China to squeeze Japan and U.S. electric auto industry

When it comes to building gas powered vehicles China falls short. In general its gasoline cars don’t live up to Japanese and American quality, but that could turn out to be a positive for the country as it zeroes in on electric vehicles, leapfrogging technology platforms.

That announcement couldn’t come at a more frenetic time for the Big Three in Detroit as they struggle to recover from a succession of bad decisions that left them producing vehicles that consumers disdain. Fuel efficiency is a key consideration for most car buyers today and right now Japan automakers like Toyota are right on the money.

But what makes China think it’s ready to jump into the electric vehicle rat race?

It seems to be a combination of necessity and consumer demand, especially as the countries skies fill with black smog and rivers cloud over with pollutants. Interestingly with its current electricity infrastructure, China would mainly be shifting the pollution from car exhaust systems to power plants. The only advantage there is that power plants are usually located outside the cities.

China also has a another advantage because its population doesn’t have as many preconceptions about what a vehicle should be capable of. “First-time car buyers also make up four-fifths of the Chinese market, and these buyers have not yet grown accustomed to the greater power and range of gasoline-powered cars,” according to the New York Times.

The picture isn’t entirely rosy though. China will need to install a system of electric charging stations to enable countrywide mobility, and that’s no small feat. Beyond that cost, the batteries that would store energy for electric cars are created with lithium-ion, which is not cheap. That means the price tag will hover around $30,000 or about double what consumers are currently used to paying.

Despite those challenges, the government is solidly supporting the initiatives, which means subsidies will be readily available and businesses looking for startup funding won’t have to look far.