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Reuters Summit-China seen as potential electric car hub
07 Oct 2008 21:34:57 GMT
 Source: Reuters
(For other news from the Reuters Global Environment Summit, click on http://www.reuters.com/summit/GlobalEnvironment08?pid=500) (Adds quotes, background)

By Braden Reddall

SAN FRANCISCO, Oct 7 (Reuters) - The head of Johnson Controls Inc's <JCI.N> battery unit believes China could adopt electric cars faster than elsewhere because of its size and comparative lack of reliance on gasoline for transport.

Alex Molinaroli, president of the Power Solutions unit, said China's government would likely lead the way through policy to provide vehicles to the many among the country's 1.3 billion people who now rely on bicycles and scooters.

"The next step up from that is going to be some sort of vehicle, (but) it may not be a vehicle that would be acceptable in both Western Europe and the U.S.," Molinaroli told the Reuters Global Environment Summit on Tuesday.

"They can't go everywhere on a bicycle, and they all can't afford a $20,000 to $30,000 vehicle, but they have to move people around."

Molinaroli expects to see golf cart-like vehicles, which would not be allowed on U.S. roads, driven in China, where his unit has a Shanghai technical center and development deals with carmakers SAIC Motor Corp <600104.SS> and Chery Automobile Co.

"They'll look a lot different, the vehicles there, but it's going to put scale around a business much quicker there than it would in other parts of the world," Molinaroli said, adding that India should also lead the way given its population and recent developments in its auto industry.

"If one in 100 folks around the world end up in electric vehicles, just the sheer numbers say that China and India will have a real place in it," he said in a phone interview.

He pointed to the Nano, a four-seater unveiled by India's Tata Motors Ltd <TAMO.BO> this year that will be the world's cheapest car, in the $2,000-plus range. While it was not electric, it showed how cars in China and India could be produced under dramatically different cost structures.

He said Warren Buffett agreed with his take on the electric potential of emerging markets, based on the recent purchase of a 10 percent stake in Chinese battery maker BYD <1211.HK> by a unit of the investment guru's Berkshire Hathaway <BRKa.N>.

Molinaroli said another advantage in China was the fact that the country had relatively fewer gasoline stations for a new electric car infrastructure to compete with, adding: "They don't have a legacy cost chasing them around."

Johnson Controls, which has a joint venture with France's Saft <S1A.PA> to produce lithium-ion batteries for hybrid cars, made $4.3 billion in fiscal 2007 revenue from batteries, though little of that is from the developing hybrid battery business.

Eventually, in addition to the European plant, Molinaroli expects to produce batteries at facilities near customers in North America and China.

But he played down the potential for teaming up with Korean or Japanese battery makers. "We certainly know that the Koreans and Japanese are formidable competitors," he said. "But day in, day out, we wouldn't look at them as the most obvious logical next partner." (Editing by Gerald E. McCormick, Richard Chang)


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Last updated:Tue Oct 7 21:37:06 2008