Inside Story

Climate’s quiet achiever

When the history of electric vehicles is written, who will be seen as central?

Akshat Rathi 20 October 2023 3413 words

Global impact: Wan Gang with German transport Alexander Dobrindt at an April 2016 conference in Berlin on alternative fuels. Bernd von Jutrczenka/picture alliance via Getty Images

Wan Gang cuts a diminutive figure, but when he speaks all ten people sitting around the table listen intently. In an opulent Shanghai hotel conference room lit by golden chandeliers, he is surrounded by executives from international car giants including General Motors, Ford, Peugeot, Nissan, Honda and Tesla, and leaders of Chinese car companies like Geely, Chang’an and SAIC.

It is the eighth annual China Auto Forum, in April 2019, and a mere three months after the US electric car company Tesla began constructing a factory in Shanghai. The focus is on the transformation of an industry that is turning towards electrification. The executives are aware that what Wan says here can change the fortunes of their companies.

Many have tried to create a mass market for electric vehicles over the past 140 years, but all have failed. The widely held belief is that if anyone can succeed, it will be Elon Musk, the eccentric, ambitious and obscenely wealthy CEO of Tesla. But when the history of electric vehicles is written, it might be Wan Gang who will stand tallest.

The Musk–Tesla story is lore. Founded in 2003 by Martin Eberhard and Marc Tarpenning in Silicon Valley, Tesla struggled to get off the ground. Elon Musk, who had become wealthy on the back of startups like PayPal, began investing in the company in 2004 and took an active role in product design. After Eberhard was ousted following internal conflicts, Musk took over as CEO in 2008 just after the company began selling its first model, the Roadster.

Tesla sold about 2500 units of the electric sports car, but Musk’s stated goal was to make a mass-market electric vehicle. With every iteration, the car models got cheaper and sales grew — turning Tesla into the world’s most recognisable electric car brand and the world’s most valuable car maker. As of 2022, the company was selling more than 1 million cars annually. Still, the cheapest Model 3 — one that Musk promised would be the affordable car — costs well above US$35,000.

Wan Gang’s story is mostly unknown. His rise in the electric vehicle world started at about the same time as Musk’s. The car engineer by training was appointed China’s minister of science and technology in 2007. In the country’s top-down economic system, Wan’s policies incentivised the creation of hundreds of Chinese companies tied to making electric vehicles. The country now sells more than six million electric vehicles each year. That includes not just expensive cars but the complete range, with the cheapest selling for less than US$10,000.

Wan’s policies have also created some of the world’s largest and most valuable companies selling electric vehicles and lithium ion batteries. And the choices he has influenced haven’t only affected already established Chinese car companies; all big car manufacturers in the world for whom the largest market remains China have been affected.

While Musk fought Wall Street’s scepticism and benefited from waves of government subsidies to keep Tesla afloat through turbulent periods, Wan has shown how policy done right can drive technological disruption not just in China but worldwide. Both men are at the forefront of the global project to propel the world from the current economic age into the next — yet it is the lesser known of the two who has had the bigger impact.

In the mid 1960s teenager Wan found himself in the middle of a violent disruption of Chinese society. Mao Zedong’s Cultural Revolution pitted rich against poor and urban elites against rural commoners. The Red Guard, a paramilitary force controlled by Mao, subjected those in the higher classes of society, such as Wan’s family, to humiliation, beatings and persecution. The Communist Party shuttered universities and sent students to villages for “re-education.” That’s how Wan, a city kid from Shanghai, found himself in Dongguo, a village in Jilin province near the North Korean border, working with other city teenagers to build basic infrastructure.

His work ethic caught the attention of local party members, and in 1974 he was unanimously elected as a team leader. Worried that because his parents were counter-revolutionaries he shouldn’t have been promoted, Wan spoke to the head of the local party branch. “Keep at it,” he recalled being told. “One day your parents will be heroes again.”

After Mao’s death, in 1976, universities were reopened and Wan studied physics at Northeast Forestry University in Harbin and then mechanical engineering at Tongji University in Shanghai, one of China’s most prestigious educational institutions. He excelled there and won a scholarship from the World Bank to pursue a PhD in Germany. For his doctorate at the Clausthal University of Technology he studied ways to reduce the noise made by internal combustion engines — the type of engine that powers all fossil fuel vehicles in the world.

In hindsight, his decision to study cutting-edge automotive engineering in Germany was perfectly timed. Following the oil crises of the 1970s, the global car industry was undergoing a period of major change. The German car industry wanted to stay ahead of growing competition from the United States and Japan, and was crying out for engineers like Wan.

He received job offers from six car companies, from Volkswagen to Mercedes. In 1991 he chose to join Audi, the smallest of the German majors at the time, reasoning that it presented him with the greatest opportunity to rise through the ranks.

Wan began in Audi’s car development division, helping to solve technical issues in design and manufacturing. After five years he realised that in order to climb the corporate ladder at Audi, engineers had to show success in more than one department. He duly moved to production, where he focused on car paint and was soon made head of a division with more than 2000 employees.

To effectively manage them all, he deployed techniques he had learned during his years in Dongguo. On an employee’s birthday, for example, he would carry two bottles of beer to the workshop floor and spend time getting to know them. The effort paid off, and Audi eventually promoted him to its central planning division, giving him oversight of a manufacturing process that produced a car every sixty seconds.

Wan also kept a keen eye on his home country. Deng Xiaoping, who took over as the country’s leader after Mao’s death in 1976, called the Cultural Revolution a “grave blunder.” In the late 1980s he set about reforming China’s economy, including the country’s almost non-existent car industry. He welcomed foreign companies — for example Germany’s Volkswagen and France’s Peugeot and Citroën — to build factories in joint ventures with domestic players. If foreign companies were worried that their Chinese partners would steal their technology, it seemed like a cost worth paying for access to the country’s vast untapped market.

By the 1990s the Audi brand had become a favourite of China’s elite; government officials were often seen being chauffeured around in black Audi saloons. As one of the car maker’s top Chinese-born executives, Wan led many company visits to China, at a time when the country’s car industry was expanding.

On these visits he noticed how the industry’s rapid growth was increasing air pollution and exacerbating China’s reliance on oil imports. If his home country was to go the way of its Western counterparts, as its leaders hoped, then these problems would become intractable. At the beginning of the twenty-first century China was consuming one barrel of oil per person per year, whereas in Germany the figure was twelve and in the United States it was twenty.

Wan wanted his fellow Chinese to have the quality of life he enjoyed as an immigrant in Germany, but given China’s large population, he realised that this might not be possible. It was quite likely that the country couldn’t afford the bill from importing all the oil, even if that much oil could be extracted somewhere, which itself wasn’t guaranteed. Fossil fuels are finite. The way out was to develop cars that could be powered by something other than oil.

In 2000 Wan got a chance to share his ideas with Chinese government leaders. Zhu Lilan, the country’s science minister at the time, visited Audi’s headquarters and factory in Ingolstadt, Germany. During the trip — designed to showcase what state-of-the-art car makers look like — he proposed to her that, rather than continuing to tinker with the internal combustion engine, China could leapfrog the West by using a completely different technology.

At the time, the United States produced some fifteen million cars each year while China produced only 700,000. But international car companies like BMW, General Motors and Toyota were starting to work on electric cars — powered by batteries or hydrogen — that produced no particulate pollution and reduced the amount of greenhouse gas emissions. And Wan was convinced this form of transport would be the future of the passenger car. If China were to become a leader in electric cars within the next decade or two, Wan told Zhu, the country could become the electric car hub of the world.

Zhu invited Wan to come back to China and make his case to the State Council, the country’s highest ruling body. Wan knew that if he succeeded then he could alter China’s history. He found support from Li Lanqing, then vice-premier of China, who in 1952 had started China’s first major homegrown car maker, First Automobile Works. Chinese cities were starting to struggle with the problem of smog. But more importantly, if Wan was right, China could become a technology leader and avoid the humiliation of having to rely on Western countries to bring modernity to its people.

A few months later Wan moved back to China. Under the auspices of Tongji University, which gave him a professorship, he began working as the lead scientist on a secret government program for advanced vehicle technologies. Along the way he played a key role in convincing important members of the State Council to set up policies that would encourage the development of alternative fuel transport, and in 2009 he launched a new- energy vehicle program that would reshape China’s car industry.

Wan’s political acumen was essential. “The automobile’s importance to growth, trade, innovation, military technology, and the environment is, for practical purposes, immeasurable. The industry is a point of national pride,” wrote Levi Tillemann in The Great Race in 2015. “Since the time of Henry Ford, no automobile industry in the world has ever become internationally competitive without that kind of government intervention.”

In the 1930s the US government paid for the construction of more than 100,000 miles of roads under President Franklin D. Roosevelt’s New Deal. It later set up research programs to push for more fuel-efficient engines and established improved safety regulations. In the same decade the Japanese government provided cheap loans to domestic car makers, funded technology programs and undermined US players through tariffs to protect domestic companies. In other words, China’s industrial policy approach, which would rely on subsidies and regulations, was a tried-and-tested method to boost the car industry.

Wan’s plans were bigger still. The car makers he would unleash wouldn’t just serve Chinese customers but would make the sorts of cars that would dominate the future of the car industry — by throwing away internal combustion engines and placing all the country’s bets on zero-emissions transportation.

Wan’s appointment as China’s minister of science and technology came one year before China was due to hold the 2008 Olympics in Beijing. An image-conscious Communist Party spared no expense to show off what it was capable of. This would be the first “green” Olympics, the party declared, as it announced the closure of coal-fired power stations and factories for weeks, returning blue skies to the smog-choked capital. It also promised to plant enough trees to offset the emissions caused by athletes’ air travel.

Wan had been on a deadline ever since being put in charge of China’s advanced vehicle program back in 2000: to produce electric buses and cars in time for the 2008 Olympics. It wasn’t the first time electric vehicles had been launched at an Olympics. BMW had produced two prototype lead-acid battery-powered electric cars for the 1972 games in Munich. But China’s plan was far more ambitious: to have 1000 electric buses and cars ready for the Beijing games.

By 2007 Wan Gang had many research institutes and industrial partners, including state-owned car makers BAIC, SAIC, Dongfeng and Chery, working on the project. But China still hadn’t mastered the technologies required to make effective electric vehicles: efficient motors powered by advanced batteries and controlled by sophisticated software. Though it had produced and even successfully tested prototypes, China did not possess the manufacturing capability to make 1000 such vehicles. Rather than admit defeat, the government scaled back its ambitions; a BAIC subsidiary would produce fifty electric buses and Chery would make fifty hybrid electric cars.

Chery had to hire Ricardo, a British engineering consultancy, to help meet the deadline, according to Levi Tillemann’s research. After many long hours the new team had developed a system, which could be bolted on to the Chery A5, a compact car, that allowed it to automatically switch between a petrol-powered engine and an electric motor.

But work on the computer algorithms that enabled the switching had begun late in the process. That meant Chery had to specifically train drivers for the hybrids who could manually switch between electric and internal combustion engine modes. The BAIC buses seemed to work well but were retired within three years because their batteries quickly degraded.

None of this came out during the Olympics, and the spectacle had the world enthralled. “Blockbuster,” wrote the New York Times. “Astonishing,” wrote the Guardian. “The world may never witness a ceremony of the magnitude and ingenuity,” said the Sydney Morning Herald.

After the Olympians went home, the industries restarted and restrictions on car use were lifted. Unsurprisingly, smog returned to Beijing. Within months, in 2009, China overtook the United States as the world’s largest market for cars, selling thirteen million gas-guzzlers. That meant even more particulate pollution — tiny particles capable of entering the human bloodstream and leading to breathing problems. The pollution can cause cancer or stroke, and the higher the number of particles belched out, the greater the harm caused.

The Chinese leadership could see the problem from the windows of its Beijing offices. That is why, even though China’s electric vehicle industry was clearly lagging, the government’s support for Wan’s ideas to electrify transport did not wane.

Despite the disappointing delivery of electric vehicles at the Beijing Olympics, Wan was able to get approval for a bigger rollout of new-energy vehicles with a hefty subsidy for each new car purchased. The bet was technology neutral, encouraging car makers to make battery-powered cars, plug-in hybrids (large battery and a combustion engine), and fuel-cell cars (consuming hydrogen fuel to produce only water as exhaust).

The program aimed to sell 1000 new-energy vehicles in each of the ten largest Chinese cities by 2012, and the government was prepared to provide as much as US$10,000 per car in direct subsidies to incentivise people to buy them. It would also give indirect subsidies to car companies and battery makers in the form of tax cuts and cheap land for factories. The government bill for all that ran into the billions of dollars.

With continued support, the plan eventually began to work. BYD, a Shenzhen-based battery company, launched the plug-in hybrid F3DM — it looked like a carbon copy of the Toyota Corolla — months after the 2008 Olympics. Thanks to the subsidies, there were 10,000 of them on China’s roads by 2011.

Even as electric vehicles began appearing on the streets of Chinese cities, the number of fossil fuel cars sold in China continued to increase. In 2012 the country sold fifteen million passenger cars. Predictably, pollution worsened, and the figures were available for all to see with the government beginning to openly share air-quality data.

Publication of these figures was a surprise. It would almost certainly make the government look bad. But it was a calculated move. In 2014 China’s Premier Li Keqiang used the data as the basis for a declaration of war against pollution at the annual gathering of the National People’s Congress.

The government had provided a carrot, in the form of direct and indirect subsidies for electric vehicle makers. Now it had a stick. Wan Gang’s ministry was directed to work with local governments to introduce regulations to control the number of new cars on the roads each year. If city residents wanted a licence plate for a fossil fuel car, they needed to either enter a lottery or bid in an auction. Sometimes the amount they would have to pay for the new licence was higher than the cost of the car itself. For new-energy vehicles, it was first come, first served.

In 2011 the country sold about 1000 battery-powered cars and plug-in hybrids. By 2022 that number stood at nearly seven million and China had become the world’s biggest market for electric vehicles. In some years, the annual rate of growth was 300 per cent. As a fraction of all cars sold, electric vehicles now make up more than 25 per cent of total sales — a figure that is already higher than the government target of 20 per cent for 2025 sales. It’s clear the future of cars in China is electric, and the country’s push has accelerated the electrification of transport globally.

In 2018 Wang Zhigang succeeded Wan Gang as minister of science and technology. Since then Wan has remained a key player in the country’s electrification efforts, but his impact was clear even before he left his government job. Between 2009 and 2017 the Chinese government spent more than US$60 billion on electric cars, according to a study from the Center for Strategic and International Studies. To put that figure in perspective, it is more than the market cap of General Motors, which produces some eight million cars each year.

Wan’s push also created industrial jewels such as BYD, the world’s largest maker of electric vehicles, which counts Warren Buffett as one of its biggest shareholders. It doesn’t just sell electric cars around the world; it also sells electric buses. It operates electric bus factories in California and Ontario that have the capacity to build more than 1000 buses each year.

In that sense, the money the Communist Party spent has already paid dividends. Today, China doesn’t just have factories that can produce electric cars; it has an entire supply chain, from the globally mined metals that are used to make batteries to the complex software installed in electric cars. Crucially, the country also has people who can run every level of the supply chain. Though most of this talent is domestic, many Chinese electric car firms are now wealthy enough to poach staff from international companies.

Other countries are trying to play catch-up. The Inflation Reduction Act of 2022 — the largest injection of cash from a US government in climate-oriented investments — includes some US$100 billion worth of incentives for electrification of transport in the United States. Similarly, bullish plans for electric vehicles have been hatched in Europe, where strict emissions criteria have forced car makers to pivot to selling only electric vehicles within the next decade.

During Wan’s time as China’s minister of science and technology, all the countries in the world signed the 2015 Paris agreement. Electric cars are a crucial climate solution, and China has shown it is possible to scale the technology quickly. That’s led to many countries banning the sale of new fossil fuel cars by 2040 or earlier. Markets covering more than 20 per cent of car sales globally now have a mandate to fully phase out internal combustion engine vehicles.

What Wan Gang, with China’s backing, has shown is that succeeding in scaling a green technology requires supportive government policies, substantial public and private investment, and empowering entrepreneurs. Done right, it can also give a country a commanding technological lead over the rest of the world. For “climate capitalism” to work, all three are required to ensure technologies can scale within a few decades to get the world to zero emissions. •

This is an edited extract from Akshat Rathi’s Climate Capitalism: Winning the Global Race to Zero Emissions, released in Australia this month.