Toyota EV guru Bill Reinert not keen on pure electric; China government would agree for now.
Toyota rules the hybrid market here in the U.S.—sales of its Prius account for about half of all hybrids sold here. And the Prius family is growing – it now includes a larger Prius than the original model, a smaller Prius, and a plug-in hybrid Prius. http://www.toyota.com/upcoming-vehicles/prius-family/?srchid=K610_p3074941791 So it might surprise you to learn that Bill Reinert, Toyota’s advanced technology guru, is pessimistic about the potential for plug-in hybrid and pure electric cars. Hell, he is even pessimistic about the future for hybrids. His reasons are familiar—the battery is too expensive and thus the vehicles themselves. Consumers are most concerned about fuel efficiency, he said, and if they can get that in a car with an internal combustion engine that costs less than an electric vehicle of any kind, they will go with the ICE-powered vehicle.
Bill Reinert, Toyota's advanced technology guru, figures electric vehicles will only be a niche in 2020. And he figures fuel cell is the really promising technology.
Reinert’s remarks seem to validate the decision by China’s government to focus more on hybrids and PHEVs in the near term while they wait for battery electric vehicle technology to mature. His comments also add fuel to the fire currently raging in Washington, DC about the Department of Energy’s program https://lpo.energy.gov/?page_id=43 to provide loan guarantees and outright loans to companies developing EV technology. http://www.autonews.com/article/20120409/OEM01/304099974/1424/doe-auto-loan-program-was-badly-bungled
I think Reinert would agree, however, that those programs, and the Chinese government’s continued support of BEVs in the longer term, make sense. Remember when mobile phones were as big as a bread box? Only more research created the tiny mobile phones we use today. And only more research will improve battery technology. Just who will fund that, at least in the U.S., is up in the air, however. China seems to be forging ahead. Hey, maybe China will fulfill its dream of being a first mover in BEVs after all. With help from many U.S. and European companies’ technology….
But I digress. Bill had too many valuable things to say for me to simply pull some comments and write a story. Below are edited comments from our conversation. Good stuff.
China-EV: Your title is National Manager, Advanced Technology Group at Toyota. What does that encompass?
Reinert: We look 20 to 30 years out to determine what are the trends and technologies coming along, when will they likely be mature, what does that mean to our fleet and our business model and brand,
China-EV: When did you start to look at the future of the battery electric vehicle?
Reinert: About 1999, when the RAV4 battery electric vehicle was offered for leasing, we did a deep dive and saw that even though there were a lot of hand raisers (who said they were interested in a pure EV), there weren’t a lot of wallets on the table. We were 100% subsidizing that product. Events in 2006,7 and 8 led us to believe there was not a first mover advantage to electric cars. The sales numbers bear that out.
China-EV: Why are other automakers seemingly rushing to offer pure electric vehicles?
Reinert: Sometimes you get wishful thinking marketing caught up in the reality of engineering. We could see right away there wasn’t the strongest business case in the world for a bigger battery in the car. The business case got upside down.
China-EV: Toyota pretty much rules the hybrid segment in the U.S., but sales in that segment in general haven’t shown much strength. Why not?
Reinert: Because the economic conditions in the U.S. and other economically developed countries, don’t favor spending a lot of money on fuel economy. The hybrid is still misunderstood, (and) if you can get a small 4 cylinder car that gets 40 miles to the gallon that meets your needs, why pay a premium for a hybrid?
China-EV: What don’t people understand about hybrids?
Reinert: People believe the technology might have a shorter life than gas engines (and that) battery replacement costs are high.
China-EV: What should automakers do to create demand for alternative fuel vehicles? Is it possible to “create” a market or does it have to emerge organically?
Reinert: I don’t know why you would want to create demand that would be supposing there is some kind of market out there. Alternative fuel vehicles are the result of regulatory push. Manufacturers should create a market for the best fuel economy cars that fit the buyers’ needs. There is a market for efficient cars.
China-EV: Must automakers have electric vehicles as part of their portfolio?
Reinert: Automakers see the need and desire to provide electrification of the powertrain, not the pure electric vehicle. A lot of that is from regulatory push. Start stop will become a bigger part of the mix, five years from now almost all cars will have start stop.
China-EV: What percentage of light vehicle sales in the U.S. will be alternative fuel vehicles in 2020?
Reinert: I’m a little pessimistic on compressed natural gas in light duty cars. It needs tanks that are light weight, have more pressure, etc. I think CNG is going to be problem. There are a wide variety of fuels that come out of natural gas such as methanol, gas to liquid, etc. By the late 2020’s you might have a substantial number of liquid fuels being made from non-petroleum fuels. Could be hybrid or traditional internal combustion engines. As internal combustion engines become much more efficient, hybrids and all the other alternative fuels will struggle to compete against ICEs.
China-EV: What about hybrids and pure electric vehicles? What is your prediction?
Reinert: I look at hybrids as 8-10% of the market by 2020, including advanced start-stop. Of that maybe 2% may be plug in hybrids. Battery electric cars by 2020 — .5% of the market. Fuel cells maybe .5% by 2020ish. I expect fuel cells over time to outsell BEVs but that won’t’ start until the late 20’s.
China-EV: What about the global market?
Reinert: It depends on how governments act.
China-EV: What country will have the largest market in the world for alternative fuel light vehicles in 2020?
Reinert: That is hard to say. It might be India, it might be China. The vehicles might be bicycles. Pure hybrids are probably going to be the domain of Canada and the U.S., as will plug-in hybrid electric vehicles. Battery electric vehicles (will do well in) managed economies (that do it for political reasons).
China-EV: You said at the Meeting of the Minds confab in last November that PHEVs didn’t make a lot of sense for consumers. Why is that? It seems PHEVs are being touted as the perfect answer to range anxiety….
Reinert: If you are going to put a bigger battery in a car than a PHEV is what you want to do. But the payback could be long. If you care about the numbers, then your motivation for buying a PHEV has to be different then motivation for buying a hybrid.
China-EV: How big a problem will EV battery disposal be for Toyota and other automakers in another 5 years? 10 years?
Reinert: It absolutely will be a problem. We know Nickel-Metal Hydride batteries. We can recycle everything except the battery case economically. But getting the lithium out of a battery is complex. We are talking more about battery disposal. We have an internal deal that we want 100% of our car to be recycled in the longer term. We have experimental factories to show how to recycle the cars, to develop recycling for the cars. Now you have these batteries (as well). http://tinyurl.com/79vnwwk We are looking for solutions. How can we keep them from ending up in landfills? In lieu of for-profit recycling, it looks like it is a manufacturer or societal burden.
China-EV: What other EV-specific issues do you see arising down the road?
Reinert: We can work the expectations on hybrids, but they are overblown on plug-ins and pure electric vehicles. (There is also) a lot of work to do on reducing auxiliary loads (on the battery), such as heating, cooling, windshields demisting, all that stuff. Is on a per-mile load, it goes up in heavier traffic. If you reduce those loads and manage them it is not range anxiety it is range repeatability. The load on battery makes range unpredictable.
China-EV: How to reduce auxiliary loads? Lighter-weight materials? Better technology? A Combination?
Reiner: Work occurs everywhere—it might be better bearings on the air conditioner band, moving heaters, new materials, etc.
China-EV: Is it worth the investment?
Reinert: Yes. Most of these improvements spread across board—they also help internal combustion engines. Improved telematics will also help EV drivers. We also need bigger recharge infrastructure, and need to allow a for-profit charge infrastructure.
China-EV: What is coming in the future for the electric vehicle?
Reinert: Electric vehicles will move toward a shorter range, around 100 miles. Then (the market) will just jump right into fuel cells. We can get the cost down on a hydrogen fuel cell car.
China-EV: What does Toyota have in the fuel-cell segment?
Reinert: We have the FCHV – Adv. There are about 160 on the road. Hydrogen infrastructure modeling is being done at UC Irvine; they seeing how that overlaps with electric vehicle infrastructure. In pure electric cars there will be distributed mass transit—that means share cars, etc. It is not about selling the car, it is about taking out a monthly subscription to use one.
China-EV: So do you think the lower-cost Mitsubishi “i”, which Mitsu is marketing as a city car, is the future? http://i.mitsubishicars.com/
Reinert: At Toyota we have the IQ Scion EVs. http://www.youtube.com/watch?v=vlkT4-1WVkY We are studying how to take them to market in a non-traditional manner. Urban is the market, urban is a high rise environment. They are coming to market tests. The model is an extension of work Toyota did in 1999. But then telematics were on desktop computers (and so not convenient). That is solved now.
A123 looks to China cell JV for boost. Big market beats intellectual property protection
Battery maker A123 Systems Inc. www.a123systems.com just can’t catch a break. A Fisker plug-in hybrid electric vehicle powered by an A123 battery died while being driven by someone from Consumer Reports. A123 had to issue a recall. http://tinyurl.com/c25wadx Talk about bad luck!
In China, however, A123 hopes its luck will be better. Last week, the battery maker announced it would establish a second joint venture in China with SAIC Motor Co. http://tinyurl.com/d2o8kat The new JV will produce battery cells in China. Let’s face it, the lure of the China market is just too strong to pass up even if it means losing a little intellectual property in the progress.
I talked to Jason Forcier, vice president of the Automotive Solutions Group at A123 Systems, about the new joint venture. He was pretty gracious given that I raked him over the coals regarding his remark about the China market last time I interviewed him (see China-EV of April 18, 2011 for full context). But hey, I was sort of right. The Chinese government did have to back pedal on its hugely optimistic targets for EV production and sales. Unlike the U.S. government, however, China’s government consistently supports the EV sector. A123 has taken note.
“We continue to be very bullish on the (China) market,” Forcier said. “There is strong government support.
“The China market is still pushing ahead more than we are seeing in Europe and North America,” he added. “We still see a lot of activity around plug-in hybrids and even BEVs.”
Forcier is still bullish on the China market.
The first A123/SAIC joint venture was established in 2009. http://tinyurl.com/cmnao2d Advanced Traction Battery Systems, as it is known, produces lithium-ion battery packs using cylindrical prismatic cells imported from the U.S. The new joint venture will produce A123’s 20Ah flat prismatic cells. “We see a big demand for flat cells in China,” said Forcier. “A lot of programs will be migrating from cylindrical to flat because the density is better.” The two companies are still talking terms; they hope to have the agreement hammered out by September, 2012.
I asked if the new venture would become part of ATBS. The more likely scenario, said Forcier, is that ATBS will become part of the new venture. “The capital required to do the cell is much greater,” he said.
A123 will send its latest technology to China, said Forcier. Of course, what is state-of-the-art right now might not be when a model actually goes into production two or three years down the road. So the agreement also includes future cells, said Forcier. “The market isn’t accepting older technology,” he said. “There is no way you are going to win business (in China) with battery technology that is a generation or two old.”
Why didn’t A123 just start producing cells in China back when it established its first joint venture with SAIC? Trust was an issue, it seems. Now that A123 has worked with SAIC www.saicmotor.com for a few years, “as we get more comfortable with the relationship, we are willing to take our partnership to the next level,” said Forcier. In any case, he claims that the main intellectual property in the cell is the cathode powder, and that will still come from A123 in the U.S.
Okay, but I bet that like many U.S. companies A123 is willing to give up some intellectual property for a piece of the China market. SAIC has turned out to be good at generating business for A123 in China. Naturally, A123 will supply battery systems for SAIC’s electric car programs. That includes the Roewe 750 hybrid sedan, the Roewe 550 plug-in hybrid sedan, and the Roewe e50 battery electric vehicle.
The ATBS joint venture has also been awarded several other programs in China, said Forcier (Warning: He is very fond of the word “significant.”) On the commercial side, A123 has gotten production contracts in China through ATBS, though they haven’t been publically disclosed, said Forcier. One might be Shanghai Sunwin Bus Corp. http://tinyurl.com/82ngeya SAIC owns half of Sunwin and Volvo Bus Corp. owns the other half. A123 sees. “major activity” in the truck and bus market, said Forcier. “SAIC has played a significant role in helping us land new business,” he said. “We expect significant revenue growth.”
Forcier gives a lot of credit to the business development team at ATBS. The team’s first “significant win” is the just-announced agreement to supply complete battery packs to Geely Automobile’s plug-in-hybrid electric vehicle program, http://tinyurl.com/7twk7sf which is expected to launch in 2014. “We weren’t the ones who went out and won the business,” said Forcier. “This is the first big win without one of the parents holding their hand.”
Suppliers in China used to tell me Geely http://www.geely.com/english/index.html was merciless at pushing the price down. “Geely won’t pay for a decent part,” as one supplier put it. I asked Forcier if ATBS had to take a haircut on pricing to get the Geely contract. He didn’t say yes, but he also didn’t say no. “Is there any automotive company in the world that doesn’t push the price down?” said Forcier. He added that the price was competitive, with a decent margin, defined as anything between 15% and 20%. I’ll wager A123/ATBS also has its eye on supplying future Geely EV programs. A123 is likely also interested in supplying Volvo programs in China (Geely owns Volvo). So it was probably willing to settle for slim margins. Alas, slim margins are like tax cuts. Once to you give them, it’s hard to take them away.
A123 may also bring in business to the new battery venture. It is supplying battery packs from its Michigan plant for the General Motors Spark battery electric vehicle due to launch in some states in the U.S. in 2013. http://tinyurl.com/6h3mdm4 A123 expects the Spark BEV to also be sold in China, said Forcier. “We might have multiple sites” from which to supply the program, he said.
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.
Alysha Webb's ChinaEV Blog 