Millen Works aims to infiltrate China’s EV industry–so long as no defense uses for the tech
I visited with Mike Reagan, director of the commercial OEM division for Millen Works, today. Millen Works www.millenworks.com is based in Tustin, CA, in Orange County to the south of Los Angeles. It has four business areas: commercial, defense, custom manufacturing and entertainment. It was founded by legendary off-road rally car racer Rod Millen, but sold to Textron Systems, which is a big military contractor among its other businesses.
So Millen Works currently earns a lot of its income from military projects. But it wants to diversify, and Reagan is working on that. His division focuses on non-military customers, and especially Class 5 medium-weight commercial vehicles. Reagan is concentrating on electric vehicles, both hybrid and pure electric. Why concentrate on EVs, I asked? “I’ve been in automotive for 25 years,” said the Delphi veteran. “Never have I seen the global industry so focused on one technology. That’s where the research dollars are.”
Mike Reagan of Millen Works with its battery management system at the SAE EV Tech Symposium.
Naturally, Reagan has his eye on China, where the government is encouraging automakers to jump into the electric vehicle sea. Not so long ago, battery electric vehicles were the big thing as far as the Chinese government was concerned. Now, at least in the near term, hybrid and plug-in hybrid electric vehicles are looking a lot better. In any case, China’s automakers are interested in electric vehicles of all types these days.
Millen Works aims to speed up that process. What kind of business is Millen Works looking to do in China, I asked? “Rapid development of engineering services for electric vehicles for Chinese OEMs,” he said.
There is a caveat. The technology can’t violate ITAR, said Reagan. That stands for International Traffic in Arms Regulations. To quote this website in brief: “ITAR places strict controls on the export of “defense articles” and “defense services.” http://www.oesrc.researchcompliance.vt.edu/ITAR/index.html In other words, Millen Works can’t help China produce electric tanks and the like.
Millen Makes vehicles like this EV for the U.S. military but has plenty of non-military technology it could sell to China.
But Millen Works has plenty of capabilities and technology that don’t fall into the defense article category. And as China’s leaders have admitted, there are some gaps in China’s EV technology portfolio which don’t seem to violate ITAR since other U.S. companies are already trying to sell the same technology to China. Two big gaps are battery management systems and battery packaging. Millen Works has both, and is hawking them in China, targeting Class 5 commercial vehicles, says Reagan. “We also do internal combustion engine development,” he hastens to add.
Millen Works is targeting Class 5 commercial vehicles in China--of which this is an example--for its EV technology.
Given the many other companies out there trying to sell this kind of technology to Chinese companies, it is a competitive area. Millen Works has a leg up because it already built prototypes for many defense industry companies—even if it can’t talk about them…. But Millen Works also has non-defense industry customers. Reagan mentioned that Millen worked on the first Coda www.codaelectric.com BEV sedans and also on Fisker Karma www.fiskerauto.com PHEV prototypes. And, there was a Ford-badged vehicle on one of the many machines in the Millen Works building.
Reagan is headed to China next week to meet with a list of Chinese automakers, whom I know but am not at liberty to disclose. Seems to me he should find a welcoming audience. The battery packaging technology should be as popular as the battery management system. Jeff Seidel, CFO of battery maker Ener1 told me that Wanxiang was interested in Ener1’s battery packaging ability. “They are probably 2-3 years behind in terms of their pack design and not as far in terms of their cell,” said Seidel of Wanxiang. If Wanxiang, www.wanxiang.com China’s largest automotive supplier company, needs that technology there is no doubt other Chinese automakers need it too. (Actually, Reagan said Chinese cells could use some improvement, which is doubtless true at many Chinese companies, though perhaps not Wanxiang.)
Of course I am not an engineer and I can’t really make a judgment as to the quality of Millen Works’ battery packaging technology. But hey, its batteries work in really big, heavy military vehicles so I’m guessing the quality is pretty good.
Reagan gave me a tour of the Millen Works building, which includes many testing machines such as two huge nitrogen tanks with frost on the top which are part of a dyno used to test shock absorbers, said Reagan. Also a chassis dyno in the back, and a huge precision machining tool, among other delights.
There is another market Reagan might explore in China given the many amusement parks that are being built there now. In one room were what looked exactly like roller coaster cars. In fact they were roller coaster cars. Millen Works makes suspensions; roller coasters need really good suspension system. One of its division is entertainment. Reagan couldn’t reveal who the customers are for the company’s entertainment division. But he did mention some of the product was going to Orlando….
The U.S. government is sending alternative fuel vehicle technology to China. Okay, that is a bit strong. But, the lack of funding for companies with such technology, and the strict criteria recipients of loans from the Department of Energy Advanced Technology Vehicles Manufacturing program must meet, is forcing U.S. companies to look to China for funding. The ultimate result is a technology transfer to China forced in part by political pressure. Pretty ironic.
The most recent example is Bright Automotive www.brightautomotive.com , a company in the mid-western state of Indiana that aimed to manufacture plug-in hybrid electric vans for fleets.
Bright aimed to market its electric van to fleets, who would want it because of a lower total coast of ownership, said Bright.
On February 28, Bright closed its doors. Its CEO Reuben Munger and COO Mike Donoughe wrote accusatory letters to the Department of Energy Secretary Stephen Chu. http://www.greencarreports.com/news/1073497_startup-bright-automotive-shuts-down-slams-doe-loan-process
A few excerpts from their letters (copies of which were obtained by me and anyone else who asked Bright): In a Feb 23 letter pleading for the DOE to make a decision on Bight’s application for a $314 loan from the DOE: “Unfortunately, irrationality and petty politics have paralyzed your agency at a time America needs you most.”
And a Feb 28 letter: “The ineffectiveness of the DOE to execute its program harms commercial enterprise as it not only interfered with the capital markets; it placed American companies at the whim of approval by a group of bureaucrats.”
The Bright executives conclude: “Because of ATVM’s distortion of U.S. private equity markets, the only opportunities for 100 percent private equity markets are abroad.”
“We unfortunately did not aggressively pursue an alternative funding path in China as early as we would have liked based on our understanding of where we were in the DOE process,” they say.
Guess they should have grabbed the golden ring when it was offered. And who’s to say they won’t still turn to China for funding? The company may have closed down, but the technology still exists. Of course the China funding was not a sure thing. What is a sure thing is that obtaining funding from Chinese companies and even the Chinese government seems a bit easier these days than getting a piece of the U.S. government’s cash hoard.
The DOE’s official response to the question of why the approval process for the Bright loan dragged on so long: “We understand that this is a difficult day for Bright Automotive and their workers. Over the last three years, the Department has worked with the company to try to negotiate a deal that supported their business while protecting the taxpayers. In the end, we were not able to come to an agreement on terms that would protect the taxpayers.”
The Department of Energy Loan Program Office (LPO) www.lpo.energy.gov was established to (according to the DOE website) “work with private companies and lenders to mitigate the financing risks associated with building out commercial-scale clean energy projects, thereby encouraging the broader and more rapid growth of the sector.” That would seem to indicate some appetite for riskier investments, but as you will read below, the DOE is not about risk taking. It is about getting a return on tax payers’ dollars. Fair enough, but not much more than any commercial bank does.
The Advanced Technology Vehicles Manufacturing program https://lpo.energy.gov/?page_id=43 was set up under the LPO in 2007 (yes, that was President George W. Bush) and expanded by President Obama. Of its $25 billion in funds, $8.4 billion has been allocated so far. The recipients of the two largest loans don’t seem too risky: Ford Motor Co. and Nissan North America Inc.
Why is it so tough for smaller companies to get a U.S. government loan? Politics plays a big part. The Obama administration has been lambasted for the failure of solar panel maker Solyndra Inc., a company that had obtained a $535 million loan from the Department of Energy in 2009 (under a different program than the ATVM). http://www.washingtonpost.com/solyndra-politics-infused-obama-energy-programs/2011/12/14/gIQA4HllHP_story.html
Now, any company applying for a loan has to meet incredibly high standards. Those standards were in place before the Solyndra failure, but the DOE is for sure applying them extremely vigorously now. And with an election coming up in November, that isn’t likely to change.
What are the some of the requirements for getting one of those DOE Advanced Technology Vehicles Manufacturing loan? The DOE does due diligence just as any investor would. And conducts a “competitive review similar to what applicants would find at banking financial institutions.” And the company has to be pretty far along with its product already. The loan isn’t “intended to finance research and development costs.” Indeed, the product has to be ready to produce since the loan can “only be used to reimburse the applicant for (i) costs that are reasonably related to reequipping, expanding, or establishing a manufacturing facility in the United States or (ii) costs of engineering integration performed in the United States.
The Chinese government, and private Chinese companies looking for technology, faces no such conditions. Sure, private Chinese companies want to get a good return on investment. But they are in essence private equity investors with a big appetite for risk. As for the Chinese government, well, it is an authoritarian government after all. It can do what it wishes with its money. Sure, if Beijing chooses to invest billions in foreign companies and the investment is clearly specious, there could be some social unrest. But who can be bothered to protest against some special tax breaks?
When Boston Power www.boston-power.com was also turned down in 2009 for a $100 million DOE loan, it didn’t close down. Boston Power turned to China, and landed $125 million in funding in late 2011 from a combination of investors including GSR Ventures www.gsrventures.cn/en/index.html , a Silicon Valley company with ties to China. http://green.autoblog.com/2011/09/22/boston-power-secures-125-million-in-funds-will-move-most-opera/
GSR also negotiated substantial Chinese government support for Boston Power including low interest loans, grants, and financial and tax incentives. Boston Power is building a battery manufacturing plant, R&D center, and an engineering facility in China.
Though Boston Power says it will retain control of its intellectual property, let’s get real. How can it do R&D, engineering, and manufacturing in China and not pass that knowledge on to Chinese engineers?
Other U.S. companies are skipping the U.S. government loan application process entirely and looking directly to China for funding. I’ve written about some of them in this column. The question, then, is what is the cost of losing these companies, and the technology, to China? Time will tell.
Will Coda’s next electric vehicle be made in China at Great Wall? Maybe.
I’m not sure if it is audacity, foolishness, or good business strategy, but Coda Automotive, www.codaelectric.com the Los Angeles-based EV maker with deep ties to China, is already working on its next electric vehicle when its first is not yet on the road here in the U.S. Coda won’t comment, natch, but a trio of sources from companies working on the next Coda—Coda 2.0 as one called it—confirmed that the next pure electric vehicle Coda is planning is a small SUV. It should be launched in about two years if all goes according to plan, said one source.
Coda's electric sedan isn't on the road in the U.S. yet but Coda is planning for its next model.
Of course, that’s a pretty big caveat. Let’s see, what could go wrong? Well, the company could run out of money. Coda has raised more than $300 million, but as Lindsay Chappell at Automotive News points out in a very nice blog, http://tinyurl.com/7nyw6bc it costs a lot to produce a car. He is talking about Fisker’s woes, but the same principle applies to Coda. Its cars are pretty plain-Jane, and even at a reduced price and with two range offerings it might not find much of a market here. Of course, as the name Coda Holdings suggests, Coda is about more than just electric vehicles. It is also selling batteries as storage devices and selling its electric drive train. But those markets are pretty crowded. Standing out will be tough.
So far, however, Coda is projecting an air of confidence. And why not? Defeatism sure won’t attract new investors or make existing investors happy. Coda recently moved to a larger headquarters in west Los Angeles. It has multiple job listings at various online locations. Among the positions: Director Exterior Design (god knows the current model could use some help); Director Interior Design (ditto); Manager, Color and Material; Technical Expert Exterior Lighting; Chassis Suspension Manager; Brake System Design Release Engineer. Etc.
Hey, it kind of seems like Coda is trying to hire an entire staff of engineers, doesn’t it? Trying to become a real car company. As Chappell points out, that costs money. For now, Coda is outsourcing its engineering to five or six different companies, says one of my sources.
As for choosing a small SUV as the next model, that’s smart. Because Coda last year signed a letter of intent with China’s largest SUV manufacturer to “study joint develop of electric vehicles,” according to Coda CEO Phil Murtaugh. http://tinyurl.com/7zozmhz Great Wall, the SUV maker, has been turning out some nice vehicles recently. Its Hover smallish SUV is pretty old, but Great Wall has a research and engineering center. It could craft something new. Murtaugh also hinted when the LOI was announced that models developed through the cooperation with Great Wall could end up in the U.S. “Cars that would come out of this for the U.S. would be branded Coda. Cars for China would be branded Great Wall,” said Murtaugh.
Moving forward, I’m sure Coda would prefer to be hitched to Great Wall www.gwm.com.cn rather than Hafei Motor Co, its partner in the Coda sedan. Hafei produces the glider. According to LMC Automotive Ltd, http://lmc-auto.com/ Hafei’s light vehicle sales fell 44% on-year in 2011 to 124,448 units. Meanwhile, Great Wall sold 486,811 units in China in 2011, up 23 percent compared to the previous year. Great Wall’s exports rose 83 percent to 83,000 units, according to the company’s website. Destinations included Australia and Italy. And of course Great Wall has a woman president. Need I say more?
Coda also has potential distribution issues. It has opened one “Experience Store,” in Los Angeles. Those are branding exercises, aimed at introducing consumers to the concept of electric vehicles and especially, natch, Coda EVs.
Coda has opened one "Experience Center" so far, in an upscale mall in Los Angeles.
More experienced stores are planned—sometime. Meanwhile, Coda is putting out a steady stream of tweets featuring customers at the LA store, I’ll give it that. Coda has also signed up two dealers; Marvin K. Brown Auto Center www.mkb.com in San Diego and Del Grande Dealer Group www.delgrandedealergroup.com in San Jose. Marvin K. Brown already has a Fisker www.fiskerautomotive.com dealership. And both are in the heart of EV-friendly territories. So the locations are good, at least. But two stores does not a network make.
Wonder if they know something we don’t that gave them the confidence to sign on? I hope so.
BYD now focused on fleets for its electric vehicle strategy. Smart move.
An analyst friend in China emailed me a few days ago asking if BYD was doing anything with electric vehicles here in the U.S. A colleague of his visited the BYD office building in downtown Los Angeles and found an empty showroom and, apparently, no staff, said the analyst. As well, consumers still can’t buy the e6 electric crossover vehicle in China, and there are no F3DM hybrids are in dealerships either, he said.
The BYD www.byd.com headquarters does look a bit vacant from ground level. The first floor has all glass walls, presumably to show off vehicles on display. But there’s nothing to see. I’m pretty sure there is staff working away in that building. But they are hidden away on the upper floors, out of sight.
That would also be an appropriate description of BYD’s business plan where electric vehicles are concerned. Like signs of activity in the Los Angeles headquarters, BYD’s business plan for electric vehicles is hidden. But if you look at BYD’s recent actions, and hey, ask their public relations guy here in the U.S., the automaker’s intentions become pretty clear.
BYD isn’t opening dealerships here in the U.S., or offering electric vehicles to consumers in China, because consumers are not its target market for electric vehicles anymore. Fleets are. Micheal Austin, BYD’s VP and spokesman here in North American confirmed that in an email exchange. “We are now fully focused on fleet sales in the U.S. for BYD’s K9 electric e-Bus and e6,” he said.
BYD's headquarters in LA looks kinda deserted. The first floor showroom is empty though offices upstairs have people in them.
The company recently put a bid in for a two-bus contract with the Chicago Transit Authority, and will make a bid for contract for 30 zero-emission buses for the Los Angeles Metro Transit Authority, said Austin. BYD’s K9 electric bus has also gotten some use over here in the U.S. One of the buses is being used as a shuttle bus at LAX (the main Los Angeles Airport) by Hertz, the global rental car giant. The pilot test is going well, Jack Hidary, head of global EV development at Hertz Corp. www.hertz.com “The reaction from our customers has been great,” he said. “The drivers like it; it has been a very positive experience.”
Though Austin wouldn’t come right out and say it, fleets are BYD’s main focus for electric vehicles in China too. “BYD has had great success in the commercial/government sectors” in China, he said. “Our bus orders are fantastic. But I can’t share exact numbers.”
BYD had about 300 K9 e-buses on roads in China at the end of the year, he said, adding “You may see ten times that in the next 12-18 months.”
Hertz is very happy with its BYD e-bus, said Jack Hidary, head of global EV deployment at Hertz.
The e6 electric crossover vehicle is also aimed mainly at fleets, he indicated. Shenzhen already has some (at least 50, not sure of the most recent figure) e6 in a taxi fleet. All together, BYD’s e-Bus have logged more than 1.6 million fleet miles; the taxis have logged more than 5.9 million fleet miles, Austin said.
Hertz has a several e6 taxis operating in Shenzhen, in southern China. Hidary said they have been getting 185 miles per charge. “Great range,” he said. “We hope to expand the relationship.”
Hertz has been getting 185 miles per charge from its e6 taxis in Shenzhen, said Jack Hidary, head of global EV deployment at Hertz.
So there you have it. The reason you aren’t seeing lots of BYD electric vehicles being made available to consumers, either here or in China, is that consumers are no longer BYD’s target market. The commercial sector i.e. fleets is. Smart move. I’ve said (and also written) that fleets are the best use for pure electric vehicles. The not so smart thing about BYD’s strategy is the secretiveness that seems to envelop the company’s business plans. Everyone is still wondering why BYD hasn’t opened dealerships here in the U.S., or sold any e6 cars in China. They think it is a failure. (The fleet plan could fail, too. But at least it is doing something!)
Of course, there is another BYD vehicle that some are still wondering about. That is the F3DM hybrid car. It is pretty outdated looking now, and probably wouldn’t find a market in China anyway. But it is getting some use in a fleet here in the U.S. The Housing Authority of the City of Los Angeles (HACLA) started using about 10 F3DMs in its fleet in late 2010. http://www.hacla.org/byd-and-the-hacla-launch-electric-vehicle-testing-program/ (I visited HACLA and rode around in an F3DM with an employee. I was not impressed with the car’s fit and finish….). That initial contract was extended for one year, with seven cars, starting Jan 1, 2012. According to a press release, HACLA’s F3DM fleet travelled more than 37,000 miles in last year in the hybrid cars and achieved 76% fuel savings.
BYD has one another business line, too, that isn’t getting much press. It is selling its batteries as storage systems. On December 30, 2010 it announced that it had, with the State Grid Corporation of China (one of China’s two huge state-owned utilities) http://www.sgcc.com.cn/ finished construction of “what may be the world’s largest battery energy storage station.” Located in Hebei province in northern China, the station combines 140 mega-watts of wind and solar renewable energy generation with 36 mega-watts hours of energy storage and a smart power transmission system. That’s straight out of the press release but I didn’t feel like putting it in quotes. Tee hee.
Austin wrote that BYD had about 60 MWH in 10 energy storage stations in service world-wide. “Industrial customers are gaining confidence in this technology,” he said.
Let me harp on a common complaint I have about BYD. Let some independent testing companies run tests on your technology! Then maybe the rest of us can gain confidence in your technology, too.
Enova finds China EV market doesn’t live up to advance billing, but orders trickling in
In case you hadn’t noticed, the market for electric vehicles has not taken off quite as quickly as the Chinese government predicted it would. So for U.S. (and other non-Chinese) companies China has been somewhat of a disappointment, John Mullins, chief operating officer of Enova Systems www.enovasystems.com told me last week. In 2008, his company supplied hybrid systems to First Auto Works for 25 buses that were used in the Beijing Olympics. Then, it 2009, it provided components for 200 hybrid systems to First Auto Works. Enova thought it was the start of something really big. “We were pretty excited to get into the program,” said Mullins. “The Chinese government had this mandate for 1000 alternative energy vehicles in 25 cities. But we really haven’t seen the progress at the rate everyone expected it to.”
“Everyone” includes electric drivetrain providers such as Eaton Corp., which hopes, or hoped, for big things to happen in the China market. http://tinyurl.com/7kwsdcs Enova has shipped a little over 500 electric drivetrains to China over the past three years, says Mullins. It expects sales of about only 200 annually in the medium term, he says.
Enova’s foray into the China market started with promise. It shipped 50 electric drivetrains to FAW www.fawcom in December of 2011, and in January of 2012 Enova received another order from FAW for 50 drivetrains. Rather than reinvent the wheel, here is what Enova’s press release said: “The Enova drive system will be integrated and branded under the name of Jiefang CA6120URH hybrid. The Jiefang 40 ft long hybrid city bus can carry up to 103 passengers and travel at speeds of over 50 miles per hour. With the Enova hybrid system’s components, the Jiefang bus meets Euro III emission standards, consumes only 7.84 miles per gallon, and achieves a reduction of 20 percent in harmful emissions.” Jiefang is the First Auto Works large commercial vehicle brand. Jiefang means liberate, as an aside.
Enova is based in Torrance, CA, a Los Angeles suburb near Redondo Beach. It produces power electronics for pure electric and hybrid electric commercial vehicles. Specifically, it designs the electronics that enable the battery’s DC current to be changed into AC current so it can be used by the motor. Enova also designs and produces entire drivetrains. It buys the components such as the motor, gearbox, wiring harness, safety disconnect, etc. and assembles the drivetrain in the warehouse portion of its small office on a back street of the industrial city.
Though its chairman, John Wallace, was head of the Think electric vehicle program at Ford, http://tinyurl.com/6paerxq Enova focuses on heavy duty commercial vehicles, says Mullins. (Yes, Think wasn’t always a failing Norwegian EV maker. Ford sold it in 2002.) Enova is too small to compete with the big companies in the car segment, says Mullins. In any case, “we believe commercial vehicles are a much better application for full EVs and in some cases hybrids because the routes are specific and the drivetrain can be chosen specifically for the vehicle” in terms of range requirements, he says.
Fortunately for Enova, unlike some companies it hasn’t put most or all of its eggs in the China basket. It already has several customers here in the U.S., including Navistar’s IC Bus division www.icbus.com . Enova supplies a bolt-on post-transmission plug-in hybrid system for school buses to Navistar www.navistar.com . The program started in 2005 and about 100 of the hybrid buses are on the road now, says Mullins. Enova is also the exclusive supplier to Smith Electric’s Newton pure electric route delivery, and it is working with Smith www.smithelectric.com to develop light and medium vehicle applications for Smith’s U.K. fleet customers.
The problem, says Mullins, is the cost. Without government subsidies there wouldn’t be a market, he says. The Navistar electric buses cost $210,000 each versus $70,000 for a regular gasoline-powered bus, says Mullins, with the battery pack accounting for most of the price premium. And since an average school bus only runs 9 months out of the year, it is hard to reach payback. As for the Smith EVs, in 2009, Smith received a $10 million Department of Energy grant to develop all-electric, emission-free commercial vehicles. The grant was expanded to $32 million in 2010. http://tinyurl.com/768sehs The battery pack in the vehicles Smith now produces will push a Class 6 or 7 commercial vehicles (which cover vehicles from 19,501 lbs/8,846 kg to 33,000 lbs/14,969kg) for up to 150 miles, says Mullins. But the cost is $190,000 (For battery pack alone? He didn’t specify and I haven’t heard back from him yet. ). The subsidy cuts that in half, he says. Even FAW relies on government subsidies to keep the cost of its electric vehicles within range, says Mullins. “Our challenge is to find customers that don’t depend on government grants.”
Enova hopes it has done just that with Freightliner Custom Chassis Corp., http://tinyurl.com/7y7qdmw a division of Daimler Trucks North America. Enova is the exclusive supplier for Freightliner’s’ all-electric delivery van, the kind of vehicle used by Fedex and UPS. Mullins figures this market is the sweet spot for pure EVs because the routes are set so the battery size (and thus cost) can fit the necessary range.
The Freightliner Pure EV delivery Van use Enova components.
Daimler has 80% of the market for such vans, so it can offer real volume potential, says Mullins. Therefore, “we have been able to attract very competitive pricing,” he says. “We are about to finalize the final battery supplier.” I don’t know who that will be. But Enova works with battery makers Valence and Dow Kokum on some of its other projects.
Pure EVs is where Enova figures the real commercial market is, says Mullins. Hybrids come with less of a premium than pure electric, but are still more expensive than gasoline-powered vehicles. Customers expect to use a hybrid like a regular gas vehicle and still see a big improvement in fuel efficiency. But only under certain conditions are those huge improvements realized, he says. “They are not seeing the payback they expected in the fleets for hybrids because the expectation wasn’t in line with what the technology is capable of achieving,” says Mullins. That isn’t the case with a pure electric vehicle, he figures. The fuel savings is built in, though the price premium is greater. “Pure EVs become promising because a commercial customer is smart, and makes decision on finances rather than emotion,” says Mullins. “There is a commercial reason to buy one, not an incentive reason. We have plenty of hybrid capability but the real commercial potential we see right now is full electric.”
Of course, China’s government has just shifted its near and medium-term focus to hybrids and plug-in hybrid electric vehicles. So Enova can expect to see slow growth there for a while there in the pure EV sector. As for the U.S., I guess we will have to wait to see the outcome of the presidential election to determine how the market for EVs will go here. Unless more companies with fleets start doing the math and figure out pure EVs make sense for them. .
PowerGenix CEO admits pairing with Chinese firm to make batteries in China won’t be easy
I got a press release a few weeks ago about a new battery joint venture in China that caught my attention. http://tinyurl.com/87eleqq For one, the battery chemistry was nickel zinc, something I hadn’t seen before. And, the Chinese partner was a company called China City Construction Corp., http://www.cccc-6.com/En/mana/shownews.asp?id=152 based in the central China province of Anhui. I looked up CCCC, or at least I think I did. It is a big state-owned infrastructure developer that apparently used to be owned by the People’s Liberation Army. The PLA was ordered to stop owning commercial businesses in 1998. The army divested itself of companies like CCCC, but left an army guy in charge. So it is not only a state-owned enterprise, it is one with a military background. Kinda interesting.
To learn more, I talked with Dan Squiller, CEO of PowerGenix. I came away thinking he has some rough months ahead that will surely be eventful but maybe not too fun.
Dan Squiller, CEO of PowerGenix, felt a bond with the head of a Chinese infrastructure company
First the basics. PowerGenix, based in San Diego, CA, produces rechargeable Nickel Zinc batteries. From the PowerGenix website: “Its high energy density and high discharge rate capability make it an ideal solution for applications that demand large amounts of power in a small and lightweight package. Cordless power tools, premium UPS systems, electric scooters, specialty military equipment, and high-intensity DC lighting are among the applications in which rechargeable NiZn batteries are best applied.” In the automotive world, PowerGenix aims at the hybrid market, especially mild hybrids that use stop/start technology, which stops the engine when a car is, for example, at a traffic light, then starts it again when the accelerator pedal is pushed.
Its China joint venture will focus on the hybrid applications, said Squiller. PowerGenix will own 49% and CCCC will own 51% of CCCC-PowerGenix Clean Energy Co., as the JV will be known. It will be more than just a manufacturer, insisted Squiller. “The idea is we are building out a fully functional company with sales, manufacturing, and after sales support,” he said. PowerGenix will contribute intellectual property and CCCC will supply capital to build the plant and guanxi—literally “relations” but in this case connections. It was a strategic decision to give CCCC majority ownership, said Squiller. “We will be doing business primarily in China,” he said. “It also helps with (government) grants and incentives.” Well, as I learned, CCCC is eyeing overseas markets, as well. But more on that later.
The JV will build a greenfield plant – locations are being scouted and local governments are courting them, said Squiller. It will likely be in Anhui, he adds. Anhui is one of China’s poorest provinces, but it does have a substantial automotive production base, and thus a well-developed supplier base. Chery Automobile Co., www.cheryinternational.com China’s eighth largest automaker based on sales, is based in Anhui, as is Jianghuai Automobile Co. http://jacen.jac.com.cn/
The plan is for three phases of construction, each adding the same amount of capacity. According to the plan, production will begin by the end of 2012 with an initial capacity of 400,000 batteries annually. But, admits Squiller, that is dependent on business licensing and government approvals being completed in a timely manner. “There is the plan and there is the reality,” he said ruefully.
CCCC-PowerGenix Clean Energy Co., as the JV is known, doesn’t have any customers yet (Which is a good thing since it is unclear when it will actually begin producing batteries.). But it has batteries being tested at “all the usual suspects,” said Squiller. Okay, but there are lots of battery makers in China, I said. What will allow PowerGenix to succeed? Its battery chemistry, said Squiller. Only a few companies are producing NiZn batteries, and those are usually the small AAA batteries for consumer goods, he said. PowerGenix spent 10 years creating a NiZn battery with a long enough life cycle, good enough energy yields, and a low enough cost for the automotive world, said Squiller. That is what made it attractive as a partner to CCCC, he said. “CCCC is just not interested in getting into the energy storage fray with lithium ion,” he said. “They picked something unique.”
Stop/start systems, which is where PowerGenix sees a market in China, are not new. They are ubiquitous in Europe, and some automakers in China are already installing them. The Buick LaCrosse launched by General Motors in China in August of 2011 uses a lithium ion battery in the stop/start technology in its e-Assist system, http://tinyurl.com/7c6kuav as does the Chevy Malibu due in China in Q1 this year. Audi has said that all its models in China will have stop/start systems by 2012. http://tinyurl.com/7au2nok Local automakers are also using stop/start. Geely plans to install stop/start on an Emgrand model, and Hafei will introduce it on a minivan model. But there is no guarantee it will spread.
Squiller said adding stop/start to a car adds from $400 to $600 to the total cost, and the battery represents 1/3 to ½ of that amount. He claimed the PowerGenix battery was smaller (and thus lighter) than the batteries currently being used, and could be dropped in without major changes. “The voltage on the alternator needs to be tweaked,” he said. But “we are compatible with all engine systems.” But, pointed out Michael Omotoso, senior manager for global powertrains at LMC Automotive, www.lmc-auto.com the engine has to already be designed to work with stop/start technology. So CCCC-PowerGenix Clean Energy Co. will be fighting for a share of a small (albeit growing) share of the market…when it actually starts producing batteries in China.
Strange bedfellows
Exactly how does a San Diego battery maker get hooked up with an Anhui-based former PLA construction company? Through a business associate’s company that helps identify Chinese partners, said Squiller. CCCC and PowerGenix had the “same priorities in the green space, and the same management perspective,” he said. “There is a corporate culture and DNA,” he said, “but at the end of the day it is the two leaders and their personal relationship and how they think and operate.” I can’t help but wonder how Squiller’s thinking and modus operandi could resemble a Chinese (and likely) ex-PLA head of a state-owned enterprise.
To be sure, Squiller is no stranger to China. He made his first business trip to China in 1982, he said, even earlier than I was there! (I first lived in China in 1984). Squiller said he had started R&D centers and JVs in China, and was even in Beijing during the Tiananmen protests in 1989. Still, a friend who worked on a real estate deal with a former PLA company described it as “impossibly opaque, non-communicative, uncooperative, and self-interested to an unbelievable degree—even for China.” Squiller did admit that “it is exceedingly difficult to work cross culture.” The joint venture with CCCC would require “a great deal of patience and expertise,” he said. “We don’t think this will be like selling ice cream from a stand across the street.” Well, at least he seems to know what he is getting into.
China to be first test of GM’s mini-EV project
I ran into Ray Bierzynski, director of electrification strategy at GM China, on the floor of Cobo Hall last week at the North American International Auto Show. We chatted a bit and he mentioned GM’s EN-V project in the northeast China municipality of Tianjin. We didn’t have much time to talk there—Bierzynski had come straight from the airport to Cobo. But I was intrigued by his comments and sent some questions to GM when I got back to California. 
Turns out it is kind of old news. GM put out a press release about it late last year. http://tinyurl.com/7w844m7 But it was news to me, so I’m writing about it. What GM’s EN-V project in Tianjin—indeed, the whole Eco-City project—reminds me of is a concept car. Or of the clothes designers show on the catwalk. They aren’t something consumers will buy in that exact form. But they do offer tantalizing glimpses of the direction the styling—or in this case urban planning – may be going. And in this case it is a direction I like. I will definitely have to visit Tianjin next time I am in Beijing to check it out.
Some background: GM www.gm.com calls the EN-V “a radical change in mobility to address growing urbanization issues.” Well, that’s timely because China just became a majority urban country. In mid-January, China’s National Bureau of Statistics announced there were twice as many people living in cities in China as living in the countryside. http://tinyurl.com/7c8p6n3 That’s a momentous change for a country that was 81% rural in 1989, nearly a decade after Deng Xiaoping launched his Reform and Opening program. But anyone who has been to China lately knows that while urbanization may be raising the living standards of millions, it is also eroding the quality of life for just as many. Cars are a big part of that erosion. Traffic congestion and pollution are plagues in China’s largest cities.
The pod-like EN-V, which GM debuted at the World Expo in Shanghai in 2010, http://www.gmexpo2010.com/en to quote GM’s boiler plate, “is a two-seat electric vehicle that was designed to alleviate concerns surrounding traffic congestion, parking availability, air quality and affordability for tomorrow’s cities.” Besides being fully electric, the EN-V is connected. So the EN-V (which stands for Electronic Networked Vehicle) can sense other vehicles (and hopefully avoid collisions.). It can also drive itself, park itself, and be retrieved (which would put a lot of valets out of work and unemployment is a sensitive topic in China so maybe that would not be a popular feature with the government…). It has internet connectibility—and thus social networking capability. The first-gen EN-V was a low-speed vehicle—max speed was 40 kph (about 25 mph)—and its lithium-ion phosphate battery had a range of 40 km, or about 25 miles.
Frankly, the first generation EN-V wasn’t all that practical. It was supposed to be a two-seater, but look at it.
- The first generation EN-V doesn’t seem very practical. Wonder what Gen 2 will look like?
Would two Americans fit in that little cab? And Chinese are getting fatter. But, Chinese do seek easier ways to get around than a bicycle, or an electric bicycle. So GM figures the low-speed electric vehicle market in China could be low-hanging fruit for the right product. When I visited GM in Shanghai in September of 2010, the PR guy at the time (GM rotates PR people through China faster than the cartridges turn on a Six-Gun revolver) told me: “We need to figure out if the consumer (for an EN-V) is the one who already has a car, or is this going to be there is enough e bike riders to buy this. We don’t know. We are going to do research on this. We are pretty sure the 200 million e-bike riders will view (the EN-V) as like a TV upgrade. You could have a higher price, but has to be something they can reach.”
Now, at the time I challenged that, and I still do. An electric bike is pretty damned cheap. I mean, a little a 1,000 yuan, about US$158 at current exchange rates. I don’t see how the EN-V could cost that little. But the Tianjin project is still intriguing. The point is, GM is forging ahead with the EN-V project. From now on, the EN-V will be badged a Chevrolet. Woo hoo, a tiny electric Chevy! And China isn’t the only place the EN-V will be tried out. GM is aiming to test it in megacities around the world. GM Research—that includes the U.S. and China—has the technical lead for the next-gen EN-V. But, “GM China is managing the overall (Tianjin) project, specifically the electrification strategy and teams. I will be heading up the project development,” Bierzynski said in an email response.
GM signed a Memorandum of Understanding with the Tianjin Eco-City in April 2011, and has been conducting a technical feasibility study since then. Hence the press release in October 2011 rather than April, I guess. Now, a (very little) bit about the Tianjin Eco-City, the first place the next-gen EN-V will be tried out. The full name is Sino-Singapore Tianjin Eco-City. It is 50/50 joint venture between a Chinese Consortium led by Tianjin TEDA Investment Holding Co., Ltd. (Tianjin TEDA) and a Singapore Consortium led by Keppel Group. The aim is to create a sustainable mixed-use city. Rather than me re-typing all the info, check out this website. http://www.tianjineco-city.com/en/index.aspx
GM won’t say when the next-gen EN-V will appear. But it will be a step up from the original concept. Said Bierzynski: “Our plan is for the next generation EN-V design to retain key elements of the original concept EN-V, such as the small footprint and maneuverability. It would also retain the key technologies, such as battery electric propulsion and the networking (or connected) and autonomous capabilities. However, it will also add features that customers need such as climate control, personal storage space and all-weather and road operation that were missing from the original concepts.” But will it have On-Star? Okay, perhaps that is asking too much.
I’m not sure how GM is going to cram the extras Bierzynski mentioned into the little EV and keep it comparably priced with an electric bicycle. Maybe that isn’t a goal anymore. In any case, I wouldn’t mind driving one when the next-gen EN-V finally comes out!
In mid-December, battery-swapping promoter Better Place announced it had, with the China Southern Power Grid, http://eng.csg.cn/ opened China’s first Switchable Electric Car Experience Center in the south China city of Guangzhou. The Center aims to introduce people to the concept of battery swapping, an alternative to battery recharging as a way to refuel a pure electric vehicle. http://tinyurl.com/7qxlnm5
Better Place and China Southern Grid recently opened a battery swapping experience center in southern China.
I recently spoke with Dan Cohen, vice president of strategic initiatives at Better Place, www.betterplace.com about his company’s plans in China. As you might expect, he was optimistic about the possibilities for Better Place in China. To be sure, I have been hearing from various industry sources that battery swapping is gaining favor with the Chinese government. But I came away from my talk with Cohen thinking Better Place faces some pretty big obstacles in China. At best I think it will be a small player in China’s electric vehicle charging market.
Dan Cohen, who is probably one of the laowais in this pic, figures battery swapping is the right option for China.
As there are only a handful of pure electric vehicles on the road in China right now anyway, the country is still trying out different charging models. “We will still see for a while trials in different areas” of China, said Cohen. “What is very clear is that the swappable battery has gained a lot of traction and makes a lot of sense for them.”
First, a quick lesson on the concept of battery swapping. One of the big barriers to consumer acceptance of pure electric vehicles is range anxiety, the fear that one will run out of “gas” in some strange place and not be able to “refill” the battery easily or quickly. Better Place proposes battery swapping as a solution.
Using a Better Place battery swapping station is somewhat like going through a drive-through car wash. Your car (with or without you in it) is moved by a conveyor belt onto a spot where the battery is automatically removed and a new one installed in a matter of minutes. The depleted battery is placed on a storage rack for recharging. When that battery is full, it is placed in another electric vehicle.
Sounds simple, but first there is the consumer trust hurdle. Consumers have to believe the battery they are receiving is of the same quality as the one they gave up, and it truly fully-recharged. John Proctor, the Better Place PR guy, assured me that Better Place is focused on “taking the risk and worry out of it for consumers.” But this is China, the place where a company used substandard ingredients in baby formula to make a few bucks. I’m just saying.
Then there is the issue of having electric car models that are able to use the battery swapping model. Cohen said Better Place is “in discussion” with more than one automaker in China. “Hopefully we will have some real cooperation,” he said. Well, only one Chinese automaker, BYD, is thus far making pure EVs in China. www.byd.com A BYD source told me BYD didn’t like the battery swapping model because it didn’t want to risk having its battery technology intellectual property being stolen.
Of course, there are many other automakers in China. But I heard from a supplier source that few are actively pursuing pure electric vehicles right now because the government isn’t promoting them. Because battery technology isn’t mature, it has backed off from pure electric in the near term to focus on plug-in hybrid electric and hybrids. http://tinyurl.com/7a5z5vs
Next is the issue of who will supply the batteries for the swapping stations. Better Place uses A123 www.a124systems.com batteries in some other parts of the world. In China, Cohen said, “it will depend on who we work with. Probably a local battery manufacturer” will supply them. Chinese battery manufacturers are “advancing very quickly on quality,” he added. Well, sort of. Even the Chinese government admits the industry has a ways to go before it can meet global standards. At least Better Place will likely have the option of using batteries manufactured in China at the SAIC-A123 joint venture. http://ir.a123systems.com/releasedetail.cfm?ReleaseID=430981
On its website Better Place touts its commitment to promoting a global standard for an EV recharging plug. Meanwhile, China has yet to announce a national plug standard, much less sign on to a global standard. How does Better Place feel about that, I asked Cohen? He said: “You definitely you see more and more committees in China discussing standards. We are obviously engaged in trying to help China. This is a long process. We are in there. We hope to see it mature here as well.”
China hasn’t joined in any international standard groups or put forth a national standard of its own yet because various ministries in Beijing are fighting over who has the right to determine what the standard will be. Those same ministries fight over many other aspects of the electric vehicle industry. Cohen admitted that the plethora of government ministries—from the Ministry of Information Industry and Technology to the National Reform and Development Council– weighing in on EV policy was confusing. “In the beginning, it was hard for us to navigate,” he said. “It was hard for us to know what was policy and what was opinion.” The issuance of the 12th Five Year Plan, with its emphasis on promoting electric vehicles, made the direction much clearer, said Cohen. http://tinyurl.com/7vlamcy
In recent months, of course, the government has changed its emphasis in the sector from pure electric to plug-in hybrid electric and hybrid. So the direction, at least in the near term, isn’t all that clear.
Finally, the last hurdle I am going to talk about right now—the fact that Better Place’s partner, the Southern Grid, is not a national utility. In late 2002, China’s monolithic electric company divided in two. The Southern Grid, as its name suggests, assumed responsibility for providing electricity to five provinces in south China, Guangdong, Guangxi, Yunnan, Guizhou, and Hainan. The other utility, the State Grid www.sgcc.com.cn provides electricity for the rest—26 provinces, autonomous regions, and municipalities.
Better Place began talking with Southern Grid about seven months ago, said Cohen. Turned out Southern Grid was also looking for a partner. After some shuttling between Israel and Guangzhou, the two chairmen met and the deal was done. Better Place also talked with State Grid, but nothing came of those talks, said Cohen. What that means for now, of course, is that Better Place can only spread its battery swapping mantra in the five provinces where Southern Grid operates.
Of course, these are very early days in China’s recharging infrastructure market. And Better Place knows battery swapping will likely not be the only recharging solution in China. “It still is not a done deal in terms of a full China directive,” said Cohen. Better Place also has other services and products that could find a market in China, for example its EV network software that helps a utility balance the demand on the grid for electricity. “We provide a completely managed service. Better Place knows how to distribute that energy,” says Cohen.
And the new Experience Center in Guangzhou is mainly aimed at governments and businesses right now, said Cohen. So if Better Place can manage its expectations where its China business is concerned, and by that I mean keep them really low, the Guangzhou investment could turn out to be a good one. But don’t expect to see China covered with Better Place swapping stations anytime soon.
In the last decade many foreign automotive manufacturers have set up research, development , and design centers in China. Now, a Chinese automaker is taking a page from that play book. Chang’an Group, www.globalchana.com China’s third largest automotive group, has nine research and design centers in five locations around the world. The most recent addition is the Changan U.S. Research and Development Center in Plymouth, Michigan. www.changanus.com
Chang’an (or Chana, as it goes by in some circumstances) isn’t looking to design cars for the U.S. market there, however. At least not yet. It aims to design cars for China that are just as good as the foreign brands that still dominate the Chinese market.
“First Changan will make its own domestic vehicles competitive with joint venture products,” Su Hong, vice president of Changan’s U.S. R&D center told me. “Then we can talk about exporting.”
Chana recognizes what many domestic Chinese automakers refuse to admit—it lacks the fundamental knowledge needed to make a really good car. Partnering with foreign automakers was supposed to remedy that situation. Chana has joint ventures with Suzuki, Ford, and Mazda. But while those partnerships have given Chana a lot of manufacturing knowledge, they haven’t taught Chana enough about how to design and engineer really good cars, says Su.
“There is a huge gap in the performance and quality because the foreign products are designed by foreign company and they didn’t give Chana the design and engineering know how,” he says. “Particularly how to design performance.”
Performance seems to be Su’s mantra, and that make sense. Chana’s U.S. R&D Center will focus on the chassis, which certainly has a huge impact on performance. That includes chassis design and control, brakes, steering, suspension, and tuning and testing, says Su. It will concentrate on SUVs/CUVs and D-segment, or premium, sedans.
“Changan already has small vehicles in production,” says Su. “It needs D segment and SUVs. (Its engineers) don’t have this kind of design experience. Also we have to improve the quality, and enhance performance.”
The U.S. r&d center will also work with Tier One suppliers on motors, batteries, and engines for electric vehicles, says Su. But he doesn’t see the EV segment blossoming anytime soon. “There are two issues,” says Su, “battery and cost. We are still looking for a breakthrough in technology for larger market acceptance. There is still a long ways to go.”
The Chang’an Automobile Group is China’s fourth largest auto group. According to LMC Automotive Inc., www.lmc-auto.com in the first eleven months of 2011 it sold 705,551 light vehicles, down 21% on-year and 672,112 light commercial vehicles, down 29%. Chana’s passenger vehicles include Ford and Mazda-badged cars as well as a handful of Chana-badged cars.
The Group acquired two other Chinese brands, Hafei and Changhe, in 2009 as part of the central government’s industry consolidation strategy. http://www.chinadaily.com.cn/business/2009-11/11/content_8947483.htm Integrating those brands into its operations apparently took a lot of the Group’s time and energy. According to LMC’s November China report, “Chang’an found little time to improve its products and sales channel. This is why the company’s performance of passenger vehicles and light commercial vehicles performed poorly.”
That’s too bad because Chang’an has invested a lot in setting up a global R&D footprint. “Changan has an unique strategy for its global product development system,” says Su. “It has product development centers in five countries. “
In China, Chana has r&d branches in Chongqing, Shanghai, Beijing, Harbin, and Jiangxi. It also has four overseas centers. Six years ago, Chana established a center in Torino, Italy focused on interior design, says Su; four years ago it opened its Yokohama, Japan center focused on interior trim and modeling; a year and a half ago, it opened the Nottingham, U.K. center focused on powertrain and transmission. Almost exactly one year ago, the U.S. center opened in Michigan.
Why Michigan? Chana did its homework. Of the seven largest automakers globally, six have tech centers in Michigan, says Su. Many top Tier One and Tier Two suppliers also have tech centers here, he says. So there is plenty of engineering talent (such as Su). Also, are many specialized service firms that can do chassis testing and transporting, as well as proving grounds. “If you want to do vehicle development, Detroit is the place,” says Su.
So what has the new Center accomplished in its first year? Mainly hiring, says Su. He was one of the first hires. Su, who has a PhD in vehicle dynamics from a Canadian university and worked for years in the U.S. for Ford and Visteon, shares the vice presidential duties with another VP who is from China. “I am the local hire,” says Su. The Center has hired more than 20 engineers so far; it aims to grow its staff to 150 within five years. Nationality is not a consideration, expertise is, he says.
Chana’s strategy—drawing on international design and engineering talent—certainly has merit. `The real challenge for Chana, however, will be to take those designs and translate them into a world-class vehicles. That requires attention to process technology and quality control in the manufacturing process that many Chinese companies have had trouble achieving. Su says Chana’s foreign partners have passed manufacturing knowhow onto Chana. The proof will be in the vehicles Chana produces in the next five years.
Hertz sees EVs as 10% of its fleet in China one day. Right now, it just wants more than two.
I chatted with Edward Hu, China country manager for global car rental company Hertz, in Shanghai last month to learn more about Hertz’s promotion of electric vehicles in the China market. I was pleased to hear what sounds like a reasoned approach based on a realistic assessment of the problems and potential for electric vehicles in China.
First, a bit of background. Hertz www.hertz.com first set up shop in China in 2002. It was only promoting the brand to China’s international traveler set, however, as an option in foreign countries. In late 2009 Hertz decided to start renting to corporate customers in China, first in Beijing then in Shanghai. Its China business is still very small, says Hu, and the focus is on short-term rental and leasing to other businesses. Some 80% of Hertz’s business in China is business to business.
There isn’t a huge demand for electric vehicles from business in China. So why is Hertz jumping into the EV sea there? The global strategy at Hertz is to try to capture trends, says Hu. “And we do believe EVs will be the future,” he says.
Edward Hu, Country Manager for Hertz China, figures 10% of the Hertz fleet in China could be electric one day.
There is also a nice marketing benefit, of course. It allows Hertz to be a good corporate citizen, helping keep the air clean an all. Also, Hertz can’t win a price war with local car rental firms, who mainly compete on price, says Hu. Instead, “we try to differentiate ourselves by providing good quality service, a higher standard, and also we get into new trends like EVs,” he says.
It doesn’t hurt that the Chinese government is heavily promoting electric vehicles. Any foreign company in China that can help out a government goal is bound to earn some Brownie points. And though the Chinese government has dialed back its heavy emphasis on pure electric vehicles, at least in the near term, it does still aim to have a bunch of EVs on the road in the future. But, it has been having a hard time convincing consumers to buy electric vehicles, even with a hefty subsidy attached. Hertz figures it can help with that. “EV rental is a big help to the consumer acceptance for the EV (because) they can experience the car first hand,” says Hu.
The government welcomed the suggestion that Hertz could introduce consumers to electric vehicles by including EVs in its rental fleet in China, says Hu. “We approached the government. They didn’t have any idea about the car rental industry, “ he says. “They said, ‘wow, this is a good idea.’ They really like to cooperate with us.”
Not many consumers are being introduced to EVs by Hertz just yet. So far Hertz only has two BYD e6 crossover electric vehicles for rent in Shenzhen. http://www.nytimes.com/2011/08/24/business/global/hertz-to-begin-renting-electric-cars-in-china.html
They are in big demand, says Hu. “Within two hour of release, we had a customer,” he says. “Two days ago customer wanted to rent an e6 for ten days.” The EVs rent for less than 400 RMB a day if you drive it yourself; more if you chose the chauffer-driven option.
Hertz has two BYD e6 EVs available for rent in Shenzhen with or without a chaffeur.
Hertz plans to add EVs to its fleets in Shanghai, Beijing, and Chengdu for starters, says Hu. But BYD hasn’t been able to supply the vehicles yet, he says. Lack of charging infrastructure is also a problem, even in Shenzhen, where the government is building one out. Hertz is also finding it tricky to set up the meter to calculate how to pay at the charging stations, says Hu.
Hertz is working with General Electric to grow demand for the Hertz EV fleet in China. In August Hertz and GE Industrial Solutions announced they would bundle EVs provided by Hertz with GE’s recharging stations and offer the package to multinational companies and governments in China. http://tinyurl.com/ylj2ccx
Now, Hertz is talking with the government in the Shanghai suburb of Jiading (which includes the “Shanghai International Auto City”) http://english.jiading.gov.cn/ about leasing some EVs for use by city employees, and about ways to promote individual use of EVs. Not coincidentally, Jiading is a “pilot city” in China for development of an EV infrastructure. It is trying to create a platform so all the players in the EV supply chain can test their technology, says Hu.
Hertz has ambitious plans to grow its presence in China. It now has only 1,000 vehicles in its fleet in China, and all but two have internal combustion engines. They are spread out over five cities Beijing, Shanghai, Shenzhen, Tianjin, and Chengdu. But that will expand dramatically over the next five years, says Hu, to many more cities and up to 40,000 vehicles.
In December of 2010, Hertz launched its Global Electric Vehicle Program. Among its elements: Mitsubishi I-Miev EVs are part of the Hertz London fleet, Hertz plans to add 500 Renault electric vehicles to its European fleet beginning in 2012, and different types of EVs are already available at a number of cities in the U.S.
In China, EVs could be up to 10% of the Hertz fleet five years down the road, says Hu. That could include some hybrid electric vehicles, he says. “If there is some mature hybrid vehicle available in Chinese market we definitely consider buying them.”
Of course, that will depend on how quickly Chinese consumers warm to electric vehicles. Hertz doesn’t believe that will happen too quickly because the technology isn’t mature, the cost is high, and the infrastructure is not built out. But that is changing, and Hertz is doing its part to nudge EV adoption in China along.
“There will be no big change in the short term,” says Hu. “But this is the future.”
Alysha Webb
Alysha Webb's ChinaEV Blog 