Elysium, China and the Electric Car Question

China Elysium
China Elysium

 

On the long flight back from China to New Zealand recently, one of the films I watched was Elysium.  The sci-fi thriller probably won’t make my top-10 list, but some of the content felt disturbingly close to home.

 

Although earth in Elysium was depicted as a polluted and overpopulated Los Angeles in 2154, it had elements of the way China is going right now, as the air and water pollution seem to be getting worse every year.  The luxurious space habitat that the earthlings wanted to escape to, reminded me a little bit of New Zealand – although with slightly better looking inhabitants and a far superior health system.

 

A recent McKinsey poll in China, found air and water pollution to be Chinese consumers’ fastest growing concerns – 11% and 7% up on last year – and the forth and fifth biggest concerns overall.  Interestingly, the concerns were confirmed by a recent report by the Shanghai Academy of Social Sciences, claiming that Beijing was almost uninhabitable for human beings due to the pollution. Whether or not these claims are ‘exaggerated‘, as reported by Chinese state media, the pollution appears to be getting even worse, not better, based on both official reports and my personal experiences, particularly in Shanghai.

 

Although much of the polluting industry in and around Shanghai has been forced out due to regulation and the high cost of operating in the city, one of the other major polluters, cars, appears to be stepping up to fill the gap.

 

Chinese consumers are going to buy more cars.  As recently as 1990, there were just 5.4 million cars on the road in China.  Now more than 20 million are sold a year. As China gets wealthier, it is only going to play catch up – in 2012 there were 8.3 cars for every 100 people, versus almost 80 per 100 in the USA.   It isn’t fair for Westerners, many whom zip around smugly in their wagons, to expect Chinese to stop buying cars like, but I’m surprised Chinese consumers aren’t buying more environmentally responsible cars.

 

Of the 19.3 million cars sold in China in 2012, just 11,375 were electric – that’s 1,696 petrol and diesel powered for every electric vehicle.   Although Chinese consumers can see the stark effects of pollution around them every day, it doesn’t appear that many are taking the individual responsibility and buying less polluting cars – SUVs are often the fastest growing monthly category in China.

 

The Chinese Government generally creates policies that they believe are for the greater good of the country, but I am surprised that there aren’t stronger policies to get more people in electric cars (ideally powered with clean electricity), given the acute pollution problem that the country faces.

 

There are some subsidies for electric car manufacturers in China, but they are obviously not enough of an incentive, versus disincentives for petrol cars, to change consumer habits.  China could lead the world in green auto, which could be a significant, high value industry to keep the masses employed, but unless there is a major shift in buying behaviour, there will be less money in the pot to refine clean car technology.  If the lion’s share of the 20 million+ cars sold a year in China, plus the additional units sold everywhere else were carbon neutral, imagine how the businesses cases would stack for R&D?

 

According to a recent Hurun survey of wealthy Chinese, health is the number one concern for the affluent. Unless the pollution issue is vastly improved in China, it’s likely that many of the best and brightest locals who have the means, will take their skills and capital to places that are a little cleaner.  Why don’t they just make the wagons a little cleaner instead?

 

 

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