China, Taiwan Auto Industries Plan Cross-straits Cooperation

At an auto show held in Taipei last December, China's Chery Automobile unveiled 10 new sedan models for the first time. These models included, among others, the Apolo hybrid and three electric cars—the Fresh, Awin, and M1 EV.

The show's spotlight was also on several Panda models from Geely Automobile. The Pandas were displayed next to the new Luxgen brand of Taiwan's Yulon Motor, which had just reached a partnership deal with Geely.

This was the first time that China-made cars were displayed at the Taipei auto show, which is targeted at the domestic market in Taiwan. In fact, Yulon will soon bring Geely's Panda into Taiwan and present the car as the first commercially produced electric vehicle, the “tobe” M'car, on the island. This was made possible by an MOU (memorandum of understanding) signed with Geely during a Cross-straits Auto Conference held in Taipei last November.

Under the MOU, Yulon will assemble the Panda as the tobe M'car in Taiwan. All of the parts will be shipped from Geely's China-based factory except for the battery, which Yulon has developed on its own. Meanwhile, Yulon will set up an assembly line for its Luxgen in China's Hangzhou City, near Geely's factory, providing easy access to Geely-supplied auto parts.

Auto Conference

　　

As Taiwan's largest auto conglomerate, Yulon is considered one of the companies that will benefit most from the November auto conference, which brought together hundreds of top auto executives from both sides of the Taiwan Straits and was the most important event of its kind ever held in the Greater China area.

The conference was jointly organized by the Taiwan Transportation Vehicle Manufacturers Association (TTVMA) and the China Association of Auto Manufacturers (CAAM). It was co-sponsored by major Taiwanese auto-related organizations such as the Taiwan Automotive Research Consortium (TARC), the Mechanical and System Research Laboratories (MSL) of the Industrial Technology Research Institute (ITRI), the Automotive Research and Testing Center (ARTC), the Chung-Shan Institute of Science and Technology (CSIST), and the Metal Industries Research and Development Center (MIRDC), in addition to about 120 private auto makers and suppliers in Taiwan and China.

In addition to top executives of almost all major Chinese auto companies, the conference was attended by representatives of the Beijing industrial authority and office in charge of Taiwan affairs.

The conference marked a milestone in the cross-strait auto cooperation, with representatives from the two sides signing several MOUs calling for joint efforts in various fields, including electric vehicles, automatics, and auto testing.

This kind of cooperation will bring benefits to both sides, given their complementary industrial structures. Taiwan is competitive in auto ICs, electric motors, and batteries, while China has a vast market potential that provides a sound foundation for the development of Chinese auto brands. The mutual-benefit effect is most apparent in the field of EVs.

　　

Chinese EVs

“The electric vehicle (EV) is one of the best areas for cross-strait auto cooperation, in light of the great potential for China to take global leadership in this field,” said TTVMA Chairman Chen Kuo-rong. “Taiwan is good at all the three key parts of an EV: auto ICs, electrical systems, and batteries.”

Having engaged in EV-related research for many years, Taiwan is especially good in such fields as battery anode materials, lithium-ion power cells and battery packs, electrical control, server motors, and EV assembly. “One of the focal points of the cross-straits automotive conference was how to leverage Taiwan's advantages in the EV line to bring a win-win result for parties on both sides of the Taiwan Straits,” Chen commented.

China is now ranked among the world's three biggest auto-making countries, and its next step is to develop globally recognized auto brands of its own. Most of the country's major auto companies were each set up with a foreign partner to provide for technology transfer. Those companies made co-branded cars, but it is now time for them to develop their own brands.

While the massive growth potential of China's auto market has caught the attention of the world's leading automakers, China is now planning to develop competitive auto brands to attract the attention of the world's consumers. The emerging EV is considered an ideal niche where the Chinese can take global leadership, and cross-straits cooperation offers a short cut to that goal.

Government Endorsement

EVs will be developed with government support on both sides of the straits. Both China and Taiwan have given priority to the development of EVs in the coming years, and China has pinpointed 13 cities as model electric transportation vehicle development areas for the initial years of its national electric car promotion plan.

In pursuit of that plan, commented Minister of Science and Technology Wang Gang, “China will continue to advance its key electric car technologies on one hand and accelerate the construction of related public facilities on the other.”

China is expected to have over 60,000 electric cars on its streets and highways by 2012. The demand for EVs in China, Wan stated, ranges from large passenger cars to small sedans, and automakers there will develop all kinds electric cars to fill that demand. “China has been engaged in the development of electrical standards and legal system for EV promotion,” Wan reported, “through cooperation among academia, the corporate sector, and government agencies.”

In Taiwan, the Executive Yuan mapped out a two-phase EV promotion plan last December and expects to put it into effect this year.

In the first phase, government agencies will purchase 3,000 EVs and designate 10 trial areas for EV implementation in the next three years. If all goes smoothly, EV promotion will be expanded to the entire island during the second phase, which is to run from 2013 to 2015.

Meanwhile, the Ministry of Economic Affairs (MOEA) may offer subsidies of up to NT$300,000 each for the purchase of EVs to buyers.

The two-phase EV plan is part of the government's policy of promoting the EV as another major Taiwan industry. EV production value is targeted at NT$120 billion in 2015, including NT$90 billion worth of assembled vehicles NT$30 billion worth of batteries, motors, and other key components.

The ECFA Effect

The Economic Cooperation Framework Agreement (ECFA) scheduled to be signed between China and Taiwan sometime this year is commonly regarded as critical to the development of closer auto industry links between the two sides of the straits.

The ECFA may benefit the auto industry, first, by providing an annual zero-tariff import quota of 100,000 automobiles for each side. This will create a channel that Taiwanese automakers can use to find new business opportunities in the massive Chinese auto market.

Zero tariffs will be applicable not only to the auto industry, but also to associated industries such as wireless communications, auto PCs, GPS, and auto panels, among others.

In fact, the auto industry was the first of all industries to express full support for ECFA. China's Chery and Geely have introduced their new auto models in Taiwan, and are thinking about setting up auto assembly lines on the island. And, in Taiwan, most big domestic automakers are working out marketing and division-of-labor strategies for business expansion in the Greater China area.