byd-logo.jpgCould China's nascent car industry one day surpass that of Germany? In the long run, the answer is undoubtedly yes. But that day may arrive much quicker than many think if we frame the question in terms of strategic vision rather than simply counting cars.

What got me thinking was this story in Germany's Der Spiegel that questions the green credentials of the country's generous scrap-a-car scheme. Germany is effectively subsidising its car industry to the tune of €2,500, which is the so-called “environmental bonus” that German car buyers get if they scrap an old vehicle for a new one, which is only moderately less polluting than the one being scrapped.

Germans being Germans, the majority of those new cars are likely to be BMWs, VWs, Audis and Mercedes, so boosting the German economy and keeping Germans employed in car factories.

Germany gave birth to the motor car — or so it likes to think — and given the strength and maturity of its industry, it seems strange that the German government feels the need to subsidise giants like BMW and German consumers to use technology of the last century — the internal combustion engine — rather than a technology with a cleaner and brighter future.

China, the US and the UK have all realised that the electric car is much less environmentally aggressive than the internal combustion engine and offer big subsidies to car buyers who switch to this cleaner form of transport.

Critics may question how effective the measures are and whether electric cars are yet ready for prime time. But there is no ignoring the groundswell of environmental consciousness such that, in five or ten years time, electric cars are going to be a common sight on the roads of these countries.

“In the next five to 10 years we will see big changes. Electrification will happen much sooner than people expect,” says Henry Li,general manger for exports at BYD, China's best-known maker of electric cars.

But not in Germany, apparently. The country has encourage research into electric vehicles and does offer a tax exemption for electric vehicles, but the saving adds up to a derisory €140. Given that electric vehicles still command a hefty premium over conventional cars, that is unlikely to sway too many Germans to vote with their heart instead of their pocket-book and buy green — or encourage German carmakers to pay more than lip-service to electric cars.

The contrast with China, normally seen to be a laggard when it comes to environmental awareness, could not be starker. In China, motorists get the equivalent of over €6,700 to buy an electric vehicle. Der Spiegel notes:

The People's Republic pays the highest electric car subsidies in the world in the hope that a rapid uptake of the technology will give a competitive advantage to domestic electric car manufacturers like BYD. The deputy finance minister, Zhang Shaochun, rejects lavish research grants. A direct subsidy, he says, gives consumers a choice and means that the market decides which electric cars are successful.”

The newspaper argues that Germany should take a leaf out of China's green book and direct its current subsidy to stimulate a new car industry based on electric technology. Otherwise, it is likely that the only electric vehicles to be seen on Germany's roads will bear a Made in China sticker.

More on BYD and its plans to enter western car markets here. More on China's amibitions to be the largest producer of electric vehicles in this New York Times story.


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