With the launch of new energy vehicles, the R&D capabilities of vehicle manufacturers have improved to some extent. However, few domestic companies claim to have made progress in the R&D of components for new energy vehicles. Therefore, industry experts suggest that support for tackling key technological challenges in components should be strengthened.
Awkward industrial chain
Liu Xinwen stated that vehicle manufacturers rarely build the entire industry chain in-house during the research and development of new energy vehicles. Therefore, most domestically produced pure electric vehicles are manufactured through the external procurement of tens of thousands of core and non-core components.
He believes that the four key factors affecting the industrialization of new energy vehicles include the maturity of key battery and vehicle technologies, vehicle sales prices, charging convenience, and the new energy vehicle production supply chain. "The biggest problem in the entire industry right now is that the supply chain for independent new energy vehicles is incomplete and riddled with problems."
An investigation by *China Business Journal* revealed that domestic new energy vehicle manufacturers are currently unable to compare prices from multiple suppliers for almost all components during the supply chain procurement process. OEMs are forced to assist component suppliers in developing some or all of their components independently. This forced cost-cutting at every stage of the component supply chain ultimately results in a limited number of new energy vehicle models that can be mass-produced, with most vehicles exhibiting potential quality and safety issues.
Liu Xinwen stated that domestic auto parts suppliers' understanding of new energy vehicles lags far behind that of vehicle manufacturers. Many suppliers are skeptical about OEMs' mass production of new energy vehicles and do not believe that the latter will maintain long-term purchase orders. Therefore, with the mentality of "no business for three years, then live off the profits for three years," they demand exorbitant prices from OEMs.
Chery encountered such a situation. A single wire in the motor of their pure electric vehicles, which costs only tens of yuan to produce, was being sold at a wholesale price of nearly 200 yuan. "Subsequent repairs require original factory wiring, and suppliers can charge up to 2,000 yuan," said Liu Xinwen.
However, Han Erliang, Vice President of Weichai Group, believes that compared to the passenger vehicle industry, domestic brands have complete control over the commercial vehicle industry, and commercial vehicles have significantly higher fuel consumption and are more expensive than ordinary passenger cars. Therefore, if the government concentrates its financial and material resources on breakthroughs in new energy technologies for commercial vehicles, it may have greater technological feasibility, scientific validity, and market value.
Battery shortcomings
High battery prices are a key factor hindering the marketization of electric vehicles. A research report from CITIC Securities shows that, considering a government subsidy of 120,000 yuan, if the battery price drops to 2,500 yuan/kWh, the additional purchase cost can be recovered in 4.5 years, making it somewhat economical. Without subsidies, even if the battery cost drops to 1,500 yuan/kWh, it would still take 13.6 years or 200,000 kilometers to recover the additional purchase cost, making it less economical.
Slow charging and poor driving range are other factors hindering consumer acceptance of electric vehicles. Karsten Engel, President and CEO of BMW Group Greater China, believes that electric vehicles will only become truly widespread when battery technology advances further to achieve a driving range of 300-400 kilometers, while charging time is also shortened.
The sharp drop in value after battery degradation can also affect users' willingness to buy cars. "The BAIC electric vehicle batteries currently used by Yika Company cost 100,000 yuan. After five years of use, they degrade and can only be used as energy storage batteries, with their value shrinking to 5,000 yuan," Zhan Jingjing, general manager of Beijing Yika Car Rental Co., Ltd., told a reporter from China Business Journal.
With the entry of Tesla electric vehicles into my country, ternary lithium-ion batteries, known for their high energy density and long range, are gradually becoming the mainstay of domestic batteries, replacing lithium iron phosphate batteries. This could lead to a reshuffling of my country's electric vehicle battery industry. Wang Binggang, head of the expert group for the supervision and consultation of the Ministry of Science and Technology's "863 Program" major project on energy conservation and new energy vehicles, has publicly stated that the development of lithium iron phosphate batteries has reached a bottleneck, and ternary lithium-ion batteries represent the historical trend in the development of power lithium-ion batteries for new energy vehicles. Domestic automakers such as JAC, Chery, and BAIC have keenly recognized this shift and have begun experimenting with ternary lithium-ion batteries.
However, Tong Zhiming, general manager of Microvast Power, told a reporter from China Business Journal that ternary lithium-ion batteries are more suitable for private cars with long single-trip driving range and low total lifespan requirements. For taxis and buses with a total mileage of 600,000 kilometers, the replacement cost is too high and the safety is not as good as lithium iron phosphate batteries.
To address this, Chongqing Hengtong Bus Co., Ltd. (hereinafter referred to as Hengtong Bus) chose a different battery technology route: lithium titanate batteries. Deng Ping, General Manager of Hengtong Bus, told a reporter from *China Business Journal* that lithium titanate batteries have two major advantages: fast charging and slow charging. First, they charge quickly. Lithium titanate batteries can be charged in 10 minutes, more than 20 times faster than lithium iron phosphate batteries. Second, they degrade slowly and have a long lifespan. Lithium titanate batteries only degrade to 80% of their capacity after 15,000 cycles, with an actual lifespan of 6-8 years. In contrast, lithium iron phosphate batteries degrade to 80% after 1,000 cycles, with an actual lifespan of only 2-3 years.
Since April 2011, Chongqing Public Transport has put 31 lithium titanate fast-charging buses into service. After three years of use, all of these buses are currently operating normally, with battery degradation of less than 3%. London Buses has also ordered 1,000 sets of lithium titanate bus batteries.
However, in September 2013, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the National Development and Reform Commission jointly issued the "Notice on Continuing to Promote the Application of New Energy Vehicles," which stipulated that the maximum subsidy for pure electric buses of 10 meters and above remained at 500,000 yuan, while the fixed subsidy for supercapacitor and lithium titanate fast-charging pure electric buses was 150,000 yuan. This 350,000 yuan subsidy difference rendered lithium titanate fast buses uncompetitive in terms of price.
This regulation has also been questioned by some industry insiders. Tong Zhiming believes that most electric vehicles in China currently use lithium iron phosphate batteries, and many places have invested heavily in building battery production companies. Lithium titanate buses have significant advantages in cost and performance, and their widespread adoption would infringe on the interests of these companies. However, the essence of subsidies should be to support good technological approaches, not to provide a shield for outdated technologies. Deng Ping stated that the current one-time national subsidy of 500,000 yuan is insufficient; who will be able to afford the subsidies after lithium iron phosphate batteries become obsolete? The current battery leasing practices of bus companies, while ostensibly reducing their burden, are actually transferring costs. When tens or hundreds of thousands of electric buses are phased out in the future, won't the billions of yuan in national subsidies be completely wasted?
Furthermore, the recycling of batteries after the widespread adoption of electric vehicles is a major challenge. However, since electric vehicles are not yet widely used, large-scale battery recycling has not been prioritized, and a complete market chain has not yet been established.
