China's national oil companies— China National Petroleum Corporation, China National Offshore Oil Corporation and Sinopec—have invested in oil fields around the world, in a bid to ensure future supply. "Oil is too important to be left to the market," Herberg notes. "The critical issue is not who drinks out of what piece of the lake. The critical piece is is there enough water in the lake, enough oil in the market?"
China is doing its part, attempting to build a strategic stockpile of 20 days' worth of imports—similar to the 90 days of imports stockpiled by all countries that are members of the International Energy Agency, essentially an anti-OPEC for oil consumers. "IEA has enough stocks collectively to put 4 million barrels-per-day on the market in case of a severe disruption," Herberg says. "That's an enormous amount of oil."
And then there are the alternatives. "The future of fuels is some mix of biofuels, electricity and hydrogen," Sperling says. "That's almost 100 percent definite." And electric vehicles are leading that charge.
Chinese companies have already produced some 120 million electric bikes—regular bicycles with an electric motor and rechargeable battery attached—a convenient form of transportation that is underused in the U.S. These small companies, such as Xinri, are graduating to building four-wheeled electric vehicles, similar to the Nissan LEAF, joined by Chinese battery makers like BYD, which stands for Build Your Dream. "Electric vehicles is a way they can leapfrog conventional technology," Sperling says. "The future of vehicles is moving toward electric drive."
The Chinese government has supported the infant EV industry since 2006 as part of its 863 Program for advanced technology development. "It's a top priority," Sperling says. "This is a way to reduce oil imports, which is a big deal for them, and a way to develop an export-oriented auto industry." China already exports some conventional vehicles—Brilliance expects to ship out some 40,000 vehicles in 2010, despite crash test setbacks in Europe in which Brilliance sedans folded like origami on impact.
But it is electric vehicles on which China is hanging its future, eliminating tax cuts for small internal combustion engine vehicles and investing more than $15 billion government money in a fund for carmakers, utilities and oil companies to invest in electric and other "new energy" vehicles over the next decade. And the Chinese government will formally reveal its plan for "Energy Saving and New Energy Vehicle Development" this month, which will prioritize hybrid and electric vehicles, aiming for 1 million such autos on the roads by 2015.
Already, 16 state-owned enterprises, including automakers China FAW Group and Dongfeng Auto, have been ordered to build the electric vehicle industry in the country with a goal of becoming the number one producer of such vehicles by 2012. And Chinese central and local governments offer hundreds of thousands of renminbi in subsidies to manufacturers of electric cars. "If we fail to catch this trend, it will be hard for us to survive in future," says Brilliance's Wang.
The only problem is the Chinese consumer; hybrid vehicles that pair a gasoline and electric engine, let alone pure electric vehicles, are too expensive for the first-time Chinese car buyer. For example, a Toyota Prius costs roughly 200,000 renminbi—more than twice comparable cars with only an internal combustion engine that runs on gasoline. "The high cost of new energy vehicles make the vehicles difficult for consumers to accept," Wang says, though the company has sold 400 such hybrid electric vehicles for use as taxis in the Chinese city of Dalian, thanks to government subsidies.