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Kandi Crush: An Electric-Car Vending Machine From China Could Upend The Auto Industry

Dec 28 2013, 8:31am CST | by , in News

Kandi Crush: An Electric-Car Vending Machine From China Could Upend The Auto Industry
Photo Credit: Forbes
 
 

China is growing so fast it’s sometimes difficult to get different sources to even agree which the biggest cities are and how many people live in them. But that said, among them is a name unfamiliar to most Americans, the city of Hangzhou, located in eastern China, and home to 8.7 million as of 2010. That would make it the biggest city in the U.S. even though it’s barely a third the size of Shanghai, the world’s largest. But Hangzhou isn’t just big, it’s also home to an ambitious experiment that combines electric vehicles, giant vending machines and a Zipcar-like business model. Oh, and if it works, private car ownership as we know it is probably going to disappear in the world’s biggest cities.

The Chinese have begun to fall in love with the automobile as prosperity has rained down over the past two decades. But with that love affair has come some of the world’s worst air quality. With perhaps 80 million new cars expected on China’s roads by the end of the decade (joining the 120 million already in use), the government has taken the drastic step of actually limiting the number of new license plates it will issue. Notably, even within the limits will come a gradually increasing quota that requires many of the new vehicles to be green — running on natural gas or electricity.

Prior to the auto boom in China, most people managed with a combination of walking, biking, trains or scooters. As incomes have risen, however, more Chinese find the need for a car at least now and then, perhaps for a big trip to the store or to visit family outside the city. In the U.S., a similar need was identified more than a decade ago and Zipcar was born, allowing people access to cars by the hour at multiple locations around the city. Urbanites across the U.S. now can have most of the benefit of a car without much of the hassle of owning one.

In China, though, everything is bigger. A company called Kandi Technologies plans on making 100,000 cars available to the residents of Hangzhou for hourly rental over the next couple of years. It’s also planning to expand into 2-3 other cities during 2014. But instead of having small parking lots with a handful of cars like Zipcar, Kandi is building automated garages (see the video below produced by filmmaker Aaron Rockett) that hold between 30 and 300 cars apiece. They work like giant vending machines: Put in your card, out pops a car. While it will take time for Kandi to build the 750 such facilities it has planned for Hangzhou, the service is already operating and 50 garages should be in place by March.

For just $3.25 per hour, you can rent one of the Kandi cars. They are built in partnership with Geely, best known in the west as the company that bought Volvo. The vehicles are electric, with a range of 75 miles and a top speed of 50 miles per hour. While that might seem limiting, the vehicles are intended for urban use and the city speed limits max out at about 30 in Hangzhou. They resemble the Smart Car, which happens to be used by the Car2Go service, a Zipcar alternative that operates in Denver, San Diego and a handful of other American cities.

An important difference between Car2Go and Zipcar is that the former allows one-way rentals, as does Kandi. Anyone in New York or San Francisco who has experienced the nascent bike-sharing services there understands just how convenient that is. There is effectively dedicated parking to drop off the vehicle at either end of your trip and there’s no need to pay for the time you’re at a party or in a meeting. Kandi’s planned ubiquity should make the service compelling for more Hangzhou residents, even though it won’t offer the ability to just leave the car parked anywhere (as Car2Go does, with mixed success).

Kandi has an offer for people that also want something closer to ownership as well. They call it the “Long Lease,” though it will run 1-3 years, short to average by U.S. standards. For a single price of around $130-160 per month, you get insurance, maintenance and power.

Most Chinese won’t have the ability to install an electric-vehicle charger easily, but Kandi will solve the problem by swapping batteries, similar to what Tesla has proposed for super-fast “recharging.” Kandi will then recharge the batteries at its convenience. When Tesla showed of its version of the technology, CEO Elon Musk suggested it might be the best solution in urban areas where charging is hard to come by. The Chinese may well be ahead of the curve here, deploying today what the U.S. contemplates for tomorrow.

That isn’t to say Tesla will have its lunch eaten by Kandi. On the contrary, the company’s single-minded pursuit of longer-range electric vehicles has led to many innovations here as well. The Tesla Supercharger network now has 49 locations where it is possible to restore half the battery capacity in 20 minutes. The company’s plans call for tripling that network next year.

In the meantime, though, Kandi will bring a radical car-sharing experiment to one of the world’s largest cities. If it goes as planned, there will be more EV drivers in Hangzhou than anywhere in the world and other Chinese cities will almost certainly adopt the technology quickly. It’s unlikely too many people who come to the automobile through this per-hour-usage model will want to become car-owning, parking-space seeking, insurance-buying folks in the future. It’s not uncommon for urban car owners to walk a few blocks to a parking garage or spend hours a week looking for a space. This kind of car sharing has inherent appeal.

But in China, it should catch on faster. The Chinese are not wedded to American ideas of what a car is supposed to be like so getting them to accept relatively small, slow, short-range electrics is likely to be less challenging that it has been to sell, say, the Nissan Leaf in the U.S. (The Leaf has had its best year so far, selling 20,800 units through November.) And though air quality here is often less than perfect — lack of rain in California has given us a record number of “spare the air” days recently — it’s nothing near as bad as China’s largest cities.

So this project was born out of need, but also entrepreneurial zeal. The kind of passion that powered the American economic engine at the turn of the last century and helped turn Korea’s auto industry into a global powerhouse from very humble beginnings here in the 1980s. Geely, for its part, had its vehicles fail crash test as recently as 2009. With designs on the global market, it went back to the drawing board and earned 4-star ratings in Europe just 2 years later. It’s small cars are considered among the safest in China based on tests.

Still, it’s a small company, with less than 3% of the Chinese market. And Kandi would be fairly characterized as a startup. Together, they are trying to turn the auto industry on its head, at least in China. But if the plan works, the concepts are exportable — and ripe for copying. For China, usually the innovation has been co-opted there, often causing consternation among foreign competitors. Perhaps the greatest long term threat for Kandi is that the new model works exactly as they hope. With so much opportunity inside of Chinese, they might then face clones not just abroad, but even at home. Of course, an auto industry that sells transportation rather than cars is radically different on its own. So those clones might not entirely come from within.


I’ll be looking more at the intersection of cars and technology in some upcoming posts. If you have interesting stories to tell, feel free to get in touch.

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Source: Forbes

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