Electric car makers woo Chinese buyers with range, features

BMW X7 (R) and 7-Series cars are displayed at the China launch of the X7 a day before the opening of the Shanghai Auto Show in Shanghai on April 15, 2019. (AFP / GREG BAKER)
Updated 16 April 2019
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Electric car makers woo Chinese buyers with range, features

SHANGHAI: Automakers are showcasing electric SUVs and sedans with more driving range and luxury features at the Shanghai auto show, trying to appeal to Chinese buyers in their biggest market as Beijing slashes subsidies that have propelled demand.
Communist leaders wanting China to lead in electric vehicles have imposed sales targets. That requires brands to pour money into creating models to compete with gasoline-powered vehicles on price, looks and performance at a time when they are struggling with a Chinese sales slump.
General Motors, Volkswagen, China’s Geely and other brands on Tuesday displayed dozens of models, from luxury SUVs to compacts priced under $10,000, at Auto Shanghai 2019. The show, the global industry’s biggest marketing event of the year, opens to the public Saturday following a preview for reporters.
On Monday, GM unveiled Buick’s first all-electric model for China. GM says the four-door Velite 6 can travel 301 kilometers (185 miles) before the battery needs charging.
VW showed off a concept electric SUV, the whimsically named ID. ROOMZZ, designed to travel 450 kilometers (280 miles) on one charge. Features include seats that rotate 25 degrees to create a lounge-like atmosphere.
Communist leaders have promoted “new energy vehicles” for 15 years with subsidies to developers and buyers. That, along with support including orders to state-owned utilities to blanket China with charging stations, is helping to transform the technology into a mainstream product.
“People’s mindset and governmental policies are more encouraging toward e-cars than in any other country,” said VW CEO Herbert Diess.
Electric vehicles play a key role in the ruling Communist Party’s plans for government-led development of Chinese global competitors in technologies from robotics to biotech.
Those ambitions set off Beijing’s tariff war with President Donald Trump. Washington, Europe and other trading partners complain Chinese subsidies to technology developers and pressure on foreign companies to share know-how violate its market-opening commitments.
Electric car subsidies end next year, replaced by sales quotas. Automakers that fall short can buy credits from competitors that exceed their targets or face possible fines.
“Most of the traditional car makers are under huge pressure to launch NEVs,” said industry analyst John Zeng of LMC Automotive.
Last year’s Chinese sales of pure-electric and hybrid sedans and SUVs soared 60% over 2017 to 1.3 million, or half the global total. At the same time, industry revenue was squeezed by a 4.1% fall in total Chinese auto sales to 23.7 million vehicles.
That skid that worsened this year. First-quarter sales fell 13.7% from a year ago.
Still, China is a top market for global automakers, giving them an incentive to go along with Beijing’s electric ambitions. Total annual sales are expected eventually to reach 30 million, nearly double last year’s US level of 17 million.
Under Beijing’s new rules, automakers must earn credits for sales of electrics equal to at least 10% of purchases this year and 12% in 2020. Longer-range vehicles can earn double credits. That means some brands can fill their quota if electrics make up as little as 5% of sales.
Also Tuesday, Nissan Motor Co. and its Chinese partner displayed the Sylphy Zero Emission, an all-electric model designed for China. Based on Nissan’s Leaf, the lower-priced Sylphy went on sale in August.
Mercedes Benz displayed its first all-electric model in China, the EQC 400 SUV. The Germany automaker says it can travel 400 kilometers (280 miles) on one charge and can go from zero to 100 kph (62 mph) in 5.2 seconds.
Mercedes plans to release 10 electrified models worldwide, with most built in China, according to Hubertus Troska, its board member for China.
Some Chinese rivals have been selling low-priced electrics for a decade or more.
China’s BYD Auto, the biggest global electric brand by sales volume, unveiled three new pure-electric models last month. All promise ranges of more than 400 kilometers (280 miles) on one charge.
Last week, Geely Auto unveiled a sedan under its new electric brand, Geometry, with an advertised range of up to 500 kilometers (320 miles) on one charge.
Geely’s parent, Geely Holding, launched a joint venture with Mercedes parent Daimler AG in March to develop electrics under the smart brand. Geely Holding is Daimler’s biggest shareholder and also owns Sweden’s Volvo Cars.
Beijing wants to force automakers to speed up innovation and squeeze out producers that rely too heavily on subsidies. But the technology minister acknowledged in January that China faces a difficult transition as that spending is ending.
Keeping development on track “will be a challenge,” said Miao Wei, according to a transcript on his ministry’s website.
The shift creates an opportunity for fledgling Chinese automakers that lag global rivals in gasoline technology. They have just 10% of the global market for gasoline-powered vehicles but account for 50% of electric sales.
The end of subsidies should lead to dramatic changes, said Zeng of LMC Automotive. He said longer-range, feature-rich models from global majors will replace small producers that cannot survive without subsidies.
Electric vehicles “will be much more competitive,” said Zeng.
As the cost of batteries and other components falls, industry analysts say electrics in China could match gasoline vehicles in price and become profitable for manufacturers in less than five years.
EVs carry a higher sticker price in China than gasoline models. But industry analysts say owners who drive at least 16,000 kilometers (10,000 miles) a year save money in the long run, because maintenance and charging cost less.


Oil prices near 2019 highs after US ends all Iran sanction exemptions

Updated 29 min 36 sec ago
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Oil prices near 2019 highs after US ends all Iran sanction exemptions

  • Iran’s main oil buyers initially received sanction exemptions
  • US reiterates its goal to cut Iran oil exports to zero

SINGAPORE: Oil prices were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.
Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
US West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.
The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.
Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets.”
The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel.”
ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya.”
The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.
Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”
Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.
“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Meanwhile, the Atlantic Council said the US move would hurt Iranian citizens.
“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the US sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”