China automakers focus on hybrid and electric vehicles

SHANGHAI -- As global automakers agonize about survival strategies, China's upstarts are racing to launch homegrown hybrid and electric vehicles in the only major auto market still growing.

Shanghai's biennial auto show, which opens Monday, will showcase these "new energy" vehicles, as the Chinese call them, alongside a cornucopia of conventional compacts, luxury and midrange vehicles.

No purely electric vehicles, apart from a few experimental buses, are on Chinese roads yet. Automakers still are working on developing products with prices and performance that are competitive with conventional cars.

Yet the focus on innovation reflects China's desire to curb its growing dependence on imported crude oil and to clear its polluted city skies. Beijing is plowing $1.5 billion into new energy vehicle technologies in the next three years.

"There's a lot of interest in electric vehicles because it's a technology that's emerging from China's strong research and development base for lithium-ion batteries," said Ray Bierzynski, vice president for engineering in the Asia-Pacific for General Motors. "China has grown very dramatically, but it still has a relatively young infrastructure, so the move to battery technology is very interesting for China."

Chinese consumers, most of them still first-time car buyers, are relatively open to electric vehicles, since many already own electric scooters and motorbikes, said Thomas Schiller, managing director for consultant Arthur D. Little China.

Meanwhile, the shake-up in the worldwide auto industry in the economic slump offers Chinese automakers a chance to move ahead in an area not yet dominated by foreign technology.

"They see it would take five to 10 years to catch up with Western and Japanese manufacturers, so they are jumping to the next technology by investing in electric vehicles," Schiller said.

A recent McKinsey & Co. study estimates the Chinese electric vehicle market could be worth up to 1.5 trillion yuan ($220 billion) by 2030.