Just days ahead of this weekend's Guangzhou Auto Show, Volkswagen has announced plans to invest $12 billion dollars into efforts to build coal-fueled electric vehicles in China. According the Wall Street Journal, VW plans to produce 400,000 EVs by 2020 and introduce 5 new all-electric models each year through 2025.
Volkswagen AG and its Chinese partners will jointly invest nearly $12 billion by 2025 in developing electric cars for the local market, VW’s China chief executive said.
That will enable the German auto group—which operates in China through joint ventures with the state-run SAIC Motor Corp. 600104 -0.86% and FAW Group Corp.—to release five electric-car models in China annually until 2025, or around 40 in all, Jochem Heizmann told reporters here Thursday.
Some auto makers, both foreign and domestic, are scrambling to meet a Chinese government requirement that electric vehicles account for roughly 3% to 4% of their total output in 2019, but Mr. Heizmann said that won’t be a problem for VW.
With plans in place to have produced 400,000 EVs by 2020, its tougher target in its biggest market are stringent fuel-efficiency standards being introduced alongside the electric-vehicle mandate.
Of course, as we pointed out a couple of months ago, Xin Guobin, vice-minister of industry and information technology, recently announced plans to phase out petrol and diesel vehicles in the Chinese market altogether. According to The Guardian, Xin did not confirm an explicit timeline but said the policy would be implemented "in the near future."
“These measures will promote profound changes in the environment and give momentum to China’s auto industry development,” he said in remarks broadcast by CCTV state television.
“Enterprises should strive to improve the level of energy saving for traditional cars, and vigorously develop new energy vehicles according to assessment requirements,” he said.
China produced and sold more than 28m vehicles last year, according to the International Organization of Motor Vehicle Manufacturers.
Ironically, China generates 65% of its power, more than double the U.S., from the "dirtiest" fuel available: coal. So, while the move to electric cars will undoubtedly be praised by blissfully ignorant politicians and environmental lobbyists, the end result will be even higher carbon emissions...
...a fact that was also recently confirmed by Morgan Stanley (see: 'Inconvenient' Fact: Morgan Stanley Says Electric Cars Create More CO2 Than They Save)
This is where Tesla, along with China’s Guoxuan High-Tech fall short.
“Whilst the electric vehicles and lithium batteries manufactured by these two companies do indeed help to reduce direct CO2 emissions from vehicles, electricity is needed to power them,” Morgan Stanley wrote. “And with their primary markets still largely weighted towards fossil-fuel power (72% in the U.S. and 75% in China) the CO2 emissions from this electricity generation are still material.”
In other words, “the carbon emissions generated by the electricity required for electric vehicles are greater than those saved by cutting out direct vehicle emissions.”
Morgan Stanley calculated that an investment of $1 million in Canadian Solar results in nearly 15,300 metric tons of carbon dioxide being saved every year. For Tesla, such an investment adds nearly one-third of a metric ton of CO2.
Of course, this is hardly a China-centric development as Bloomberg recently noted that almost 80% of the global auto market is pushing toward a phase-out of petroleum cars in favor of more "environmentally friendly" electric vehicles.
Ironically, the end result of this effort to 'save the environment' will be more expensive vehicles, landfills full of lithium-ion batteries and more coal-fired generation plants...but, somehow we suspect those 'inconvenient facts' are lost on our politicians...