California company may have finally found a market for its EV technology–in China

I’ve been reading a lot of comments lately about how the market in China for electric vehicles is going to be the world’s largest in somewhat short order. I suppose people come to that conclusion because of the fast growth of China’s automotive market and the government’s wholehearted support—for now—for electric vehicles.

My friend and former colleague Yang Jian, managing editor of Automotive News China (Which I’m fond of since I launched it. Everyone subscribe! It’s free!) wrote a nice column about the government’s EV fixation. http://www.autonewschina.com/en/article.asp?id=5397

I’m my usual skeptical self about this latest government crusade. But, it seems to have given one U.S. company, Efficient Drivetrains Inc., an opportunity to finally see its technology commercialized. And maybe even get paid for it.

First, my skepticism.  At one time, China was going to be a first mover in fuel cell technology. Fuel cell technology was targeted for special funding under the National Hi-Tech R&D Program, which goes by the (very Chinese) nickname of 863 because it was initiated in March, 1986.  

I think back to 2004, when I was working for Automotive News in China. General Motors and Shanghai Automotive Industry Corp. announced they would jointly develop a fuel cell vehicle.  The vehicle “will serve as an important point of reference for government decision makers in the creation of regulations and standards,” I quoted GM’s then-CEO Rick Wagoner as saying.

In 2005, General Motors unveiled its Sequel fuel cell vehicle (the one that sort of looked like a fish) at the Shanghai auto show.   In an interview at that show, a GM executive told me China might be the first place GM built a large number of fuel cell vehicles.

That plan, like Rick Wagoner, is gone. That’s no surprise, because China’s government isn’t talking much about fuel cell vehicles now, though some local automakers such as Chery and SAIC have demo models. Nope, now electric vehicles are the thing.

That’s just fine with Andy Frank. Frank is a professor at the University of California at Davis and the founder of Efficient Drivetrains, Inc.  www.efficientdrivetrains.com

Frank is the “father” of the modern plug-in hybrid electric vehicle.  Among other accomplishments, Frank worked on General Motor’s EV1 project, building a plug-in version of its pioneering electric car.  The car “went like a rocket,” said Frank. It was crushed along with all the other EV1s.

Frank founded Efficient Drivetrains Inc. (hereafter EDI)  four years ago to commercialize the technologies he had developed.  But he is the chief technology officer at EDI rather than the CEO.  “I would rather be the technology guy,” said Frank.  “I’ve never really run a business. I would be sort of a duck out of water.”

Frank has met with U.S. automakers about his technology, with little result.   “They have their own technologies,” he said.  “I’ve visited all the companies, they want to do it themselves.  They don’t want to pay you a nickel for it.”

Chinese companies are interested, however, especially now that the government is pushing (and funding) electric vehicle  development.  

EDI is closing in on some deals with Chinese companies to commercialize EDI’s plug-in hybrid technology, said Frank and EDI president Joerg Ferchau.  They wouldn’t name names. But the first uses in China would be in commercial fleets, they said.

Frank relentlessly promotes the suitability of plug-in hybrid electric vehicles for China.  The infrastructure already exists, he insists. As proof, Frank offers up that there are already thousands (more probably) of electric scooters in China.

PHEVs don’t require the high-power infrastructure that battery-operated EVs do, he said.  “If the cities really want to get the movement going, all they need to do is install the three point plugs. That is doable and possible.”

That’s a bit too optimistic. Most urban Chinese live in high-rises, or at least multi-floor apartment buildings. A scooter can be pushed into an elevator and taken up to be recharged inside a home. Not so a PHEV. So, infrastructure would still be a problem for consumer use. For commercial use, however, it is more plausible.

EDI is working with several Chinese bus companies, said Ferchau. It also has a proposal for a taxi fleet of plug-in electric hybrid electric vehicles. The taxi fleet owner is just interested in the possible cost savings, said Frank.  For China’s central government, the objective is to displace the use of oil. “There is an intersection of those two objectives, and that is where we are trying to fit,” said Frank.

Working with Chinese companies requires a lot more handholding than in the U.S., said Ferchau. “Virtually 100% of the projects want us to build the first PHEV,” he said.  “So we are not only providing tech, we are also building vehicle. They could build the vehicle, but it is new technology. People in these companies are fairly conservative.  They don’t want to take the internal political risk of starting a project that won’t be finished.”   

EDI is working with Chinese companies on building a limited number of demo vehicles, and the beginning of commercialization would be in 2011, said Ferchau. Initially only two to three companies would be involved, with fleets of a dozen vehicles each, he said. “All will lead to mass production,” said Ferchau.

Well, maybe. Words don’t always lead to actions. At least EDI has actually started getting paid–a bit– for some of its work in China.

Said Ferchau:  “We got our first project deposit.”

That didn’t happen overnight, however.  Frank has been talking to China for nearly 8 years about EDI technology. That should be a warning for foreign companies with EV technology looking to cooperate with Chinese companies.

 “It takes an awful lot of talk with a lot of people,” said Frank.  “The point is you really don’t have a project until money crosses the ocean.”

I’ll watch hopefully for EDI technology to appear in vehicles in China. And hopefully, the Chinese government’s attention span has gotten longer.  It probably has. Reducing dependence on foreign oil is a national security issue to Beijing, and China would love to be a leader in electric vehicle development (just as it once wanted to be a leader in fuel cell vehicle development).

Who knows, maybe it hasn’t flaked out on fuel cells, either. Secret fuel cell vehicle research may be going on.  A friend of mine heard (from an admittedly not entirely reliable source) that SAIC has a huge fleet of fuel cell vehicles.

For now, however, I’m waiting to see how Beijing’s electric vehicle fixation plays out.