Report: EVs Offer China Big Chance to Curb Its Reliance on Foreign Oil, Autos Tech

Report: EVs Offer China Big Chance to Curb Its Reliance on Foreign Oil, Autos Tech

China should push electric cars to curb its dependence on imported oil and foreign automobile technology, although they offer smaller cuts in carbon emissions than alternatives such as gas-electric hybrids, according to the global consulting firm McKinsey & Company .

In two decades it could create a world-leading industry and a domestic market alone worth up to $219.4 billion, even if less than a third of drivers go electric, the company said Wednesday in a quarterly report (subscription required).

"China has a compelling case for embracing electric vehicles," said the report, which weighed up oil imports, the cost to consumers, the potential for innovation, as well as carbon emissions.

"While a handful of firms in Japan and North America are making strides in developing electric vehicles, no nation has yet emerged as the clear leader in this sector," it added.

The world's number two crude oil consumer already churns out millions of automobiles for a growing middle class hungry for a better lifestyle. It relies on imports for nearly half its oil.

If China continues current growth rates it will almost double oil imports by 2030, the report said, but greater use of electric cars would cut this growth by around a quarter.

For consumers, the vehicles will not be cheap up front. They will have to pay a premium of about $4,400 for electric vehicles.

But if Beijing takes a bold step it has been flirting with for years, bringing in a significant fuel tax or raising pump prices, they could recover that extra cash in around five years, the report said.

One of the biggest problems in promoting a type of transport often espoused by environmentalists may be its limited impact on emissions, because China gets so much of its power from coal.

An electric car would have 19 percent less emissions than a conventional gasoline powered vehicle over its lifetime, the report said, but a full hybrid vehicle, running on gasoline with a high-tech engine and a battery to power acceleration, can make a 56 percent cut.

"If the fundamental goal is just to reduce greenhouse gases you could argue that maybe we just go with hybrid or improved gasoline engines," said Paul Gao, lead author of the report.

However, electric cars could be a more realistic hope for widespread change because they may be the cheapest choice and meet a range of government goals.

Scott Doggett:  is an AutoObserver.com Associate Editor.