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Electric bikes: China’s development of a low-cost, efficient energy solution holds a lesson for India

Feb 9, 2012, 04.26AM IST

Over the next decade, a slew of subsidies and policy measures - subsidised land and monetary grants - propped up the industry. Consumers got cash incentives. The subsidy was hiked repeatedly when new and powerful models were introduced and was upgraded last year to a maximum of 3,000 yuan for a 1,000-watt two-wheeler costing up to 10,000 yuan.

There was no need for registration of the electric two-wheelers and no licence requirement for the buyers. This made it popular and user-friendly for students, women, and the aged because it was a low-cost, low-speed, but power-assisted, vehicle.

The big boost to the industry came, however, when several cities started to ban conventional motorbikes ran on fossil fuels. Though criticised as an extreme step, it ensured that every manufacturer moved into the production of electric vehicles in China.

Lithium Batteries

China also invested heavily on the backend components and is the world's leading producer of electric controllers, DC motors, miniature circuit breakers, brushless motors, batteries and chargers.

Its sovereign fund, China Investment Corporation, made sizable investments in lithium mining and processing units in China, Chile, Argentina and Australia, and controls 70% of the global supply. In 2007, it introduced two-wheelers powered by lithium ion batteries that gave a higher speed as well as longer life.

A new product category of electric scooters rapidly became popular that catered to the more sophisticated user byoffering a higher speed of 50 kmph and longer charge life of 80-100 km. As speeds rose, so did the number of accidents. Some municipalities like Shenzhen have banned the electric two-wheelers for sixmonths with the intent to introduce registration and licensing for higher-powered ones.

Global Competition

Meanwhile, the advent of high-speed units and the hybrid version powered by lithium and lanthanum batteries have also spurred interest of global majors. Yamaha, Honda, Suzuki, Peugeot, BMW and Volkswagen are all readying new models that will hit the market this year.

At Delhi's Auto Expo 2012, Indian manufacturers Hero Electricals, Lohia Auto and TVS Motor also displayed both electric-driven as well as hybrid versions. However, the huge subsidy support and scalable volumes of China may be difficult to match for Indian producers.

Considering that there is no support infrastructure like bicycle lanes throughout the nation, the future and growth of the Indian market looks less certain, unless the government becomes proactive.

With the global demand growing rapidly, it may take a few years for others to catch up with the Chinese who have developed infrastructure and a huge domestic demand. China expects to produce 75 million units per year by 2020, with 500 million electric two-wheelers on road.

This will mean that a third of China's population will be empowered with their personal transport for daily commuting and would not need state-funded subsidised mass transport. The electric two-wheeler may be ultimately a major trump card for China's working class that would have access to low-cost eco-friendly personal transport for commuting to work at China's global factories.

(The author is an analyst and commentator)