A New York Times article tonight reports that China intends to become a world leader in electric and hybrid cars:
Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.
The goal, which radiates from the very top of the Chinese government, suggests that Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today….
To some extent, China is making a virtue of a liability. It is behind the United States, Japan and other countries when it comes to making gas-powered vehicles, but by skipping the current technology, China hopes to get a jump on the next.
The article then goes on to discuss the advantages (cleaner air) and difficulties (lack of public recharging centers, consumer worries about the safety of lithium ion batteries, disincentive of current cheap oil prices).
However, it fails to mention Detroit was once a leader in this technology.
I did a study on advanced batteries, visited Detroit, and drove an electric car made by a GM consortium in 1993. At the time, there was a mandate in California as well as the Northeast scheduled to come into effect in a few years to have 2% of cars sold be electric. Now the idea of forcing a sales goal seems silly, unless you had some obvious targets. The early vehicles were best suited for city use (no worry about your car running out of juice on the interestate), so public transport, delivery services (think the Post Office, UPS, Fedex) and government fleets were logical buyers. But the states did nothing to help create a market.
GM spent over $1.5 billion manufacturing and marketing the EV1, its electric car, despite its ambivalence (at least when I was investigating, which prior to the 1996-2000 opportunity to lease the car in Arizona and California). GM did costly consumer marketing in those states, despite being able to manufacture only 600 cars a year. California also welched on its promise to lease electric cars and trucks in meaningful numbers and wouldn’t install public chargers.
Another issue was the batteries were not ready for prime time (I had looked at all the competing technologies adn recommended against investment for that reason and the lack of enthusiasm for the iniative). Batteries don’t do well in the cold. And electric engines don’t throw off heat the way an internal combustion one does, so the early EVs had small gas fired heaters to warm the passenger area.
However, success also depends on commitment to overcome obstacles, and GM had already divested key bits of relevant technology BEFORE the EV1 launch. Which begs the question, how hard were they really trying to make this work (for instance, did they press the California government when it started waffling?).
We have ceded leadership in battery technology to Asia, and reader Keenan pointed out, also the know-how for the related drive trains:
h torque DC servomotors are the sine qua non for electric vehicles.
High torque performance is achieved via magnets made of alloys of various so called “rare earth” elements. Prominent among the alloys are samarium-cobalt and neodymium-iron-boron. GM held a majority interest in Magnaquench, an Indiana company with expertise in such materials and magnet fabrication. GM however decided that electric motors did not fit into its “core competencies.”.
While the article highlights the aspects of defense technology, the commercial / industrial side of the business is every bit as important in today’s world of economic warfare.
Magnequench had a unique expertise in the manufacture of high-powered neodymium magnets, which it pioneered in the 1980s for its parent company, General Motors, to use in airbags and mechanical sensors. When GM restructured in the early 1990s, the company began to divest itself of subsidiaries that were not in its “core competence.” Magnequench, in spite of its high-tech pedigree—and the fact that it provided critical component parts to “precision guided munitions” that were then in great demand by the U.S. Department of Defense—was put up for sale.
Reportedly, Magnequench supplied 85 percent of the neodymium magnets used in servo motors for PGMs, but neodymium magnets are far more important and ubiquitous than their use in advanced weaponry might suggest. They are the sole reason high-speed, high-capacity computer data storage devices can work. They are found in literally every computer in the world, and in 2004, Magnequench, together with its merger partner NEO Material Technologies (and its integrated Chinese joint-venture partners), supplied about 80 percent of the world market share of neodymium and rare-earth oxide powders used in those magnets.
So when GM put Magnequench on the block in 1995, who should come up with the $70 million asking price? An investment consortium headed by Archibald Cox Jr. (son of the illustrious Watergate prosecutor) acting in concert with two Chinese state-owned metals firms, San Huan New Material and China National Nonferrous Metals Import and Export Company (CNNMIEC), which had been pestering GM to sell Magnequench since 1993.…
Magnequench’s Chinese owners cleverly reinterpreted the CFIUS conditions. One Magnequench employee reported that shortly after the Chinese took over, Magnequench’s neodymium-iron-boron magnet production line was “duplicated in China” and that, after the Chinese “made sure that it worked, they shut down” the U.S. production in Indiana. The employee added, “I believe the Chinese entity wanted to shut the plant down from the beginning. They are rapidly pursuing this technology.”
So this vignette reveals the degree to which Detroit helped seal its own fate. It went along with the electric car mandate fully hoping its 2% goal would make it a non-starter (that was the line I heard, anyway, that the cars would be costly enough that the target was pretty certain to be unrealistic) and played the game out, rather than try to influence the legislation so as to get a program that might be viable for the states as well as the carmakers.