Taiwan’s Electric-Vehicle Sector Charges Up

New market entrants could put Taiwan on the map as a major EV maker.

In April, Premier Mao Chi-kuo proclaimed the goal of making Taiwan a leading manufacturer of new-energy vehicles as part of a plan to transform it into a “model green country.” In particular, Taiwan should replace its motor scooters and motorcycles with eco-friendlier electric versions as soon as possible, the premier emphasized.

Achieving that goal will be quite a challenge. While Taiwan has begun rolling out electric buses nationwide, consumer use of electric vehicles (EVs) remains negligible. Despite government subsidies to promote electric scooter use, only 31,919 of them were registered as of April – less than .02% of the total 15 million petrol-powered two-wheeled vehicles.

Whether for cars or motor scooters, high costs and a lack of charging stations in Taiwan have hindered development of an EV sector that could play a vital role in curbing the island’s air pollution. The particulate matter emitted by scooters and motorcycles is the single biggest source of air pollution in Taiwan, comprising up to 23% of overall suspended particulates, according to the Executive Yuan.

“We all want to see a cleaner environment,” says Thomas Fann, president of the Ford Lio Ho Motor Co. and chairman of the American Chamber of Commerce in Taipei. “But these vehicles are very expensive. How can the mass market afford to buy them without a strong incentive?” Budget issues and differences of opinion among policymakers have further slowed the adoption of electric vehicles in Taiwan, he adds.

To be sure, Taiwan is not alone in its EV travails. Data collected by Taiwan’s Automotive Research Testing Center confirm the difficulty cities worldwide are having in persuading drivers to go electric. For instance, Shanghai set a target of putting 80,000 EVs on its roads by 2015, but had achieved only 2% of that volume between 2009 and 2012. During the same period, Los Angeles was home to 2,000 EVs, just 2.5% of its 2015 target of 80,000 units. Even the green-minded city of Amsterdam reached only 7.5% of its 10,000-unit goal during that timeframe.

Automakers are having troubles of their own selling electric vehicles. It took three years for Nissan to deliver 100,000 units of its Leaf EV. In 2014, iconic EV maker Tesla Motors enjoyed record sales of 31,655 units, still a very small slice of the 100-million vehicle global automotive market.

Nevertheless, the long-term potential of electric vehicles is enormous, researchers say. The International Energy Agency (IEA), an autonomous organization that counts 29 OECD countries as its members, forecasts that global sales of pure electric cars and plug-in hybrid electric vehicles (PHEVs) will pass the one-million-unit mark in 2015 and grow to some six million in 2020. Frost & Sullivan, a prominent research and consulting firm, estimates that worldwide sales of extended range electric vehicles (EREVs) will top 350,000 in 2018.

In July 2014, the Executive Yuan announced a “Smart EV Development Strategy and Action Plan.” The plan extends the life of various electric car pilot projects, and aims to put 10,000 electric buses on Taiwan’s roads within 10 years.

“For public transport, you don’t need as much charging-station infrastructure,” explains Chen Min-teh, secretary general of the Taiwan Transportation Vehicle Manufacturers Association (TTVMA). “And you don’t have to persuade consumers to buy the buses.” With that in mind, he reckons Taiwan will put electric buses into service at a much faster pace than scooters or cars.

A leading electric bus-maker in Taiwan is RAC Electric Vehicles, which held a 58% market share in 2014, according to company data. In December 2014, company chairman and CEO Alex Tsai told investors that RAC is currently able to build 80 to 90 buses a year, but plans to eventually boost annual capacity to 400-500 units. The company needs to sell at least 60 buses a year to break even.

The ‘Tesla of scooters’

Taiwan-based Gogoro and its deep-pocketed backers think so. Founded in 2011 by HTC alumni Horace Luke and Matt Taylor, the startup received US$40 million from billionaire Ruentex Group chairman Samuel Yin and US$10 million from HTC co-founder Cher Wang. In its recent Series B funding round, Gogoro raised an additional US$130 million.

Gogoro scooter

After four years of preparation, Gogoro in July rolled out a sleek 150cc-equivalent electric motorbike powered by swappable batteries. Gogoro owners pay a modest monthly fee to swap the portable batteries from the company’s “GoStation” network. “Taiwan is an ideal market for electric scooters, since it has one of the highest scooter ownership rates in the world,” says Jessica Chuang, Gogoro’s marketing manager. “It’s the right place for us to start.”

Still, Taiwanese consumers balked at Gogoro’s initial prices of NT$128,000 for its standard scooter and NT$138,000 for the high-end model. As criticism of the company grew more vocal online, Gogoro announced in October that it would reduce the prices of its two scooter models to NT$98,000 and NT$108,000 respectively. With a government subsidy included for residents of some cities (NT$26,000 by the Taoyuan government and NT$20,000 by Taipei City), Gogoro scooters are now priced comparably to petrol-powered counterparts, Chuang notes.

The company also lowered its entry bar for consumers by releasing the Gogoro Lite model, which starts from NT$88,000 before subsidies from local governments.

Before expanding to the rest of Taiwan, Gogoro is focusing on Taipei City and New Taipei City with the aim of setting up 1.6 battery-swapping GoStations per square mile in that region. There are already more than 1,000 such GoStations across northern Taiwan, the company says.

Looking ahead, Gogoro sees strong potential in the cities of central and southern Taiwan, which lack the comprehensive public transport networks of Taipei and New Taipei City, Chuang explains.

The GoStations can be installed wherever an air-conditioning outlet is present. According to Gogoro, in under a minute a rider can pull up to the GoStation, remove the 20-pound battery from a compartment under the scooter’s seat, and swap it for a fully-charged one. In order for the new battery to function, the rider must receive authorization through a dedicated smartphone app.

With this system, Gogoro may have solved the battery problem that has prevented electric scooters from gaining popularity in Taiwan, observes a Taipei-based electric battery designer. “Nobody wants to lug a heavy electric battery into their apartment and charge it there – it’s not convenient. You don’t have to worry about that with Gogoro,” he says. “The only problem I see with this system is that riders don’t own the batteries but they are still responsible for them if they’re damaged. And what if it isn’t their fault? How is that decided?”

Indeed, the policy does seem ambiguous. According to Gogoro’s website: “Sensors and recording features of the batteries keep track of usage automatically. “Gogoro reserves the right to claim appropriate damage compensation” from anomalies or safety concerns found in batteries “that can be traced back to improper handling by a particular user.”

Overall, though, Gogoro’s SmartScooter is an attractive proposition, says the designer, who was impressed by its fast acceleration and tight handling during a recent test ride. “With a government subsidy available, I will consider buying a SmartScooter in the future,” he says. “The subsidy is critical because Taiwanese are always concerned about cost. They want a deal.”

From toolmaker to car brand

Pundits have called Gogoro the scooter’s answer to Tesla. Now former Taiwanese machine-tool maker Thunder Power hopes to take on the iconic electric-car brand directly with its Thunder Power sedan that debuted in September at the Frankfurt Auto Show.

Taipei-based Thunder Power, which was founded as Motomax in 1987, boasts a Milan-based R&D team. The company says its battery technology emerged from collaboration with European developers Bosch, Dallara, and CSI, while the car body was designed by Italian coachbuilder Zagato. Former Lotus technical director Peter Tutzer is the chief technical officer, according to a company press release.

Veteran Hong Kong financier Wellen Sham is the company’s chairman and chief executive officer. Sham worked for over a decade in the China auto industry before taking control of Motomax in 2011 and reorganizing it as an electric-vehicle maker, according to Thunder Power’s website.

The company says its rear-wheel drive sedan will be able to cover 300 kilometers (186 miles) on a half-hour charge and reach full charge in just one hour. Fully charged, the car should have a range of about 400 miles.

The vehicle is fast as well. Of the two models available, the less powerful will reach 100 km/h (62 mph) in under six seconds, while the 320 kW model will be able to do so in less than five. That rate of acceleration is comparable to the petrol-powered Audi S4 or the electric Audi E-tron Quattro concept car, industry observers say.

The 125kWh battery pack in Thunder Power’s car is large compared to its EV competitors. Tesla’s Model S offers a 90kWh model, while Nissan’s Leaf is only 30kWh. In addition, borrowing a page out of Tesla’s book, Thunder Power has equipped its cars with touchscreens responsible for the main functions. The TP-Touch infotainment system spans the length of the dashboard, offering video streaming and other entertainment for passengers.

Overall, auto experts at the Frankfurt Motor Show said Thunder Power’s concept car looked sturdy but sparsely detailed. The seats of the vehicle were bare and the dashboard lacked buttons or dials.

The aspiring Taiwanese EV maker has not announced plans to launch the car in its home market. Instead, it is focusing on large international markets: first Europe in 2017, followed by China in 2018, and later the United States.

Still made in China?

Tucheng-based Hon Hai Precision Manufacturing Co. (also known as Foxconn), the world’s largest contract electronics manufacturer, is also keen on tapping the burgeoning EV market. But as with its assembly of Apple’s iPhones, Hon Hai plans to manufacture in China, not Taiwan.

In March, Hon Hai announced it was establishing a 1-billion renminbi EV production venture with Chinese Internet giant Tencent Holdings and Chinese luxury-car dealer China Harmony Auto Holding. China Harmony holds a 40% stake while Tencent and Hon Hai each hold 30% shares. The joint venture will be headquartered in Zhengzhou, Henan Province, where Hon Hai assembles iPhones.

Hon Hai, whose EV experience includes manufacturing the touchscreens in some Tesla models, will oversee electronics-related parts and systems for the project; Tencent will handle Internet platforms; and China Harmony will be responsible for distribution.

Several Hon Hai affiliates will also join the project as suppliers. They include Innolux Corp., Taiwan’s top maker of LCD panels, and precision tooling developer ESON Precision Engineering Co., a Tesla supplier.

Analysts expect construction of the venture’s first factory to be complete by 2017 and mass production to begin by 2018.

Will other Taiwanese firms follow Hon Hai’s lead and use China as an EV manufacturing base, lured by its massive market size? That would do little to develop an indigenous EV sector in Taiwan. Moreover, it would continue the risky strategy of binding Taiwan’s economic fortunes to a single market.

To be sure, China’s EV market has big potential – it is already the world’s second largest – but it has yet to flourish. Of the more than 23 million cars sold in China last year, just 75,000 of them were electric.

At the same time, Hon Hai’s venture faces fierce competition from established domestic auto vendors in the China market. Those include Zotye, BYD Qin, Roewe, Chang’an Automobile, Dongfeng Motor, and GAIC, to name a few.

In looking at ways to boost the development of Taiwan’s indigenous EV industry, Japan’s experience is instructive. Although Japan is a much smaller auto market than China or the United States (the world’s largest EV market), it boasts the world’s third-largest EV fleet after those two countries. A paramount reason for the success of electric vehicles in Japan is that it has put the necessary infrastructure in place to ensure that driving an EV is as convenient as driving a petrol-powered car. Japan’s 40,000 EV charging units nationwide now exceed its 34,000 gas stations, according to Nissan.

That sort of EV infrastructure will be critical for the industry to develop in Taiwan, whether for battery-swapping stations such as Gogoro is using or public charging stations like Amsterdam has, experts say.

“If we want electric vehicles to become mainstream in Taiwan, we need to make sure the infrastructure is in place before we can expect consumers to change their driving habits,” concludes Chen of TTVMA.