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China EV policy helps U.S. PHEV firm get contracts; volume orders still unsure.

January 14, 2014

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  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.  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.

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.   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?

2 Comments leave one →
  1. brian permalink
    January 14, 2014 10:18 pm

    China needs a homegrown Tesla to get the ball rolling,Once this happens you’ve baited the hook and people will believe and start buying EV’s

  2. January 22, 2014 6:50 pm

    In fact, the NDRC has debated allowing non-automotive Chinese firms to produce EVs in the hopes of producing a home-grown Tesla. But that would require a home-grown Elon Musk, so that could be a problem….

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