China charges into electric cars

Fortune: China charges into electric cars

… China has just launched an Apollo moon shot of sorts: The government recently decreed that 5 million electric cars will be traveling the nation's roads by 2020 — up from basically none today. According to banking giant HSBC, that will equate to 35% of the global electric-vehicle market.

What that means is that China, which last year rocketed past the U.S. as the world's largest market for new-auto sales, is also determined to become its most innovative. As part of the country's 12th five-year plan (2011–2015), Beijing has pledged that it will do whatever it takes to help the Chinese car industry take the lead in electric vehicles (See: China vs. the U.S. in electric vehicles). (Its long-term plan also calls for building bullet trains, subways, and electric buses to alleviate traffic congestion.) "The Chinese are trailing in the development of internal-combustion engines," says Bill Russo, a senior adviser at Booz & Co. in Beijing who covers the car industry. "They figure, Why not leapfrog that technology and become a dominant global purveyor of battery-powered vehicles?"

Building an electric-car infrastructure won't be easy. Vehicle makers must work with a jumble of different players — from the utilities, which will provide the power and smart-grid networks, to local governments, which will provide public charging stations. Standards must be set. But China, an authoritarian state, is particularly well positioned to help make the electric car a reality. "China's government is supporting electric-car technology more than any other country on earth," says Kevin Wale, head of GM China Group. …