China needs to boost sales of range-extended electric vehicles, rather than focus too heavily on pure EVs, according to McKinsey.
In a study of the Chinese EV market, the strategy consultants say it will be at least 10 years before pure EVs become a commercially attractive alternative to combustion-engine-powered cars. EVs with range extenders, on the other hand, could be a competitive proposition as early as 2014.
McKinsey talked to decision makers in industrial companies in China as well as associations, government and universities for its study.
The consultants note that the Chinese government is committed to boosting electric vehicles to reduce dependence on foreign oil and lower CO2 emissions. But they also cite relatively disappointing results so far, with a mere 6,700 EVs sold since 2009.
"That doesn't even come close to the plans of the government to put a half million EVs on Chinese streets by 2015," said Axel Krieger, a McKinsey partner based in Beijing.
The consultants found that 80 pc of those polled blamed a national fixation on the development of pure battery-powered EVs for the slow start. Krieger said the government has prematurely committed itself to its goals and "needs a new EV strategy."
The McKinsey consultants found that 90 pc of decision makers interviewed agreed that, until now, China had not managed to build sufficient domestic expertise to make a reliable battery-powered EV.
An alternative strategy aimed at boosting range-extended EVs would be easier and faster to realize, McKinsey said. "Compared with pure battery-powered EVs and hybrid vehicles, this technology can be managed more easily and cost-effectively," McKinsey said. That plays to the strengths of the domestic car industry, it added.