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The Electric Revolution

A budget promise to explore the use of battery-powered cars has raised hopes of a green future. Now comes the hard part

Sarah Monks – Updated on Mar 11, 2009 – SCMP

Financial Secretary John Tsang Chun-wah’s pledge to explore a future for electric cars in Hong Kong came out of the blue for many listening to his budget speech last month. But not for Geoffrey Chen Pau-hsiu. The 30-year-old entrepreneur saw it as confirmation of a “blue ocean” business opportunity; in other words, a chance to create a market in Hong Kong that doesn’t yet exist for battery-powered cars – and the electric grid to charge them.

Mr Chen has met officials and transport industry players over the past nine months to promote the idea of electric cars. It’s a transport revolution he believes is coming sooner than most people think.

“We’ve been trying to promote awareness in government of electric vehicles [EVs] as a possibility not in a decade or two decades but really in the next three to five years,” said Mr Chen, director of Ergo, a company he co-founded a year ago and which stands for Electric Recharge Grid Operator.

He considers that Hong Kong, a prestige auto market, is “a natural” to lead Asia’s shift from cars with internal combustion engines to battery-powered “green” vehicles that move cleanly and quietly through the streets. Electric cars emit none of the carbon dioxide linked to global warming and produce no roadside air pollution. They also tend to be one-third cheaper to run than petrol-driven vehicles, according to the Climate Change Business Forum.

“If it works in Hong Kong’s urban environment, it’s going to work in Shanghai, Guangzhou, Shenzhen, all those other markets in China,” Mr Chen said. His plan is to help the city convert its 18,000 taxis to battery-powered EVs – and provide the charging infrastructure to support them.

“This is our `blue ocean’,” he said, referring to the best-selling business strategy book of the same name, for which he undertook research while studying for an MBA at Insead Business School in France. “The idea is to create new market space, or a blue ocean, beyond existing competition.

“If you think about what Shai Agassi is doing, I would say that we are kind of the Asian version, the Hong Kong home-grown version – obviously, a lot less well-funded.”

Mr Agassi is the Israeli-born founder and chief executive officer of Better Place, a venture started with US$200 million in 2007 to build a global network of electric car service stations that will exchange drained batteries for fresh ones.

Many people have been caught off guard by the world’s sudden focus on electric cars. Only three years ago a US documentary film, Who Killed the Electric Car, portrayed EVs as “murder” victims of “big oil” and car interests. Now a sequel – Revenge of the Electric Car – is in production.

Moving electric cars into the mainstream are a new generation of lithium-ion batteries, more efficient electric motors and improved design. It’s more important, now, to know the difference between hybrids like Toyota’s Prius, which combine petrol-fuelled conventional engines with electric motors; pure electric cars, which run on rechargeable batteries; and EVs, powered by hydrogen fuel cells.

A growing list of electric cars includes the Chevy Volt, Mitsubishi’s i MiEV, which is to have trials in Hong Kong, and MyCar, a “microcar” developed in Hong Kong with initial government funding.

In his budget speech, Mr Tsang announced he would lead a steering committee to study the wider use of EVs here. The government would look at jointly promoting them with car manufacturers and be “actively involved” in vehicle tests, “with a view to introducing electric vehicles into our market early”. It would also look at providing recharging facilities in government multi-storey car parks.

Environment Secretary Edward Yau Tang-wah, whose bureau is helping to deliver on the budget promises, says electric cars are a better alternative than the existing technology and more fuel-efficient than petrol-powered vehicles. While yet to drive an electric car, he recently visited BYD in Shenzhen, a Hong Kong-listed mainland battery and EV manufacturer. Its five-seat electric car, with a driving range of 400km on one charge, has caused a buzz in the auto world – along with US investor Warren Buffett’s 9.9 per cent stake in the company.

There were two reasons for promoting electric cars, Mr Yau said.

“Hong Kong is going to be a greener city and the EV is becoming a commercially available product in the next few years. Through the budget speech, we’ve sent a clear message to electric car manufacturers and the community that this is a real choice coming into reality. Hong Kong is willing to give it a trial. We’ll give all the support needed to allow EVs to prove themselves as the clean option.”

There are currently fewer than 100 EVs in Hong Kong out of more than 560,000 licensed vehicles. They include electric vans, cars, golf carts and service vehicles operated by the two power companies, the Airport Authority and Cathay Pacific and its subsidiaries. Some were introduced more than 20 years ago.

“EVs are nothing new,” Mr Yau said. “The question is, should Hong Kong be one of the earliest cities to take advantage of this commercially available new type of car, which suits our green agenda? Will we be receptive to this technology?”

Among the government’s first steps, Mr Yau said, was to remove any legislative barriers that might inhibit the use of EVs. That includes MyCar, which had originally been a left-hand-drive vehicle that could not be registered here, but now has a right-hand model.

“Having said that, there can be no compromise on safety or construction and maintenance [of EVs]. They have to demonstrate their roadworthiness, safety in particular,” he said.

Another early step was to provide a financial incentive to buy EVs which, like hybrids, can cost significantly more. The financial secretary extended from three to five years the exemption of first registration tax on such cars. It can be as high as 85 per cent of the retail price for smaller vehicles.

More essential, Mr Yau said, were support facilities for parking and charging EVs. There needed to be discussions with car park operators and property managers. There had already been early discussions with Hong Kong’s power companies.

“Obviously, you do not want premature technology to come to the city causing unnecessary disruption. At the same time, you don’t want to lose the momentum; to be the last city to consider this, because then you’re losing the golden opportunity to grow greener and cleaner.

“The real test is how to allow people to see the electric car running on the road instead of breaking down, to allow it to be tried out while we facilitate its entry into our market.”

Mr Chen believes the coming revolution in electric cars is part of people recognising that the present way of living, working and driving is unsustainable.

“We live in this carbon-constrained world and we’ve got to do something about it. The transport sector seemed a logical place to start. That’s why we formed Ergo. We really want to stop talking and actually do something about it.”

Focusing on taxis was an effective way to tackle roadside pollution, he said, especially if an EV conversion scheme for taxis could be extended to light goods trucks and other commercial vehicles. “If you get the taxis and the commercial vehicles, you’ve made a huge impact on roadside pollution. I don’t think you’ve solved the problem for Hong Kong, but you’ve made a very big difference to people’s lives.”

Research showed that the average taxi covered 360km a day, compared with 59km a day for the average car, Mr Chen said. “These guys are driving six times more than the average person. It’s true that the LPG they use is a lot less polluting than petrol but it is still a problem.”

Making it happen, however, will not be easy. “There’s a lot of risk. What if these cars don’t work? What if the batteries fail? What if the air con doesn’t work? All those questions have to be dealt with. Taxi owners and drivers need to be fully confident there won’t be any issues with the car and, if there are issues, that they’re going to be resolved quickly.”

Environment policy advocates and green groups say electric cars will help tackle Hong Kong’s bad roadside air but cannot go far or fast enough in addressing the problem.

“This technology on its own will not make much of a difference fast enough to protect public health, so this tells you other measures are needed,” said Christine Loh Kung-wai, co-founder and chief executive of think-tank Civic Exchange. “Banning old commercial engines [in trucks] is likely to have a much higher and faster impact, or more pedestrianisation. I am not saying e-cars are not a good idea, just that I would have gone for other measures now, for the sake of public health.”

According to Friends of the Earth, unless the government can attract heavy diesel vehicles to go electric, there will be little improvement in roadside air quality. Another concern is how to deal with the spent batteries of electric cars.

“We don’t want to cope with the air pollution problem by creating a waste issue,” said Angus Wong Chung-yin, environmental affairs officer of the green group. “The government should consider how to recycle the battery wastes generated by electric cars.”

Environment minister Mr Yau said the success of Hong Kong’s EV initiatives depended not just on the government doing its part but also on whether it could attract consumers, primarily private users.

He acknowledged that there was a further reason for targeting private users. “Obviously, from a selfish angle, electric cars would help my push to stop idling engines in Hong Kong …”

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