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Foton's electric delivery van
 
Will electric trucks help China achieve its EV ambitions?
Reuters | 2018/11/20

Having just broken ground for a factory in the southern Chinese province of Hunan, the head of electric vehicle startup Singulato Motors has grand plans: Build up to 50,000 electric vans per year and ride the crest of a wave for e-truck demand in China.

For a growing number of automakers operating in the world's biggest vehicle market, it's time to invest in electric vans and trucks. They're convinced by increasingly stringent restrictions intended to rein in pollution, generous subsidies as well as robust demand for light-duty trucks as e-commerce flourishes.

"We think China's about to see an electric commercial vehicle revolution," Singulato co-founder Shen Haiyin said in an interview. "In many ways, the EV future might arrive faster with commercial vehicles than passenger EVs."

Singulato, which plans to launch its first electric car by the middle of next year, hopes to open the e-truck plant by 2020 and quickly ramp up annual output to 50,000. Shen envisions two main models that would appeal to e-commerce and logistics companies: a small intracity delivery van the size of the Ford Transit or the Toyota Hiace, and a delivery truck under 2.2 tons.

Growing momentum for e-trucks could prove to be a tipping point for the EV, first in China and eventually worldwide -- encouraging the mass adoption that Tesla Inc. and other EV makers are trying to give rise to with cars.

"It's a new game," said Bill Russo, head of Shanghai consultancy Automobility and a former Chrysler executive. "The advantages of electric vehicles become apparent when vehicles are deployed into transportation and logistics services fleets."

Cheaper to operate
Impediments that come with EVs, such as the high cost of the battery and cumbersome charging needs, could with a truck fleet be erased to make the total cost of operation cheaper than gasoline or diesel.

Batteries could be designed smaller because routes would be predictable, charging stations and schedules could be deployed more strategically and as trucks are often operated around the clock, economies of scale could be achieved, Russo said.

Foton, part of BAIC Group and China's biggest maker of light-duty trucks under 6.6 tons, is also looking at expanding further into electric delivery vans, people with knowledge of the matter said.

In August, a group of Foton officials gathered in a small spartan office in a low-rise building near Tokyo's posh Ginza district. Eager to develop a compelling mini delivery e-van, they had come to seek advice from a highly regarded engineer, now retired from a Japanese automaker.

The officials, who believed that Japan's minicar technology could offer a good base for a low-cost van, wanted his input on how to design one that could be sold for as little as 50,000 yuan ($7,225), according to two people who were at the meeting.

"That was a second visit since late last year," said one of the two people, who spoke on condition of anonymity. "They're serious," he said.

Nissan sees growing demand
A representative for Foton declined to comment. Foton has some electric commercial vehicles on the market but volumes are still tiny with around 800 sold last year.

While electric trucks may not grab the public imagination in the same way Tesla's EVs have done, their advent has long been advocated by many auto experts.

Skeptical of the merits of the industry's rush into long-range cars, they believe battery electric technology, because of its heavy weight and the limits on driving ranges, has a more natural home in short-haul trucks. That's particularly so for intracity delivery vans and trucks plying routes that are pre-determined or at least predictable.

Last year, the number of electrified light-duty commercial vehicles -- both full-electric and plug-in hybrids -- sold in China was roughly 200,000, about 6 percent of the market for trucks under 6.6 tons.

Nissan Motor Co., one of the first global automakers in China to develop an e-truck lineup through its venture with Dongfeng Group, believes that demand for light-duty e-trucks will quadruple in four to five years. Its joint venture with Dongfeng is seeking to lift its electric commercial vehicle sales six times to 90,000 by 2022.

Nissan's partner Renault is also on the case. Its new venture with Brilliance China Automotive Holdings plans to launch three electric delivery vans in two years, starting next year.

Allowed in city centers
Warren Buffet-backed BYD and Geely also have some electric trucks and vans on the market, although volumes are small.

Growth in e-trucks fits with efforts by Beijing and Chinese local authorities to promote EVs -- both to jump-start a domestic auto industry that lags global rivals in internal combustion engine technology and to combat smog -- a constant source of public discontent.

Subsidies, up to 100,000 yuan from the central government alone, are helping to propel the shift. Nissan's most popular electric commercial vehicle, the Dongfeng D94 van, is eligible for combined subsidies of up to about 80,000 yuan from the central government and regional authorities, knocking roughly a third off its purchase price.

Nearly two dozen cities including Beijing, Shanghai and Guangzhou have put in place restrictions on fossil-fueled trucks coming into city centers. Beijing, for instance, last year banned heavier trucks from entering the city center between 6 a.m. and 11 p.m. and next year will place further limits on diesel and some other commercial vehicles.

"We're betting on the e-truck because pretty soon only e-truck and e-vans will be allowed to enter city centers," a Nissan China executive said, declining to be named because as he was not authorized to speak publicly on the matter. "With the continued rise of e-commerce, we see a bright future in electric delivery vans."


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