EDrive a micro-history of China’s pursuit of electric vehicle dominance

While the Chinese government may be intent on growing the electric vehicle segment, Chinese consumers are not so keen to buy electric vehicles.  But that doesn’t mean companies in China that produce components for electric vehicles aren’t counting on the sector growing.  The just-released New Energy Vehicle policy is a big reason for that optimism. Local government support also plays a role.

The history of one of those companies, Shanghai EDrive,  http://www.chinaedrive.com/index2.asp is a micro-history of China’s quest to be a global player in the electric vehicle field, and proof that the Chinese government is taking a long-term view in developing the sector.  If EDrive succeeds, it will mean China is succeeding in its electric vehicle ambitions as well.

Shanghai EDrive produces electric motors, controllers, and invertors for both traditional gasoline-powered vehicles and electric vehicles.  It has long benefited from government support for the electric vehicle segment.   I recently spoke with Dr. Gong Jun, president of EDrive, by phone and also exchanged emails with Jimmy Lin Renjie, who works with Gong, about the recent policy and EDrive’s future.

“Of course the new policy is good for our company,” Gong told me.

Now, I’m a skeptical person.  And I am certainly no engineer so can’t evaluate EDrive’s technology. But several industry friends have spoken well of EDrive.   Its growth strategy is, however, based on the belief that electric vehicles, first regular hybrids, then plug-in electric hybrids, then battery electric vehicles, will take a growing share of the vehicle market.   And of the government supporting companies that serve that purpose.

EDrive’s support from the government started with the 863 program.  http://www.most.gov.cn/eng/programmes1/200610/t20061009_36225.htm  The 863 program was launched by the central government in 1986 and has been part of every Five-Year Plan since.  Its goal is to help China “leapfrog” in certain technologies to become a world leader.  EDrive has also received funding from the Shanghai government.

The components it produces are used in both traditional internal combustion engine vehicles and electric vehicles, from hybrids to low-speed electric vehicles to regular battery electric vehicles.  EDrive is already profitable.  Its motors are in hybrids cars produced by companies ranging from Dongfeng www.dfm.com.cn  and FAW www.faw.com.cn  to Brilliance www.brillianceauto.com , Geely www.geelyauto.com.hk , and Chery www.cheryinternartional.com ; and in hybrid buses from just about every large Chinese bus maker you can name, according to materials EDrive sent me.  Ditto with the few pure electric vehicles being produced (but not BYD, which is highly vertically integrated) and many micro cars such as the QQ, it seems.

Eventually, when his company is big enough, Gong figures it will want to export.  One way it aims to grow is by listing on Shenzhen’s Growth Enterprise Market next year.  EDrive is preparing the materials right now.

EDrive has been in business since June of 2008.   It manufacturers to a client’s specifications and also does what Lin called “cutting edge” research and development of components in cooperation with universities.   It is receiving a growing number of orders related to components for battery electric and plug-in hybrid electric vehicles, mainly buses right now, says Gong.  “Due to the new policy, we expect that will grow,” he says.

Gong is right, the recently released NEV policy should be good for EDrive.  If the central government is effective in implementing the policy, that is. Gong mentions in particular the mandate for 30% of new vehicles in municipal fleets to be New Energy Vehicles, which in practice will mean BEVs and PHEVs.  For details see my earlier blog on the policy.

What about the consumer market for electric vehicles?  That is more uncertain because of the lack of a charging infrastructure, Lin told me.  “The bottleneck for the development of passenger cars is the infrastructure such as the charging point,” he says.  “If the infrastructure is developed, the EV of passenger car will have a bright future.”

And it seems EDrive will be along for the ride.

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