per cent in the traditional car sector.

Anticipating the industry revolution, Chinese firms already dominate the production of electric motors and batteries. “This poses a real problem for the European industry,” says Laurent Petizon of AlixPartners.

The era of the combustion engine “will end on a time schedule where China can assure itself that its own domestic carmakers are capable of delivering the solution they would like to see on the road,” Russo predicts.

Is this good news for the environment?

Not necessarily. While pedestrians and cyclists in pollution-plagued mega-cities may breathe easier around the purring of electric cars, how ‘green’ the vehicles are depends on how clean the manufacturing process was.

In China, fossil fuel plants with their climate-altering carbon emissions still power the bulk of the country’s factories.

Promising to clean up its act, the government has said it wants 20 per cent of Chinese power consumption to come from low-emission energy by 2030, up from 11 per cent currently.

In France, which derives 75 per cent of its energy from nuclear power, a massive switch towards electric cars would theoretically translate in a significant reduction of harmful carbon emissions.