In a discussion on the role of electric cars in reshaping the future of China’s energy industry, panellists at the Credit Suisse Asian Investment Conference in Hong Kong today argued it will be survival of the fittest when the sector inevitably consolidates and there will be a rapid change in the fuel market.
Bo Bai, chief executive of US-China Green Fund, noted how the Chinese government’s drive for more electric vehicles is similar to the push to adopt solar energy over the past few years. US-China Green Fund is a commercially run private equity fund initiated by the US and Chinese governments in 2016 to target green technology solutions to promote sustainable development in China.
He explained that, like electric vehicles, solar technology was initially developed elsewhere, and then put into mass production and became commercialised in China. Alongside the Central government’s policies to encourage market growth, local governments have been enthusiastic in offering incentives such as land and loans to help manufacture more electric vehicles, which he noted may not be high quality, but of a very low cost.
“All these combined [factors] will have a substantial impact on China’s energy system,” he said. Adding that, like today’s solar sector, the market is expected to experience industry consolidation with only the strongest, best-performing companies surviving.
Neil McGregor, group president and CEO of Singaporean utility Sembcorp Industries, argued that the promotion of electric vehicles in China will bring a rapid change in the energy industry due to a reduced demand for transportation fuels.
“As we change our business model,” he said, “it’s a scenario we need to think about. It will come faster than you think.”
McGregor said Sembcorp is committed to investing in both conventional gas and renewables power generation across the world, partly due to demands for more green energy from millennial customers.
Commenting on the use of roads by electric vehicles, Peter Coleman, managing director and CEO of Australian oil and gas company Woodside, said: “Electric vehicles are having a free ride at the moment, and that will change as the tax system will catch up.”