Those seeking to create multibillion dollar businesses in electric vehicles, their components, intellectual property and services should look at the world’s largest market – Asia. This region of the world purchases about 56% of the global market value of electric vehicles for land, sea and air and it will still be doing that in 10 years time. For Western companies to take this huge opportunity seriously, they first need to slay six myths.
Myth 1. It is all about cheap labour and the West cannot compete with that. The truth is that, although few in the West can compete with basic e-bikes made in China, most electric vehicles are not sold on price.
Total global production of the Toyota Auris hybrid car will be in the UK, with the cars shipped from there into Asia. Kongsberg of Norway sells Autonomous Underwater Vehicles (AUVs) into South Korea and elsewhere in Asia, for search and rescue, underwater repair, surveillance etc. They use those new lithium polymer traction batteries and electric motors that are increasingly popular in electric cars and aircraft and they cost up to US$5 million each.
The IDTechEx report ‘Traction Batteries 2010-2020’ discusses how North American traction batteries from Electrovaya, EnerDel and A123 Systems are being sold into India and China and elsewhere in Asia – even to the leading EV manufacturers such as SAIC and Tata.
Myth 2. They steal your intellectual property then destroy you by making cheap versions of your EV or component. The truth is that, although trading with China needs care, at least 25% of Asia’s EVs will be made in India in 10 years from now and Japan may remain the largest Asian market for electric cars, mobile robots and much else besides.
In India and other parts of Asia, there is a stronger tradition of ongoing collaboration with Western companies to mutual benefit and many successful deals have already been done. For example, India is busily licensing and collaborating with the West to get traction battery technology in order to compete more effectively with China. The French-Japanese Renault Nissan alliance is a world beater.
Myth 3. There are no opportunities for investment in successful Asian EV companies. The truth is that Warren Buffet’s Berkshire Hathaway in the US made US$1 billion paper profit in one year from its investment in BYD Auto, the Chinese electric car maker.
Myth 4. You cannot get a good price if you try to sell your business to an Asian company. The truth is that Geely of China paid a full price for Volvo and Manganese Bronze, the London taxi company and Tata Motors bought Jaguar Land Rover for a generous US$2.3 billion just before the recession hit.
Myth 5. Asians do not innovate so they do not need new ideas. The truth is that, with the major countries of East Asia losing their cheap labour, they desperately need to innovate to succeed.
India has the first LNG hybrid electric bus and the first solar rickshaws, China has the first long range pure electric car and saleable pure electric sports plane. South Korea is progressing with cars that capture inductive power from the road and it has a pneumatic hybrid. The Japanese Prius series parallel hybrid power train remains unique as do the Honda U-3X hand held bike, its mobile home robots and much else in Japan. They all eagerly seek to buy or license good ideas.
Myth 6. You cannot get investment from Asia. Well, just note that Coda electric car company in the USA has just received a US$294 million line of credit from the Bank of Tianjin Joint Stock Co. In China and there is a steady stream of Asian organisations taking both minority and majority positions in Western EV and EV component companies.
Under reported
One problem has been that the situation in Asia has been rather opaque to Western eyes. There has been no analysis of Asian demand for all EVs – land, sea and air – and no forecasts of what to expect in the next ten years. Western media report little about the region, beyond the product launches of the largest participants. Even that is highly oriented towards cars, which are only half the market and by far the toughest sector in which to make profits. Most of the aspiring participants in the EV business, whether with vehicles or their components, should be looking at cars last not first.
IDTechEx now provides free daily EV information interpreted by experts. Uniquely, it includes at least as much about Asia as about the West. It is called Electric Vehicles Research www.idtechex.com/evr.
For those wishing to grasp the global scene, with East Asia taking its appropriate part, IDTechEx is staging an event “Future of Electric Vehicles” in San Jose 7-8 December 2010. Unlike other electric vehicle events, it will cover land, sea and air EVs, concentrating on future breakthroughs worldwide.