Better Place inks Chinese electric vehicle deal

Electric vehicle infrastructure firm Better Place announced yesterday that it is to work with China's biggest independent automaker to develop new technology for the burgeoning Chinese electric vehicle market.

The company signed a memorandum of understanding with Chery Automobile Co that will see the two firms jointly develop switchable-battery electric vehicle prototypes with the goal of carrying out pilot infrastructure projects on behalf of the government.

The announcement comes after the Chery exhibit at the Auto China 2010 last week featured a demonstration of Better Place's electric vehicle charging and battery-switch technology displayed with a Riich G5 sedan.

Any partnership is likely to extend the number of cars Better Place can offer that are compatible with its innovative batter swap recharging model. The company already has a major global deal in place with the Renault-Nissan alliance, which will provide the first battery swap compatible vehicle in a number of pilot markets, but in the long term the company is likely to need a number of automotive partners to support its recharging infrastructure.

China is the world's second largest consumer of oil behind the US and the government is increasingly concerned about air pollution and reliance on foreign oil imports. As a result government officials are keen to establish the nation as a major player in the electric vehicle market, but to date the high cost of vehicles and lack of infrastructure has delayed adoption.

The Chinese government had been scheduled to announce subsidies for low carbon vehicles in January, but according to recent reports in the China Economic Times the decision will now not be made until July.

However, increased adoption of electric vehicles seems inevitable and research recently carried out by HSBC predicts that the nation's share of the global EV market will grow from 2.7 per cent this year to 35 per cent by 2020, overtaking Japan by 2016 and the US by 2019.

Dan Cohen, vice president of strategic initiatives for Better Place said that with only two per cent of China's population owning cars and 80 per cent of sales in 2009 to first-time car buyers, China is in the perfect position to build an electric car infrastructure before the use of conventional vehicles becomes too entrenched.

"With the scale of Chery's design and manufacturing capability and an industrial policy that favours electric vehicles over the internal combustion engine, we believe China represents an unprecedented opportunity for Better Place," he said. "Our collaboration with Chery is just the beginning for Better Place in China."

Better Place is already building networks in Israel, Denmark and Australia and raised $350m in January from a consortium led by HSBC and Morgan Stanley Investment Management.