Despite the hip advertising seen in the U.S. for electric cars such as the Chevy Volt and Nissan Leaf, analysts indicate that the vehicles will only make up a small percentage of the market for years to come. But a recent deal between a Boston-based battery maker and a major Chinese auto company shows that a strong movement is underway that could soon make China the center of the electric vehicle world.

Boston-Power has signed a multi-year agreement to provide lithium-ion battery systems to Beijing Electric Vehicle Company, a division of Beijing Automotive Industry Company (BAIC). The battery pack will be installed in thousands of electric cars by 2014, notably BAIC’s new C70 full-size sedan, which goes on pre-order this fall. The reasons Boston-Power reached a deal with a Chinese automaker, and not, say, an American or European company, reveal why China could rapidly lead the market.

The most fundamental reason is that “China has committed to achieving sustainable energy innovations in all aspects of society, including transportation,” says Christina Lampe-Onnerud, who founded Boston-Power in 2005 and is the company’s international chairman. China is now the number one auto market in the world, and is poised to claim that rank for electric vehicles as well.

A clear national policy brings certainty to that market. China is determined to create a basic electric car for people in urban areas, Lampe-Onnerud notes. Europe’s approach is clear too: launch innovations in high-end cars first then let them trickle down. The U.S. government, however, “is torn on its national priorities,” Lampe-Onnerud says. “It needs a clearer energy policy.”

Boston-Power’s chairman, Sonny Wu, echoed the sentiment in a prepared statement about the battery deal: “China is committed to leading the world in electric vehicle innovation, manufacturing, public policy, consumer adoption and export.”

Lampe-Onnerud stresses the innovation point. “BAIC is inviting innovators from around the world to bring it solutions. It is also encouraging innovation from within its company.” As a result, Boston-Power is establishing a research, development and engineering facility in China, as well as a state-of-the-art manufacturing plant there.

Government incentives are helping to scale up R&D and manufacturing in China, and consumer incentives are also being put into place. Individuals who want to use a car in megacities such as Beijing and Shanghai, for example, must enter a lottery to get a license plate, and lucky winners can only drive their vehicles in the city on certain days—steps being taken to reduce gridlock and smog. But Beijing recently lifted the restriction for electric vehicles, so that anyone can get a plate and drive their electric car at any time.

China’s deal with Boston-Power also underscores the choice of lithium-ion technology, which some industry observers have said is too expensive for automotive applications or has maxed out in terms of performance, leaving it most appropriate for smaller products such as laptops and cell phones. But Lampe-Onnerud, a well-known battery entrepreneur and innovator who has 80 patents in various stages of filing, maintains that lithium-ion technology has plenty of room left for innovation. The product line Boston-Power is selling to BAIC—called “Swing”—“is really only the second generation,” she says. It still has a long evolutionary life.

The Swing batteries have 50 percent more energy density by volume and 45 percent more by weight compared to typical batteries on the market. The system for BAIC will last 10 years even if frequently recharged. It will work down to -40 degrees Celsius—“It gets cold in Beijing,” Lampe-Onnerud says. And it has passed the same high safety standards the industry, and Boston-Power itself, have imposed. Overall, Lampe-Onnerud says, second-generation lithium-ion batteries from her company and others “are better in all aspects—higher energy density, long life, quick recharge—which to some people is a bit of a surprise.”

Auto industry culture, more than technical innovation, may be the largest barrier to widespread adoption of electric cars. “It takes a long time to gain market acceptance,” Lampe-Onnerud says. China is apparently looking to promote acceptance globally even though its domestic market alone is so large. Fang Qing, general manager of the Beijing Electric Vehicle Company division, says his company intends to bring electric vehicles “to consumers in China and around the world.”

Photo courtesy of BAIC