Taiwan EVs to Become Trillion NT Dollar Industry: Yulon CEO Yen

Taiwan's automotive industry, which for more than five decades has imported technology from foreign automakers, is now seeing a chance to become a technology exporter.

During a recent interview with the Economic Daily News, Taiwan's foremost Chinese-language economic daily newspaper, Kenneth Yen, CEO of the Yulon Group, stated that if the government could map out a comprehensive policy and strategy for the development of electric vehicles (EVs), Taiwan would have a chance to become a leading EV development and production base by taking advantage of its highly competitive information and communications technology (ICT) and electronics industries.

Yulon, Taiwan's largest auto conglomerate, assembles Nissan Mitsubishi, GM, and Chrysler models on the island. Yen, however, has long harbored the dream, inherited from his parents (his father founded Yulon) of developing home-grown car products.

The movement toward EVs is an irreversible trend, Yen avowed, saying that the EV industry has the potential of becoming one of Taiwan's rare industries with an annual production value of more than NT$1 trillion (US$30.8 billion at NT$32.5:US$1). (Other trillion NT-dollar industries include semiconductors and thin film transistor-liquid crystal display (TFT-LCD) panels.)

Yulon is jumping on the EV bandwagon by making electric models a major part of the lineup for its new home-grown Luxgen brand. This gives the company a chance to establish a technology-leading brand image in the global market.

To facilitate the development of Luxgen models, Yulon has tied up with Taiwan-based international ICT suppliers such as High Tech Computer Corp. (HTC) and E-Ton Power Tech Co.

“EV market development had two key triggers,” Yen commented. “One was the record oil price of US$147 per barrel, and the other was the global financial crisis of 2008. More and more countries are aggressively promoting the development of EVs, including the United Kingdom, Sweden, other industrially advanced countries, and even mainland China. EVs have many advantages over cars powered by liquefied petroleum gas (LPG), including a lower fuel and maintenance costs than both LPG cars and gasoline/diesel hybrids.

Cheaper than Gas

“The EV market is gradually expanding, creating great opportunities for our new auto brand. And high fuel prices will drive consumers to EVs. In addition to high quality and reliability, we can make our EV propulsion systems cheaper than we can make internal combustion engines.”

In Taiwan, Yen noted, Yulon has easy access to world-class technological support from the ICT and automotive sectors. Its Luxgen EVs will target markets not only in Taiwan and mainland China, but also throughout the world. However, the CEO stressed, the government must help by mapping out development plans including business models and infrastructure construction (especially recharging stations).

Yen believes that EV production will be more attractive than the solar- and wind-power industries, because both EVs and their parts could be exported so as to create mass-production value. “Global shipments of new cars total about 70 million units a year and generate US$1.4 trillion worth of business, in addition to parts and repair,” Yen said.” If we can capture a 3% share of the global EV market, we will have enough production value to make EV production one of Taiwan's star industries.”

Yen is very proud of his Luxgen EVs, each of which, he said, is equipped with 24 central processing units (CPUs), compared with no more than eight in top-end German luxury cars. Each of the cars also has eight charged coupling device (CCD) cameras positioned around the body, making it easy for drivers to know precisely what is going on and exercise maximum control for maximum safety. The most advanced automotive-electronic systems in these intelligent vehicles provide other active safety functions as well, such as transmitting side images to the main display screen when a driver turns the steering wheel either right or left.

These comforting features make driving other kinds of cars a nervous trial for Yen; and this, he believes, makes the Luxgen strongly competitive. The CEO personally participated in the Luxgen EV road tests, he claimed, and found the cars very impressive, with a quiet cabin and smooth acceleration (0-100kmph in seven seconds).

Expanding to Fill a Growing Demand

With the current optimism about recovery of the domestic auto market and the increasingly warm economic interaction between Taiwan and mainland China, Yen said, Taiwan should take the lead in the global recovery. Yulon will help boost the island's recovery by initiating an expansion project at its auto factory in the central Taiwan township of Sanyi, the CEO reported, when the time is right.

The expansion might take the form of an EV production zone in the hills behind the Sanyi facility, noted Yulon's president, Chen Kuo-rong. He went on to say that the Sanyi plant site covers a total of 280 hectares, only 92 hectares of which are currently utilized.

With domestic auto sales amounting to only around 220,000 units in each of the past three years, Taiwan is not the primary target market for Yulon's Luxgen products.

So the aim is China; and to penetrate that market, the Luxgen (Hangzhou) Motor Co. was set up in 2007 by Yulon and the China's Zhongyu Group as a joint venture with an initial capitalization of RMB4.65 billion. To smooth the progress of this new business, Yulon later invited China's Dongfeng Motor Group to invest and the three investors signed a cooperation memorandum of understanding in mid-June this year. Dongfeng has acquired a 20% stake in Luxgen (Hangzhou), which has been renamed as Dongfeng Yulon Motor.