Will China's $15 Billion EV Investment Guarantee Success?

China's potentially massive investment in electric and hybrid vehicles clearly marks its desire to be a world leader. But given their auto industry track record, it also poses the question of whether or not they will be successful.

According to Shanghai Securities News, 16 large, state-owned auto companies have signed up to form an alliance that will oversee research and development of electric and hybrid vehicles -- to the tune of US$15 billion.

The plan: to put over a million EV's and or hybrids on the road, sending its own ripples through the world's fastest growing auto industry.

There's no question they can put forward the investment.

“This is the kind of plan the government would like to happen, and they certainly have the resources to put behind it,” said Oded Shenkar, a professor of management at Ohio State University and the author of “The Chinese Century.”

“The government could easily underwrite or subsidize the development costs,” Shenkar said, “and do it at a time when the global car industry is still reeling.”

But the question of success is not so easily answered. Especially when considering China's difficulty in the auto industry over the past several years.

Consider the problems China's BYD Auto company had with trying to move toward mass-production. This in the world's largest auto market.

There's also the problem of China's auto industry, for the most part, lagging behind the standards and innovation of other producers like Japan or the West.

Regardless, vehicle sales in China this year are predicted to reach 17 million, and this new investment is hoping at least 5 % of those will be energy efficient.