How the automotive industry seizes business opportunities in the government's green energy policy (continued)

劉宸志 Kenny Liu 2023-05-22

Regarding the impact of the green energy policy of the government of the Republic of China (Taiwan) on the automotive industry, I mentioned subsidies and action plans directly related to the industry in the previous article, and in this article, I'll be sharing how the direction of the green energy policy influences industries indirectly related to the automotive industry for your reference. Hopefully, concerned industries will understand the basics of government practices and measures when moving in the direction of the 2050 net zero policy and further examine whether the resources they have invested are aligned with the policy direction so as to seize the right opportunities for growth.

The information I have collected and organized is as follows.

  1. The preliminary blueprint of "Taiwan's Pathway to Net-Zero Emissions in 2050": Renewable energy accounts for 60-70% of the total electricity, while hydrogen energy supplies 9-12%. The remaining 20-27% comes from fossil fuel power generation with carbon capture and utilization (CCU), taking energy security into consideration, to decarbonize the overall power supply.
  2. With regard to improving the production process in the steel industry, the development of blast furnace hydrogen injection and hydrogen reduction steelmaking technology will be completed by 2030 to achieve the goal of zero-carbon steel production.
  3. The first mobile hydrogen refueling station in Taiwan will be built in 2023 to meet future demand for short- and medium-term hydrogen energy applications.
  4. CCUS (carbon capture, utilization, and sequestration) pilot projects will be brought in to develop blue hydrogen for hydrogen applications in 2030.
  5. Forward-looking technologies for AI smart charging and power regulation will be developed to construct non-uniform current automatic plug-in 60kW charging piles that charge at different currents according to the residual power and pass safety inspections. Verification will be developed for interfaces that provide vehicle-to-grid (V2G) bidirectional power flow and vehicle-to-home (V2H) bidirectional power load of charging piles.
  6. Low-cost DC (direct current) charging equipment will be developed, and incentives will be provided to encourage domestic industry players to invest in R&D and production of products related to EV charging.
  7. Key actions will be taken to recycle and reuse retired EV batteries, including boosting the use of circular materials and increasing the willingness to add reclaimed materials to products through differential rates and standards. In addition, the formulation of pertinent regulations and testing standards will be accelerated to incentivize large companies to invest in a sound battery recycling industry chain.
  8. Key subsystems of EVs will be researched and developed, and key components for electric cars will be developed, including automotive motor drivers and controllers and electric motors that meet the U.S. Department of Energy (DOE) 2025 standards.
  9. Small-scale lithium solid-state battery pilot production lines and 350Wh/kg lithium solid-state battery pilot production lines will be built to conduct verification for battery production capacity and reliability.
  10. Charging piles will be widespread in residential, commercial, and public parking areas through amended regulations and promotional programs. Moreover, usage management strategies (e.g., issuing EV-exclusive license plates, exempting EVs from fuel excise tax and vehicle license fees, promoting a parking fee incentive program for EVs, providing EV charging bays, etc.) will be adopted to create an EV-friendly environment. The Ministry of Economic Affairs (MOEA) is planning to increase the number of charging piles from 2,000 to 7,800 by 2025 (the number of AC slow charging piles has reached 3,800), also installed in public parking lots, big-box stores, gas stations, Taiwan Railways, Taiwan High Speed Rail, and highways.

Of the above 10 policies, the most pivotal is the amendment to the Parking Facility Act passed after the third reading in December 2022. The addition stipulates that public parking lots should have dedicated parking spaces and charging facilities for electric vehicles. It is a historic milestone in the development of the rechargeable EV market, and businesses that invest in charging piles will enjoy many benefits for sure, especially with all the clear targets set by the government. Once the number of charging piles is doubled, EV owners' range anxiety will be reduced. According to statistical figures from ChargeSmith, a company that provides end-to-end charging solutions for EV owners, the number of DC fast chargers exceeded 1,000, 1,007 to be precise, whereas the number of AC slow chargers exceeded 3,800 in Taiwan at the end of 2022, representing impressive growth rates. Of course, it is mainly due to the exponential growth in the number of EVs in Taiwan, from 7,064 units (1.6% market share) in 2021 to 16,120 units (3.7% market share) in 2022, and Q1 2023 alone reported 5,322 units (4.7% market share). Such growing numbers translate into growing opportunities, so companies will no doubt want to secure a spot in the market before it is too late. What's more, with the policy adding charging piles to public parking lots, it is believed that EV sales will grow even more.

According to market research institutes, the global charging pile market is expected to soar from US$35.5 billion in 2022 to US$417.3 billion (approx. NT$13.4 trillion) in 2030, with an annual growth rate of at least 31%. Because of the positive forecasts, many Taiwanese manufacturers such as Delta, Fortune Electric, Phihong Technology, Shihlin Electric, TCC, and Chung Hsin Electric & Machinery Manufacturing are ready to join this worldwide competition. Among them, having worked in this field for a long time, Delta currently ranks second and fifth in AC and DC charging pile market share respectively in the world. The outstanding performance allows the company to stay ahead of rivals. Therefore, there are people optimistically expecting Delta to become another sacred mountain guarding Taiwan after TSMC.

As for the utilization of hydrogen energy, the MOEA has budgeted a total of $4.6 billion for investment in various units in the coming two years. Specifically, the MOEA will set up a mobile hydrogen refueling station and build high-pressure hydrogen transmission and storage infrastructure and facilities this year. These hydrogen-oriented achievements will be crucial to the introduction of hydrogen-powered buses and sedans. Interestingly enough, Tsai Ying Clean Energy just completed the empowerment ceremony for the first prototype of a hydrogen bus on May 12. In addition, China Steel Corporation has decided to invest $2.4 billion in the development of zero-carbon hydrogen ironmaking technology, a decision of great significance to automakers engaged in net-zero production because after all, automobiles mostly consist of steel and aluminum. The ability to abandon coal and natural gas and use hydrogen as a reducing agent in steelmaking will mark another important milestone in achieving net-zero carbon emissions.

There is also support for the research and development of solid-state lithium-ion batteries and the establishment of pilot production lines. ProLogium Technology is the leader in this product portfolio in Taiwan. The President of France has just announced the setup of a factory in Dunkirk, France, ProLogium Technology's first overseas solid-state lithium-ion battery factory (the domestic one is located in Taoyuan, Taiwan). The FLCB (FPC lithium ceramic battery) is a new type of battery that combines a solid-state battery with a flexible printed circuit board (FPC). Only 0.38mm thick, the thin battery can be bent and cut freely without exploding. This technology is still evolving. Thanks to the advantage of fast charging of solid-state batteries and the in-house development of the ASM (Active Safety Mechanism, a technology that actively terminates the thermal runaway reaction to ensure battery safety), ProLogium Technology has signed MOUs or technical cooperation agreements with Mercedes-Benz, VinFast, Nio, and other EV manufacturers. Just like GUS Technology, manufacturing LTO batteries, mentioned in the last article, ProLogium will be a shining star in the next rising industry in Taiwan.

In terms of CCUS technology, Germany just reached an agreement with the European Union on March 28 to recognize vehicles with internal combustion engines that use e-fuels, environmentally friendly synthetic fuels made from carbon dioxide and hydrogen obtained by electrolysis from renewables, as zero-emission vehicles. The ramifications of this move require further observations. In any case, we must pay close attention to CCUS, especially after the formation of the Taiwan-US Carbon Capture, Utilization and Storage Industries Promotion Alliance (TUCA).

I hope you see from the above sharing the business opportunities net zero brings for auto-related industries, and my bigger hope is that you see the possibilities for a better Taiwan.

About the author - Kenny Liu

Graduated from Dept. of Aeronautics and Astronautics, Cheng Kung University in 1988, started his auto industry career since July 1990 after two year military service. Starting as a service engineer and a temp technician, product marketing specialist in Peugeot/ Daihatsu, marketing and dealer channel specialist in VW LCV from March 1992, then field manager in GM Taiwan from Feb. 1994, sales and service / parts head in Ford Lio-Ho from Sep. 1998 till retirement in May 2019. Kenny then started to work for JLR Taiwan as sales/service head and consultant/ lecturer. After that, he was invited to work at a Suzuki dealer of Taipei as the general manager until April 2022.