China’s top automaker SAIC (Shanghai: 600104) is talking up its alternate energy vehicle strategy and, in a surprise to no one, is saying it has big plans to make electric, hybrid and fuel cell vehicles. (English article) I won’t go into too much detail here, but the highlights include plans to launch mass produced electric cars and a hybrid plug-in next year, and a mass produced fuel cell vehicle in 2015, all relying heavily on government subsidies to boost sales. I thought that people had given up on fuel-cell vehicles, but it looks like SAIC still thinks it can succeed in this area where no other major car maker has done so. But what caught my eye more than this ambitious plan is that SAIC says Shanghai is going to fully support its campaign, with plans to build out major charging infrastructure in the city. This kind of tie-up is intriguing, because local government support could greatly improve chances of success for these alternate energy vehicles. The only other car maker I know of that has similar local support is BYD (HKEx: 1211), whose hometown government in the boomtown of Shenzhen is already helping to build out infrastructure to support its electric car roadmap. This kind of government-automaker tie-up in a major market like Shenzhen or Shanghai is intriguing because governments can supply not only infrastructure but are also major vehicle buyers and are likely to lend support in this area as well. But all that said, these companies still have to prove they can build an effective, reliable product to really succeed in this space.
Bottom line: Support from their local governments will boost SAIC’s and BYD’s chances of success in their green car initiatives if they can build reliable products.
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