Anyone who believes that the Chinese government and other players in the policy-making process have complete agreement on the readiness of China’s domestic companies to produce globally-competitive electric vehicles, or in how to bring them to that level, need only read the diverse commentaries that appear in the Chinese press to know that is not true.
Unlike the past, when debate was hidden behind closed doors and only the official line appeared in public, China’s media world is now filled with vibrant debate on topics so long as those topics don’t threaten the government’s hold on power. The EV industry falls into that category. Saying Chinese companies aren’t globally competitive is unlikely to produce social unrest, and there are plenty of opinions about their readiness on display.
I recently read an excellent blog on that topic posted by Professor Wang Binggang, the team leader of the National Coordinating Office for Clean Vehicle Action (I confess not to know exactly what that is or where it falls in the whole power structure, but it seems to be associated with the 863 plan.) This is the link but for some reason is doesn’t work…. http://wangbinggangauto.sohu.com
Wang argues that China lags the global industry in the quality of its electric vehicles and that the real weakness is in the supply chain. He also draws a comparison with producers of China’s “traditional” i.e. internal combustion engine vehicles, who concentrated on producing the vehicle as a whole and thus have to rely on foreign companies for key technologies. Wang makes an excellent point. Is the entire development process in China stymied because of a lack of indigenous innovation or maybe just an unwillingness to take the time to innovate?
But let me start from the beginning. The beginning of Wang’s blog post, that is. He lays out the EV production numbers for 2013, which are dismally low though a big increase on 2012. China produced 17,533 new energy vehicles in 2013, up 39.7 percent on-year. That included 14,243 battery-electric vehicles and 3,290 plug-in hybrid electric vehicles. As for sales, in 2013 NEV sales totaled 17,642, up 37.9 percent on-year. That included 14, 604 battery-electric vehicles and 3,038 plug-in hybrid electric vehicles. Production of regular hybrid vehicles in 2013 was 14,463; sales were 15,101 units. (regular hybrids are not consider “new energy vehicles.”)
It seems China has had some success in the regular old hybrid bus world. It ranks number one worldwide in the number of hybrid buses on the road. China’s hybrid bus technology has reached world levels, Wang says. But hybrid technology is mature technology and in the area of electric vehicle innovation there is a big gap between China and the rest of the world, he says.
Wang traces this lack of innovation back to China’s weakness in tradition vehicle research and development. Indeed, though China’s domestic automakers have been producing cars for decades, those who do not have foreign partners still rely on foreign suppliers for technology such as automatic transmissions (okay, some Chinese OEs claim to have indigenously-developed ATs. But they trail foreign ATs by a long way…). And Chinese automakers who partner with foreign OEs generally rely on the foreign partner for certain complex systems.
This reliance on foreign partners is probably the underlying cause of Wang’s next reason for China’s slowness in developing EV technology: Lack of investment in research and development. Despite the policies to promote electric vehicle development in China, investment has been slow and it lacks good products. So the policies are “empty words,” says Wang.
He then falls back on that recent favorite towering example of how to develop electric vehicle technology: Tesla. www.teslamotors.com “Everyone is talking about Tesla these days,” says Wang. “I really favor this way of thinking. There are lots of things we should study about Tesla.” He indicates that the structure of U.S. society is more likely to produce innovation, so maybe there is a bit of revolutionary thinking here. Hmmm.
The main point is: Elon Musk was able to start an automotive company basically from scratch. Now that Tesla EVs are being sold in China, http://blogs.marketwatch.com/thetell/2014/01/28/tesla-hits-it-big-in-china-on-social-media-at-least/the country’s policy makers seem obsessed with Tesla’s road to success. I read that China is considering allowing non-automotive companies to jump into the EV sector because that could facilitate the rise of a Chinese Tesla. I won’t go into the merits, or lack thereof, of that position. But as one article I read pointed out, non-automotive companies are already jumping into the EV business by buying a shell automotive company.
But I digress. The main point of Wang’s blog is that China should concentrate more on developing the components that go into an EV than on producing the entire EV. “Electric and hybrid vehicle’s most critical technology is in the components,” says Wang. In China, the battery industry is the area where development has occurred most quickly, says Wang. But our battery technology is still not as good as a “great country’s.” Wow, those are fightin’ words. But true. As Wang points out, China’s battery producing companies still have to rely on foreign technology for many aspects in production and testing.
Finally, Wang discusses local protectionism and how that has hindered the development of indigenous EV technology. The latest NEV policy does call for 30 percent of NEV bus purchases by local government to be from a company outside of that area. But local protectionism still exists, says Wang, in the form of technical and permitting requirements that effectively keep all but local brands out of the market.
If local companies don’t face outside competition, they don’t have to innovate, says Wang, and fall farther and farther behind technologically. “We ought to operate according to the principle of equal competition in order to provide development opportunities for competitive local products,” Wang concludes, “thus promoting at the same time the rapid maturation of our new energy vehicle industry and its global competitiveness.” Wow, good stuff. Now let’s see if anyone is listening.
China seems to be firming up on its policy towards electric vehicles – at least for near-to-medium term. That is helping a U.S. company that has been trying to grow its toehold in China for several years. Efficient Drivetrains Inc. of Dixon, California has landed development contracts with several Chinese automakers and even attracted interest from some Chinese investors. The trick, as always, is to turn these contracts into volume production.
“There is no guarantee there will be volume, but we are trying to stay away from one-off demo projects,” says Joerg Ferchau, CEO of Efficient Drivetrains. “We only work with customers who have ability to do volume production.”
Full disclosure: I do some business development work with EDI, as Efficient Drivetrains usually goes by. So I’m always interested in how EDI’s business, especially in China, is developing!
The year is starting off with a bang. EDI www.efficientdrivetrains.com is working on four new contracts, three in China. And it has three funding offers, several from China. Of course this is just a start. For EDI to become a $100 million a year company, says Ferchau, “We need ten customers worldwide that go into mass production.”
EDI’s development contracts in China seem directly related to the recently-issued new energy vehicle policy that emphasizes electrification of municipal fleets. http://blogs.wsj.com/chinarealtime/2013/11/27/china-hopes-cities-can-help-boost-electric-car-sales/ Two contracts are for PHEV trucks, the other to engineer an electric car with a continuously variable transmission for the government of a south China city.
One of the PHEV truck contracts is to develop a 10,000-pound box truck for city deliveries. The demo truck is on a boat from China to the EDI headquarters in Dixon, where the drivetrain will be installed. One of the partners in the deal, a privately-owned company, owns a logistics fleet and will be an end customer for the truck. EDI is working with the partner to certify the vehicle and show it to local governments in China.
That truck should fit nicely with a mandate in the latest NEV policy, which says municipal fleets in China’s smaller cities should have at least 5,000 NEVs in them by 2015. Larger cities should have at least 10,000. And at least 30% of the new vehicle purchases for municipal fleets should be NEVs, according to the plan. http://www.chinadailyasia.com/business/2013-09/18/content_15088801.html
EDI is also building a low-cost PHEV SUV for a China. The body was produced by Xinkai Automobile Group in Hebei province, which supplies vehicles to local governments. Two automobile manufacturers are already interested in the PHEV SUV, says Ferchau.
Also on the city government theme, EDI has a contract from the government of the south China city of Dongguan to deliver five battery electric sedans with continuously variable transmissions. Ferchau claims this is the world’s first implementation of a CVT on a battery-electric vehicle.
The new policy may also be behind an expansion of EDI’s contract with Ankai Bus Co. http://www.hktdc.com/manufacturers-suppliers/Anhui-Ankai-Automobile-Co-Ltd/en/1X07WQ3R/ EDI developed a full-sized PHEV bus for Ankai, one of China’s largest bus makers. Now Ankai is talking with EDI about developing a smaller bus for city use, says Ferchau.
EDI is also busy here in the U.S. It is in talks with several utilities to provide PHEV fleet vehicles, says Ferchau.
The good and bad of all this activity, even in the U.S., is that it is mostly driven by government policy. The negative aspect of that driver is that it is not market-driven, organic demand. On the other hand, points out Ferchau, the policies have shifted the customer base to fleets where PHEV drivetrains make a lot of sense. He has an historic (and seven years is historic in EV terms) view of the market. When he first got involved seven years ago, says Ferchau, the motive for EVs was to save the planet. Then it was rising fuel prices, then economic development and job creation. “Now it is about the laws,” he says. “You have the mandates in place but the end customers are the people who operate fleets. They have needs for real vehicles.”
Of course, in China the law could change. And some claim that the emphasis is now shifting from electric vehicles to compressed natural gas (Oh yeah, I also wrote a blog pointing out how CNG was a more-discussed topic than EVs at a conference in Shanghai last October….). But I think electric vehicles will remain part of China’s long term plans for its vehicle fleets. And hey, EDI’s PHEV technology is fuel-agnostic. How about a PHEV CNG truck with CVT?
In 2012 it seemed that every week a U.S. company with electric vehicle technology was announcing a China deal. That flood slowed to a steady stream in 2013 as Chinese companies and investors waited to see what technologies the government would support. Some companies I wrote about in those go-go days are no longer in business. So I was pleasantly surprised to see a press release a few weeks ago from Protean Electric www.proteanelectric.com announcing FAW-VW and Protean are cooperating to test Protean’s in-wheel EV propulsion system. FAW-Volkswagen is Volkswagen’s joint venture with First Auto Works in China. www.faw-vw.com
To be sure, Volkswagen has some ambitious electrification plans for the China market. I must say, however, that I am still skeptical that any long-term business deal resulting in volume production of vehicles with Protean’s technology will result from this cooperation.
I talked with Ken Stewart, vice president of business development at Protean, about the deal and how Protean’s business in China is going in general. The good news is that Protean’s in-wheel motors are drivetrain agnostic where EVs are concerned and can be used with PHEVs, BEVs, fuel cell vehicles, and hybrids. In China, where production often awaits government policy and government policy can change from year to year, that flexibility is useful.
The most recent New Energy Vehicle Policy supports plug-in hybrid most strongly in the near term, and emphasizes electrification of municipal fleets. http://usa.chinadaily.com.cn/epaper/2013-09/18/content_16979336.htm Protean’s drivetrain slots into that space nicely. Protean’s current in-wheel electric drive system fits an 18-inch road wheel, which is the type on larger passenger vehicles and the upper half of the light commercial vehicle segment. It has regenerative capability to recapture energy from braking. And it can be included on a vehicle without major changes to the production process.
Stewart said the in-wheel motors and electronics cost $1,500 per wheel; the battery pack and battery management system control is extra. “It is a clean, easy way to get a hybrid,” Stewart told me. “Depending on the battery, you could get up to 30% better fuel economy and it is less expensive than retooling the whole car.”
A bit of background, though you could just go to this link and read the press release: http://www.proteanelectric.com/en/media-center/news/ According the agreement, FAW-VW will produce an all-electric Bora sedan using two of Protean’s in-wheel motors. To quote the press release: “The motors reside in the space behind the wheel, producing torque and power exactly where and when drivers need it. Each in-wheel motor comes with its own power and electronics control packaged inside the motor, which communicates with the vehicle utilizing a common vehicle control system.”
Now of course Protean puts the best spin possible on this cooperation with FAW-VW, but right now the two companies are only doing what Stewart called “pre-engineering work.” That should be concluded in the first quarter of next year, he said. Then, “the intent is to move into the next phase of activity, which hasn’t been fully determined yet but is likely to include demonstration vehicles and engineering on par with what is required for a production vehicle.”
Warning to Protean: Chinese companies like to talk to suppliers about technology but not act on those talks. And as a friend at a very large multinational supplier said to me regarding how often that occurs, “our business is to do business” not demo products. Actually, Protean may feel the same way having already produced an extended range electric demo vehicle with Guangzhou Auto and Brabus. The Trumpchi 2WD EV debuted at the 2010 Guangzhou Auto Show and made an appearance at the Detroit Auto Show in 2013. GAC has another car using the motors -+going through tests, said Stewart. But volume production of any kind seems distant. So the gap between demo and any kind of volume production can be long.
But you gotta start somewhere, I suppose. Volkswagen has said it aims to launch at least 15 electric car models in China by 2018, and to begin production of electric cars in China in 2016. Using Protean’s in-wheel motors wouldn’t require much re-engineering, which could help VW meet this goal. If an automakers wants “more New Energy Vehicle technology on the road quicker and less expensively, then we are the answer,” said Stewart.
Automakers in China are also going to have to explore many different technologies to meet the 5 liter/100 kilometer fuel economy requirement by 2020. Protean’s solution is a good option to boost fuel economy on larger sedans, said Stewart. Assuming a 15-20 kWh battery and a European driving cycle, he predicts 35% improvement in fuel economy on larger vehicles “without having to change major tools or dies.”
The investors behind Protean’s China venture are the same ones as when I talked to Bob Purcell in 2012 plus, it seems. They are Oak Investment Partners www.oakvc.com , a Palo Alto, CA-based company; GSR Ventures www.gsrventures.cn , a Beijing-based company with offices in Palo Alto; a Liyang, China – based company called New Times Group; and the government of Liyang http://www.jiangsu.net/city/city.php?name=liyang .
I’m guessing Liyang’s investment is in the form or a sweet deal on the manufacturing facility that Protean is building there, which is running a bit behind schedule. Initially production was to start in early 2014, so Protean may not miss the mark by too much, however. It is “coming up into the area where we are spending money on capital equipment” for the factory, said Stewart. Protean is talking to other automakers in China about using its system, he added. “The customer demand is coming but not as fast as we’d like,” said Stewart.
As for when we might see 10 or more vehicles on the road in China with Protean’s in-wheel motors, around one year for captive fleet vehicles and 18 months for consumers, said Stewart. As for the few vehicles that are in testing right now, the feedback from FAW-VW has been very good, said Stewart. “We are seeing efficiencies that are delighting them,” he said.
He adds: “I am not doing this to have them go through a development program and change their mind.” Good luck with that.
Is China getting left behind in electrification trends by focusing on plug-in hybrid and battery electric vehicles? Is it ignoring alternatives that would achieve its goals of cutting emissions and reducing dependency on imported oil more quickly than full-on electrification? Paul Rivera, director of the global product group for hybrids and electrical systems at engineering firm Ricardo thinks so. “Up until about 2 years ago most of our activity was focused around full BEVs, PHEVs, HEVs. Now there is really strong push to get into mild hybridization,” he told me. Except in China, that is. “The Chinese OEMs are investigating range extenders and battery-electric vehicles,” says Rivera.
Now Rivera has a vested interest in touting mild hybridization, because Ricardo www.ricardo.co.uk sells that technology. But it still got me to thinking that maybe the Chinese government should be considering mild hybridization. That begs the question: Is China wasting time pursuing advanced technologies – especially pure electric vehicles — which may not ever represent a viable option for large scale adoption? Should it switch its focus to more available technologies, such mild hybridization?
I say no. The government should go right ahead and push BEVs and PHEVS. That is technology that will have a place, perhaps a big one, in future vehicle choices. But China’s government should also give a nod to mild hybridization.
The technology is ready to go. It is the automakers in China who will have to create a market for it, however. They can do that by producing vehicles with equipped with mild hybridization at a reasonable price. The automakers must make the case to consumers that the efficiency gained is worth the marginal extra cost. And since the automakers will likely have to include some mild hybridization in their vehicles to meet the 5 liter/100 kilometers fuel efficiency requirement, they better get busy.
What exactly is mild hybridization? For our purposes it means a more powerful start-stop system, one that uses a 48 volt battery combined with a relatively small battery and other systems such as regenerative braking to achieve fuel savings. Naturally Ricardo has such a product. Why else would Rivera by pimping the technology? Ricardo’s system is call HyBoost, and it can be added to vehicles for a little as $1,500 for up to 44 percent better fuel economy, says Rivera.
German automakers are the ones who first used a 48V system, says David Alexander of Navigant www.navigant.com . They wanted something bigger than a 12V in order to improve driveability of cars with start-stop. Cars with 48V systems are just starting to be produced, says Alexander. The 48V system will be included on high-end vehicles to improve improve the driving feel (not for performance) and fuel economy, he says. The 48V system won’t be an option, figures Alexander. “ It will just be hidden underneath,” he says. “The OEMs don’t want to frighten people off saying new tech. It will cost the OEMs, he says, but “they are doing it to meet mileage requirements in top end” vehicles. At the low-end 48V systems might not have much use except to add some ability to drive on pure electric power for small, light cars because they are so fuel efficient anyway, says Alexander.
Seems like technology that is perfect for China as well, right? Automakers there must meet stiff the new fuel economy goal by 2020. And, says an executive at a foreign automaker that is expanding in China, the batteries that will be needed for the 48V systems are the kind that China is pushing anyway, i.e. iron phosphate.
Even though there isn’t much interest in 48V systems in China now, Ricardo is hopeful. I guess it has to be since that’s what it wants to sell in China. And since European automakers such as BNW and Audi will have cars in Europe with the technology in the next few years, they will be the likely first to try to sell vehicles with 48V systems in China.
Ricardo’s strategic division forecasts that mild hybridization will be huge part of the mix in China within five to seven years, says Rivera. Possibly. If foreign automakers can make the case for it in China, their local partners might also introduce it. They should. China doesn’t want to get left behind.
Have you seen the news that the Swedish auto brand Saab isn’t dead? It has been re-born as a Swedish-Chinese company that will produce electric vehicles, mainly for the China market. Sound like a fantasy? It is, sort of. It seems the Saab’s new owner is counting on his connections in China to create a market for not only a gasoline-powered car by a company that has no recognition in China and a brand with little recognition, but also to launch an electric vehicle. Let me be blunt. This strategy will not be successful.
Saab’s assets were purchased by National Electric Vehicle Sweden (AB), www.saabcars.com whose founder and CEO is a Swedish-Chinese guy named Kai Johan Jiang. The company’s website says its aim is “to be a front-runner in the automotive industry, with a focus on electric vehicles.” NEVS is hedging its bets. It admits that not all consumers are ready to make the move to electric vehicles, so its first Saab vehicle is gasoline-powered.
Of course I don’t know anything about Kai Johan Jiang. He is an entrepreneur, it seems, with an interest in renewable energy. He owns an investment company in Beijing, State Holdings (which despite its name is privately held) that invests in a variety of clean energy companies. http://statepower.cn/ To be sure, China is all about clean energy these days. And Jiang may have fabulous guanxi, with the government in Qingdao, for one. It is one of the investors in NEVS.
But China is awash with domestic and foreign producers of gasoline-powered and now also electric vehicles whose brand names enjoy much more recognition and in many cases higher status than Saab. A newcomer such as NEVS has little chance of making it in China.
NEVS, despite its name, is not a dedicated EV producer. Indeed, it has started production of a gasoline-powered Saab 9-3 sedan. http://www.news.com.au/business/companies/new-owners-national-electric-vehicle-sweden-roll-out-first-saab-in-years-following-bankruptcy/story-fnda1bsz-1226773806041
According to the NEVS website (NEVS did not respond to an email request for comment), it is producing a very small volume of gasoline-powered vehicles, known as the Saab 9-3 Aero Sedan 2014, right now in Sweden. The plan is to sell the car in Sweden and China. If NEVS’s real purpose is to sell gasoline-powered mid-sized sedans in China that will be tough. The segment is already crowded with competitors such as the Toyota Camry, Honda Accord, and Buick Regal.
As for EVs, aside from saying that in 2014 it will launch an electric vehicle in China, NEVS has given no specifics about whether or not that will be a full electric, plug-in hybrid electric, or regular hybrid. I’d bet on a plug-in hybrid electric as the Chinese government is pushing PHEVs more strongly than BEVs in the near-term. But just about every domestic automaker in China, as well as foreign brands including Volkswagen and Nissan, plan to launch various types of electric vehicles in the next few years. “I don’t see any reason than an individual customer would spend money to buy a Saab EV,” says Kevin Huang of WAYS Consulting www.way-s.cn in Guangzhou.
Then there is the Saab brand itself. According to Huang, “the sales of Saab in the China market has always been poor.” From 2007 to 2011 it sold only 2,057 units in China. Sales ceased in the second half of 2011. I won’t even go into the fact NEVS lacks a dealership network. Or that BAIC, a large state-owned automaker, acquired the rights to an older Saab 9-3 model in 2009 and is now producing a gasoline-powered sedan on that technology and platform in China and has said it will produce an EV based on the same platform.
Okay you might say, NEVS could sell to government fleets. But the same competition issues apply. The government of Qingdao—which owns 22 percent of NEVS — has placed an order for 200 NEVS electric vehicles to be tested as taxis in the coastal city in northeastern China. In the future, says NEVS, it will produce both gasoline-powered vehicles and EVs in Qingdao. But Qingdao is not a huge market. And, the latest plan from Beijing to promote electric vehicles attempts to temper local favoritism by calling for local governments to make at least 30% of their new energy vehicle purchases from companies outside the locality.
Jiang seems to have deep pockets, and a real belief in renewable energy as a viable investment. That’s to be applauded. But I don’t see how his investment in Saab will pay off.
I recently attended (and moderated a panel at) the Clean Truck and Bus Summit in Shanghai. www.calstart.org Of course the first topic that came to my mind was electric vehicles. But this conference looked at the full range of alternative fuels. And one that was discussed much more than electrification was compressed natural gas, or CNG.
CNG is abundant, cheaper than diesel, and cleaner burning than diesel or gasoline. But the growth of a CNG fleet in China faces one of the same obstacles that growing an EV fleet faces, namely lack of a refueling infrastructure. There are also supply questions – China is just beginning to try to get at its plentiful natural gas reserves. China is estimated to have the largest reserve of shale gas in the world at 1,275 trillion cubic ft. But that gas is deeper and tighter than reserves in the U.S., and China lacks the technology to recover it. China’s state-own petroleum companies have been on an acquisition spree, however, buying western companies that do have that technology. The U.S. has plenty of natural gas, and could selling some of it to China could help our trade deficit with China. http://www.brookings.edu/blogs/up-front/posts/2013/11/07-shale-energy-revolution-china-downs That might occur but there are, as always were China is concerned, political objections.
Then there is the actual supply in China of vehicles that run on CNG. There are few passenger vehicles. The number of commercial vehicles is also still small though growing. But that is less of a barrier than those listed above, according to my industry friends. Commercial vehicle manufacturers such as Navistar www.navistar.com are eyeing the CNG segment as are Chinese truck makers.
CNG has advantages as a fuel over electric vehicles in the pollution area, as well, at least in the near to medium-term. It is more clean-burning than gasoline or diesel. While electric vehicles don’t produce any omissions, in China the electricity to charge them is largely produced by burning coal, defeating the purpose where cleaning up the air is concerned.
Boosting the number of CNG vehicles on the road would also help reduce China’s dependence on foreign oil, a huge concern of the Chinese government. But a large-scale switch to CNG might simply transfer that dependence to imported natural gas, at least until China is able to get at its natural gas reserves, which are trapped in shale formations. http://blogs.wsj.com/washwire/2013/11/07/china-hesitates-as-washington-oks-natural-gas-exports/ Still, that seems a short-term issue rather than a systemic one. http://www.forbes.com/sites/jackperkowski/2013/06/13/shale-gas-chinas-untapped-resource/
Estimates of the size of China’s CNG vehicle fleet by 2020 suggest that most feel those obstacles will be overcome. WAYs Consulting, www.way-s.cn based in Guangzhou, estimates that China will rank number one in the world in ownership of CNG vehicles in China by 2020 at 3.5 to 4.5 million vehicles. CNG will be more popular in some provinces than others, however. WAYS forecasts that by 2015, when the total number of CNG vehicles in China will be 2.3 to 2.5 million vehicles, 10 provinces will have more than 100,000 CNG vehicles. The standouts include Xinjiang and Sichuan at more than 400,000 each and Shandong at more than 300,000. As for infrastructure, WAYS figures there will be up to 5,000 natural gas stations in China by 2020.
Consultancy ATKearney www.atkearney.com is more bullish on CNG in China than on electric vehicles, though CNG fueling infrastructure is still a major constraint to developing the market for CNG vehicles, Bill Ding of ATKearney told the Clean Truck and Bus Summit. Ding compared the technology and customer acceptance for CNG, battery-electric, and hybrid medium-duty and heavy-duty commercial vehicles. CNG wins against both BEVs and HEVs. The technology is mature and customer acceptance high with CNG, said Ding.
On the other hand, battery electric vehicle technology for trucks is not mature and there are lots of doubts about both the technology and charging infrastructure, he said. As for HEVs, though there has been investment in hybrids because of government support, the battery and battery control technology gap in China is still large compared to other places, he said. Customer acceptance is therefore low.
Growing the number of “clean” medium-duty commercial vehicles is crucial because they accounted for nearly half of the NOX emissions in China in 2011 and 61% of the PM emissions, according to ATKearney. Still, HEV commercial vehicle sales will top those of CNG units in 2020 in both the medium and heavy duty segments, according to ATKearney.
It forecasts the market for medium duty HEV commercial vehicle sales at 850,000 units in 2020. The medium-duty CNG truck market is forecast to be 710,000 units in 2020 and the market for battery-electric units will be zero. Yep, that’s right, zero.
The market for battery-electric drivetrain sales will for some reason be a bit bigger in 2020 in the heavy-duty truck segment, at 5,000 units. Hybrid electric heavy-duty sales in 2020 are forecast to be 360,000 units and CNG sales 200,000.
If these forecasts turn out to be true, there is a clear opportunity for suppliers of components to produce CNG-powered commercial vehicles. There will also be a market for components that convert gasoline-powered vehicles to CNG.
And there are already signs that municipal governments like CNG. Beijing plans to have 5,000 CNG-powered taxis by 2015 and 7,000 CNG-powered buses. http://usa.chinadaily.com.cn/china/2013-06/05/content_16567154.htm And I’m sure there are many other examples that I just don’t know about.
Does this mean CNG will replace electrification in China? Hardly. Merely that it is a more suitable solution in the near term to achieve the government’s goals of reducing dependence on foreign oil and having cleaner air.
China’s central government has tweaked its approach to growing the country’s New Energy Vehicles segment (see my blog of September 20 on latest NEV policy), but it still aims to have tens of thousands of battery electric and plug-in-hybrid electric vehicles on the road in a few years.
If you don’t think China is committed to EVs for the long haul, consider this. In September of 2012, an “EV Experience Center” was established at the Party School of the Central Committee of the Communist Party of China. The Party School is where promising candidates for leadership roles in China go to debate ideas. https://www.facebook.com/pages/Central-Party-School-of-the-Communist-Party-of-China/102921913083319?rf=108563155844465 (The Central Party School has a Facebook page, though FB is blocked in China. Can you say irony?)
Of course they don’t debate any ideas in public. But they can at least get it out of their system at the Party School. Now, they can also drive an electric vehicle, which gives them some hand’s on experience as they debate what role EVs (or in Chinese parlance, NEVS or New Energy Vehicles) should play in China’s auto industry.
Meanwhile, local governments are doing their part to promote EVs with additional subsidies and incentives as well as research and development and data collection. The efforts extend down to the district level. One reason for district involvement is that it gives the districts a shot at some of those fat central government ministry budgets. That doesn’t mean what the districts are doing isn’t valuable, however.
Take Jiading District, part of the huge Shanghai metropolis. http://english.jiading.gov.cn/ Jiading has had itself designated an “EV International Pilot Zone” within Shanghai, which is an “EV International Pilot City.” A few weeks ago, I visited Jiading and met with Lucas Cao Yue, project manager in the New Energy Cause Department at the Shanghai International Auto City Group Co. (SIAC). http://www.shautocity.com/english/cczl-01.htm One of the first slides that appeared on the Powerpoint presentation he showed me on his laptop showed that Jiading has the stamp of approval from the Ministry of Science and Technology, the Ministry of Information Industry Technology and the Ministry of Commerce.
Much more than in the U.S., the promotion of an electric vehicle industry in China is a government project. Why are those important? I asked. “It means we have a chance to get part of their budget,” Cao explained. The Ministries contribute 60% toward the budget of certain projects, Cao explained. But Jiading still has to cover the remaining 40%, he added.
Finding the funds shouldn’t be a problem for Jiading. Jiading’s Anting area, where SIAC has its offices, is home to a huge Shanghai Volkswagen plant, an F-1 race track, an automobile museum, and the research and development centers of many multinational suppliers. They were strongly encouraged to open those centers in Jiading, my supplier friends tell me. Jiading is planning a 120,000 square meter R&D port, with many foreign enterprises.
But Jiading really is doing some useful work where EVs are concerned. The EV Zone is dedicated to “seeking the best integration between city, life and new energy vehicles.” One issue it is already facing – one that cities in the U.S. are familiar with – is the best placement for charging stations. Jiading has 800 public charging stations, said Cao. But 40 are in one area, which isn’t working so well. (About a dozen ring the building that houses the SIAC office, which seems a bit self-centered….)
The EV Zone also includes EV car-sharing, an EV rental plan, an EV service center that can import EVs without having to go through cumbersome Customs procedures, and free EV test drives to the public. Each month it holds an event to introduce the public to EVs. To date some 80,000 people have tried out an EV, said Cao.
The EV Zone surveys those who take the test drives about their likes and dislikes regarding the vehicles, and their purchase intents. It also has a fleet of 160 EVs that it collects usage data on. That data, and the user survey results, are shared with the automakers –both foreign and domestic – who are shareholders in Shanghai International Auto City Group Co. Ltd.
Other trials, such as the EV car-sharing, are just getting started. Anting has 3 stations with 20 EVs that can be rented for an hour at a time, said Cao. Cao said that Tongji University http://www.tongji.edu.cn/english/themes/10/template/Academics/College%20of%20Automotive%20Engineering.shtml was managing the car-sharing program. It paid a fixed price and is now renting them out on an hourly basis, he said. Those EVs collect data that must be reported to the government.
The EV Zone has one battery-swapping station, run by the State Grid,http://www.cse.anl.gov/us-china-workshop-2012/pdfs/session3b_demos_standards/hua_3B-4-HUA-Tsinghua%20Univ-Progress%20in%20Battery%20Swapping%20Technolo.pdf and one gas station that also offers charging, run by Sinopec. It also has one station that supports bi-directional charging, allowing EVs to send energy back to the grid. Domestic automakers Lifan www.lifan.com and Zhongtai www.zotye.com contributed EVs that offer bi-directional charging, said Cao.
Different business models for selling EVs are also studied, and the area has an EV-only dealership, all in the pursuit of finding the best way to have a viable EV market, says Cao. Like the central government, Shanghai International Auto City has discovered that its initial targets for EV usage may have been a bit high. The demo base will have a 10,000 EV capacity by 2015. But it is likely only about 2,000 will actually be on the road then, says Cao. He is sanguine about the possibility of miscalculations, however.
“As a pilot city, it is an experiment,” he says. “We have different ways to get to the target. Even if it is the wrong way, this is good. If we explore some good ideas, we can promote this business model to China and the world!”