Green road is being laid: Now, for the cars

Worries about the range of electric vehicles and a lack of widespread charging stations continue to preoccupy consumers in markets such as the US and Europe. China is the exception. Many Chinese consumers want electric vehicles and so does the government. For vehicle manufacturers, this may mean new business opportunities, but greater challenges too.

According to a recent study by Accenture of more than 7,000 people in 13 countries, 86 percent of Chinese car drivers would like plug-in electric vehicles (PEVs) to replace conventional vehicles. Moreover, asked if they would consider PEVs as an option when they buy their next car, 95 percent of respondents planning to buy a car within the next decade said they would certainly or probably consider a PEV. This potential increase in the number of PEVs in the Chinese market is reinforced by actions planned by the Chinese government.

China's auto industry is bracing for the soon-to-be announced government policy that will dictate future investment in "green" vehicles and their drive train technology. The government's position is clear. It wants to reduce emissions of carbon dioxide, and targets are in place for next year and 2013. This commitment by the government is also backed by some of the largest levels of investment in the world and the creation of a 16-strong, cross-industry association that consists of big State-run companies.

For drivers in China, like their counterparts elsewhere, convenience is an important factor when considering an EV, and that has implications for the location and type of EV-charging sources. But, unlike the issue of charging infrastructure that is still largely being debated and shaped in other countries, this challenge in China is being indirectly solved as the population expands and shifts. Committed to the concept of intelligent cities, the country is adopting new strategies, technologies, open platforms and effective governance to create sustainable and attractive places to live that will include developing an EV infrastructure.

The research also shows that China has the highest proportion of consumers who claim to understand enough about PEVs to consider them when they buy cars. This understanding demonstrates that the future of EV and alternative drive trains in the China market will not be driven by technology alone.

China auto producers will need to tackle three emerging issues that could stall consumer acceptance of EVs. These are brand and marketing effectiveness, brand quality and EV demand. While strong branding and marketing, as well as build capability, can be partially satisfied by the expanding number of Western auto manufacturers sharing EV technology with Chinese producers through joint ventures, the level of demand remains a question. Despite enthusiasm over EVs, their cost is a key factor. Government incentives may accelerate demand, but converting consumer enthusiasm into major sales could be challenging.

In addition, there are the demands of competitive sustainability. Chinese producers, who want to emerge from China's rapidly changing marketplace ahead of their peers today but to sustain their lead tomorrow, must not neglect the fundamental basics of manufacturing. This includes utilizing strong core technologies and maintaining comprehensive and efficient operations with a focus on continuous improvement.

Then too, there will be a need to adjust core processes to accommodate the mass production of EVs and alternative drive trains. Big car design changes will be needed, with e-engines and batteries replacing core parts like the combustion engine, fuel tank and electronics. Adherence to new government regulations regarding the standardization of components will probably be required. Manufacturing plant changes and new competencies such as chemical and electrical engineering will be part of the shift, as well as meeting the need for battery recycling processes, and repair and road assistance services.

The surge of consumer interest in EVs in China, coupled with aggressive government initiatives, offers Chinese auto-makers an unprecedented opportunity to capitalize on their development. But the key to capturing the promise of EVs will be establishing their own capabilities in China's emerging green vehicle marketplace. China's automakers will welcome this passion among car buyers. Their reaction is already emerging: An increase in wanting to understand and adopt world-class industry practices to capture the potential growing demand for EVs and maintain this growth for the long term.

The author is managing director of Accenture's Automotive, Industrial Equipment, Infrastructure and Transportation Industry Groups for Asia-Pacific. The opinions expressed in the article do not necessarily reflect those of China Daily.