California EV drivetrain firm eyes China’s medium and heavy commercial vehicle sector
At the Alt Car Expo in Santa Monica, CA a few weeks ago, I took a ride on a battery electric bus produced by Balqon Corp. www.balqon.com, a small company in Harbor City, CA. Harbor City is near Torrance, which is by Redondo Beach. Which is next to Hermosa Beach. Which is next to Manhattan Beach. Ah ha, do you finally recognize one of these towns?
Anyway, Balqon is in the Greater Los Angeles area. Its seven engineers design electric drivetrains for medium- and heavy-duty commercial vehicles.
I learned the company is providing the drivetrain for electric buses in China. So I went to Harbor city to talk with Balqon CEO Balwinder Samra. It turned out to be yet another example of a U.S. company that is turning to the China market after not finding much of a market for its technology in the U.S.
Balwinder Samra's company is providing electric drivetrains for buses in China. This is one of Balqon's electric buses at the HQ in Harbor City.
Last February Balqon inked a $16 million deal with Winston Global Energy, a lithium-ion battery maker in Shenzhen, China, to provide drivetrains for 300 buses. http://tinyurl.com/3lkkonx A few drivetrains have already been shipped to Shenzhen, says Samra. The buses are for the domestic market.
Here’s how the agreement to supply electric drivetrains for Chinese buses came about:
Balqon’s U.S. customers include the Ports of Los Angeles and Long Beach. Business wasn’t good last year. Revenue plunged 82% to $677,745, with a net loss of $4.3 million.
CEO Balwinder Samra says the U.S. market hasn’t been very welcoming to his electric drivetrain technology. “We did take our technology to most OEMs (in the U.S.), but it didn’t seem like anyone was interested,” he says.
However, a Chinese businessman with investments in the U.S. was interested in Balqon’s drivetrain. Balqon was already buying batteries from Winston Global Energy, http://en.winston-battery.com/ located in the southeast China city of Shenzhen. At the suggestion of the U.S. distributor of the battery, last November, Samra attended the EVS25 electric vehicle forum and exhibition in Shenzhen, China (I was there too!).
At EVS25, he met Winston Chung, owner of Winston Global Energy. Though Chung, from south China, doesn’t speak English, he and Samra both speak the language of business. “It became a strategic relationship,” says Samra.
Chung was looking for an electric drivetrain for a recreational vehicles to be produced at MVP RV Inc., www.mpvrv.com a company Chung owns in Riverside, CA, near Los Angeles. One 44-ft RV using Balqon’s drivetrain was produced, and worked well. “It was proof of concept,” says Samra.
If the electric drivetrain could handle a 44-ft RV, it could clearly handle a 22-ft passenger bus, says Samra. Thus, last February Balqon signed an agreement with Winston Global Energy to provide electric drivetrains for the 300 buses in China.
In December of 2010, Winston Chung also made a $5 million equity investment in Balqon, with an option to invest another $5 million.
Is Balqon worried about its intellectual property being stolen in China, I asked Samra? Since Winston Global Energy is also an investor in Balqon, it is in Winston Global’s interest to prevent IP theft, points out Samra. Like most companies, however, his main strategy to fight IP theft is to keep making his technology better. “We are obsoleting our technology,” says Samra. “By the time they have copied us, we have innovated.”
Samra seems optimistic about Balqon’s future. He is also targeting OEMs in Europe and India. Currently, 82% of Balqon’s business is international, says Samra.
He has no plans to move any time soon from the small warehouse in the industrial area of Harbor City that serves as Balqon’s office and assembly plant. Samra figures electric drivetrains have a great future in the medium- and heavy-duty commercial sector. But it depends on improvements in battery technology. Mass adoption will occur when battery capacity equals the range of about six gallons of gas, figures Samra. Right now it is at about four gallons.
“We know we need to stay small and weather this thing out,” he says. “We have always believed battery-powered zero emission will be the future. We will be in our little niche until it becomes general use.”
Samra sees opportunity for his electric drivetrain in China's heavy and medium duty truck market.
Balqon is already looking at the medium and heavy truck market in China. Samra figures it could use Balqon’s electric drivetrain, too. Oh, and he has his eye on Turkey “because of the cost of diesel there,” he says.
Hey, wadda ya know. It appears the Chinese government is looking overseas for good battery technology. And putting its support where its mouth is.
Does this herald a new electric vehicle sector development strategy for China? Will we see more support from the Chinese government for foreign companies with electric vehicle technology? Is this a way to get some technology without trying to force foreign automakers to fork it over?
In late September, Boston Power, a Massachusetts-based producer of lithium-ion batteries, www.boston-power.com announced it had received a US$125 million investment, and that it was moving to China. http://www.autoobserver.com/2011/09/new-investor-refocuses-boston-power-on-china.html
The investment includes cash from private investors and support from the Chinese government. The deal was arranged by GSR Ventures, a venture capital firm with offices in Silicon Valley and Beijing. www.gsrventures.cn GSR managing director Sonny Wu told me via email that the Chinese government is providing “significant support for the company.” He wouldn’t elaborate. According to the press release, the government’s investment came in the form of grants, low-interest loans, and financial and tax incentives.
The money will be used to build a plant near Shanghai with capacity of 400 megawatt hour of lithium-ion battery cells per year cells by the end of 2012, more than tripling Boston Power’s production capacity. To put that in perspective, that equals batteries for some 20,000 passenger cars.
I talked to Boston Power founder Christina Lampe-Onnerud about the big move for her company. Lampe-Onnerud (below) is now Boston Power’s international chairman. Sonny Wu of GSR Ventures is the new chairman.
Lampe-Onnerud figures China is Boston Power's future.
Why would the Chinese government chose to invest in foreign battery company given that there are so many battery makers in China, I asked Lampe-Onnerud? “It was a merit-based award,” said Lampe-Onnerud. “The technology is rock solid. Our stuff works.”
Is Lampe-Onnerud worried about a glut of batteries on the China market? Overcapacity, that is? “I think there is always a huge need for high quality battery,” she said. “I think there is an overcapacity of cheap batteries,” she said. I guess not.
Boston Power claims its lithium-ion battery delivers the holy grail of EV battery technology: High energy density, long life, fast charging, and safety. Oh, and environmental sustainability. Who could ask for more?
Why China, I asked Lampe-Onnerud? She said: “We recognize that China is taking the lead in transportation. We are extremely well positioned in that; we are outperforming our competition in transport.”
Okay, but isn’t she worried that Boston Power’s intellectual property will get nicked by a Chinese competitor who will then start producing similar batteries? “I’m not particularly nervous,” said Lampe-Onnerud. As a young company, Boston Power’s number one intent is to grow, she added.
Boston Power wanted to grow in the U.S., but its request in 2009 for $100 million in federal funding was rejected. Why, I asked? “Our company was maybe a little young” to get an award from the U.S. government, said Lampe-Onnerud. Boston Power’s focus in China will be on batteries for vehicles, said Lampe-Onnerud.
She wouldn’t say if it would focus on passenger cars or commercial vehicles. And though she said it is already talking to Chinese companies about using its battery, Lampe-Onnerud wouldn’t reveal any names. It will make an announcement regarding its customers in China within the next six months, she said.
This is not Boston Power’s first foray into China. It has a trading company in Shenzhen, said Lampe-Onnerud. She has long seen China as a destination for Boston Power. Though she doesn’t speak Chinese, and had never been to China before, in 2005 Lampe-Onnerud went to Shanghai to visit several battery manufacturers to try to talk them into doing a test run of her battery. One of the companies finally agreed, and Lampe-Onnerud paid for the run with her own money. When the Shanghai company wouldn’t agree to large-scale production, she produced the battery in Taiwan, said Lampe-Onnerud. The Shanghai battery maker has gone out of business, she said.
Lampe-Onnerud is ballsy and that impressed me. But there are still many questions surrounding Boston Power. Is its technology really as good as she claims? Who are these Chinese customers? What, exactly, is the Chinese government’s interest in Boston Power? Is it offering the same deal to other foreign companies?
I’ll sniff around when in China in November. Stay tuned! .
Coda first store is nice, but the brand still faces some hurdles to succeed in the EV world
I recently visited the first Coda electric vehicle store. It opened here in Los Angeles early in September. The store is a teaser—a way to introduce the company and its products to a target group of consumers and hopefully build demand ahead of the vehicle’s arrival. http://prn.to/rmdo0z
The question is: Can an unknown brand succeed in a segment that has yet to catch consumers’ fancy in large numbers, especially agains competitors such as Ford Motor Co. and others who have name recognition, a dealer network, and momentum? I hope the answer is yes but fear it is no.
The good news for Coda is that it got more money. http://aol.it/o1WF8y It seems to be using that cash injection to hire people—the job websites are full of ads for various Coda positions. The bad news (maybe, I don’t know how good the guy was) is that Coda is still experiencing executive churn.
Sean Blankenship, Coda’s former VP of automotive marketing, recently left the company to “pursue other opportunities,” Larkin Hill, Coda’s director of corp comm told me. Coda, founded in 2009, is alread on its third president—well, its second permanent president, to be fair.
Kevin Czinger, the first, left the company in 2010. The second, interim, president, Mac Heller, left a few months later. (Though he is still Coda’s chairman, Hill emailed me to point out after reading this blog. Makes sense as I believe he has skin in the game i.e. he is an investor.) Phil Murtaugh, the current president and CEO of Coda Holdings, is certainly exactly what Coda needs, a car guy who had impeccable China connections. Hopefully he will stick around. But he faces formidable challenges, as I have written in previous blogs.
Also, Coda is produced in China at Hafei Motor, http://www.hafeiauto.com.cn/ and based on an old Mitsubishi model. While Coda Holdings www.codaautomotive.com has updated the look, it is still very bland. And, the body (and the battery) is made in China. That may give some consumers pause.
More good news. I drove Coda’s pure electric sedan. It definitely drives better than the version I drove last year. Much more pep. The interior looked about the same, but this was not a production version car. And the car I saw at the Alt Car Expo www.altcarexpo.com in Santa Monica recently did have a much nicer interior.
Coda doesn’t plan to begin delivery of its pure electric sedans until late this year. While you can’t buy a car at the store, you can put down a deposit on one. The store aims to provide “a unique learning experience for consumers interested in the electrification movement,” Sean Blankenship, Coda’s former vice president of automotive marketing, told me a few months ago. Despite his departure, I think that still holds true.
There is a Coda EV parked on the sidewalk in front of the small store.
Inside, you can read about the company on a large computer screen immediately inside the door.
The left wall has a bar with computer terminals so visitors can read all about the Coda movement, and also Coda t-shirts and hats so people can be walking advertisements for Coda. Coda wants its stores to appeal to consumers the way an Apple computer store does—that is, people come in just to play with the cool stuff and maybe buy a computer. Amusingly, there is an Apple store next to the Coda store, and a guy came in and started asking questions about the Apple computer screen at the front of the Coda store. The Coda employee had to tell him this wasn’t the Apple store.
On the back wall are examples of the car color choices, and wheels, and another computer terminal so visitors can design their future Coda EV. On the right side of the store is a pretty cool thing—a Coda EV chassis with the batteries installed. On the wall is a map of the Los Angeles area and circles illustrating how far you can drive on a single battery charge. Coda claims a range of up to150 miles (241 km).
The Westfield shopping center where the store is located is in Century City, a high-class part of Los Angeles between Santa Monica and Beverly Hills. It is not a traditional enclosed shopping mall. Rather, it is open air. So the Coda EV in front of the store is actually outside. This works in Los Angeles, where it seldom rains and the temperature –in that part of Los Angeles, at least—seldom climbs above 80 degrees F (27 degrees C).
Plenty of people are going to walk past the Coda store, that’s for sure. Westfield Century City, the shopping center where the store is located, has 13 million visitors a year, said marketing director Karla Villatoro. The average household income is $150,000, she said. Westfield Century City shoppers tend to be very environmentally-conscious, Villatora said, adding “Coda is a really nice fit for this customer.”
In the parking garage underneath the shopping center, Coda has a handful of its electric vehicles for test drives. They are in their own little area with ample signage advertising the car. There are several charging stations in the area, so consumers see the entire package.
It all looks great. And I know that Coda is only trying to bag the early adopters with the store. It does plan to add traditional dealerships, though it won’t say when. I heard from a Coda exec at the Alt Car Expo that it was signing up dealers. I would like actually talk to some of those dealers confirm some had signed on the dotted line.
I also heard that the price will likely be coming down. That’s good because the Coda EV is pricey– $45,795 before state and federal tax credits. And the Coda sedan is pretty bland looking. It is based on the Hafei Saibao, after all. People who pay extra for an electric vehicle still want to stand out as special because they bought an electric vehicle, according to some studies. Unless Coda buyers put a big EV sticker on the side of their car, which would be pretty ugly, it looks just like a regular car.
A bigger problem is that there still isn’t a big market for pure electric vehicles here in the U.S. and Coda will be competing against some worthy opponents such as the Ford Focus EV, due out in several states late this year.
Coda’s best bet, at least in the near term, may be fleets. It is larger than many of the EVs out there, and its conventional looks won’t hurt it in rental or taxi fleets. I ran into Coda’s vp of fleet sales at the fleets conference on the first day of the Alt Car Expo. Coda clearly is also eyeing fleets for its early sales.
It’s those later sales I worry about. But hey, maybe Coda will be helped by the arrival of new competitors in the segment such as Ford and (maybe) BYD, who also offer conventional looking pure electric vehicles. That could grow the customer base for all of them. I hope it does.
Is China trying to coerce U.S. companies into to handing over electric vehicle technology? The U.S. press has been full of indignant stories recently saying China was doing just that as the price of market entry. http://www.npr.org/templates/story/story.php?storyId=140620106 Maybe the Chinese government has been pressing for foreign technology, I wouldn’t put it past them. GM vice chairman Steve Girsky says China never asked for Volt technology, but for as long as I’ve covered GM in China—which is about 10 years—the U.S. automaker has been pretty obsequious towards the Chinese government in order to smooth its way in China. http://detnews.com/article/20110920/AUTO01/109200383/GM–Chinese-partner-to-develop-electric-vehicle
Even if China is asking for EV technology, however, so what? Chinese automakers still have to take that technology, integrate it with a lot more technology, and turn out a quality electric vehicle. And most Chinese automakers don’t have the knowledge or skill to do that right now. (As an aside, according to my sources in China, Chinese OEs are losing their enthusiasm for producing pure electric vehicles as it becomes apparent they can’t do it without foreign help, and as the government wavers on its policies to support such development.)
The main issue for GM seems to be the lack of subsidies for the purchase of the imported Volt if it doesn’t hand over technology. Even with a subsidy, the Volt would still be pricey, however. And do you think GM thought it would sell lots of Volts in China? Not. As I blogged about months ago, GM is only using the Volt to test the market. GM’s Girsky said as much recently.
So what is GM up to in China as far as electric vehicles are concerned? It plans to use China as a low-cost electric vehicle technology development site, and export that technology globally. That started to become apparent to me when I interviewed John Du, head of GM’s China Science Lab, last year. The Science Lab is part of the GM China Advanced Technical Center, which just officially opened. (see my April 22 blog for more on that interview.) http://media.gm.com/content/media/us/en/buick/news.detail.html/content/Pages/news/cn/en/2011/Sep/092102
Using China to develop technology for GM globally became official GM policy at the recent opening of the Advanced Technical Center in Shanghai. Said GM chairman Dan Akerson : “As one of GM’s most important and comprehensive technical and design facilities, it will lead GM’s global research and development efforts in targeted areas.” Such as electrification.
The opening of the Center followed the announcement on September 20 that GM and SAIC will jointly develop an electric vehicle at the Pan Asia Technical Automotive Center. http://www.insideline.com/chevrolet/gm-and-saic-will-jointly-develop-evs-in-china.html
PATAC, http://www.patac.com.cn/ as it is known, is a 50/50 research and engineering venture between GM and SAIC. That was not unexpected. The two did announce at the Guangzhou auto show last November that they would jointly develop new energy vehicles with architecture “appropriate” for China i.e. lower cost.
According to GM, the electric vehicles developed at PATAC will be sold under Shanghai GM and SAIC brands. That is no surprise. But the press release also contained this tell-tell sentence: “SAIC and GM will also use the architecture to build electric vehicles around the globe for their own purposes.” So, we might see a China-made, GM-brand electric vehicle on the road here in the U.S. one day, though developing countries are the more likely target markets.
So, GM has always planned to bring electric vehicle technology to China, as anyone who followed GM’s strategy in China would know. Far from giving its technology to China in return for market access, GM is using China to develop lower-cost electric vehicles for the global market.
GM’s Girsky said the jointly-developed vehicle will be a dedicated electric vehicle, not based on current model. (I’m not sure what that means for the future of the Chevy Sail electric vehicle that SGM showed at the Guangzhou auto show last year.) http://green.autoblog.com/2010/12/22/general-motors-sail-electric-concept-guangzhou-auto-show/
What does GM’s plan to develop a pure electric vehicle with SAIC mean for local auto makers such as BYD that are already trying to market pure electric vehicles in China? An executive at a local automaker producing battery electric vehicles said he welcomed new entrants into the market. “GM-SAIC doing an EV only brings more credibility to this growing market,” he said. “I like all green products — even those from competitors.”
There is a crucial element missing in all this, of course—a market for the EVs. Will Chinese consumers actually buy electric vehicles? It isn’t happening in the U.S. yet. When will it start happening in China?
Are plug-in electric vehicles now China’s destiny? Government adjusting ambitious plan
Ah, how a year can change things. Or more concisely, reality bites. That’s what China is discovering regarding the overly-ambitious new energy vehicle development program that first appeared in the Chinese media in October of 2010. That plan called for huge numbers of battery electric vehicles to be on the road by 2020. http://wardsauto.com/ar/china_pushes_plan_101110/
Now, however, a top executive at a foreign supplier told me “the wheels are coming off” the government’s EV plans. Executives at several of China’s domestic automakers have told him the plans “will just not work,” said the foreign supplier executive.
For sure, the original plan—which basically assumed China would dominate the battery electric vehicle sector by 2020—is not tenable. The plan will change; the plan will be revised, multiple times if necessary. (The old “crossing the river by feeling for the stones” strategy.) But China is still committed to growing its new energy vehicle sector.
And, the government’s admission that China needs foreign technology to develop its EV sector will mean lots of opportunity for foreign firms who are willing to take their technology to China. (And possibly leave it there. The old risk and reward equation.)
China started out with a false assumption regarding its ability to produce electric vehicles. Since no nation was producing large numbers of battery-electric or plug-in hybrid electric vehicles, and China already produced most of the world’s lithium-ion batteries for consumer goods, China figured it could lead the world in applying that know-how to the electric vehicle sector and be a leader there, too.
Well, that hasn’t happened. China has thrown a lot of money at the sector—100 billion RMB in the program announced in 2010, but much more if the “863” tech funding program http://www.most.gov.cn/eng/programmes1/200610/t20061009_36225.htm is included. I hear much of that initial 100 billion RMB has already been allocated.
But, China’s indigenous firms lack crucial electric vehicle technologies that prevent them from producing safe, good-quality electric vehicles. And by that I mean passenger vehicles, not low-speed EVs. So in the past few months, numerous articles questioning the goal have appeared in the Chinese press—including an essay by premier Wen Jiabao. I just read a piece taken from Caijing Guojia Zhoukan suggesting that a new NEV plan expected–or hoped?– to be released later this month or in September would have a “small adjustment” i.e. it would be more realistic where the goals are concerned. Declared the author: “Battery electric vehicles are our destiny, but PHEVs are just transitional.” http://www.china4auto.com/news/show.aspx?id=263977
But who knows how long that “transition” will last?
Also noteworthy—many of these articles have suggested that China will need to turn to foreign technology, especially in the areas of batteries, electric motors, and electronic control systems. Of course, foreign firms may be reluctant to bring that technology to China, fearing intellectual property theft. But let’s face it, that is sort of the price of doing business in China.
And, foreign firms can adopt the strategy (and attitude) of battery maker Ener1 Inc. www.ener1.com of New York. It formed a joint venture with China’s largest automotive component maker, Wanxiang, www.wanxiang.com in February. At the time, I asked Tom Goesch, president of the transportation group at Ener1, if Ener1 worried about intellectual property theft. He said: “We feel the strategy of having a partner like Wanxiang, a China-based company, will provide us the best protection we can find. Wanxiang has all the reason in the world to protect that intellectual property.”
Foreign firms with good plug-in hybrid electric vehicle technology can also benefit from the apparent shift in focus of the government’s NEV plan. Efficient Drivetrains Inc. http://www.efficientdrivetrains.com/ of Dixon, CA is hoping that will be the case. EDI already is working with Ankai Bus Co. of Anhui, China to develop PHEV buses. And, it just landed a $1 million investment from Silicon Valley China Venture Management LLC to further develop its China business.
Many other foreign suppliers are trolling China’s EV water for business, as well. There is a potential glitch. The government floated a draft law earlier this year that would call for foreign firms with certain key EV technology—mainly in the areas mentioned above—who wanted to manufacture their products in China to form a 50/50 joint venture with a Chinese partner. That hasn’t been mentioned since then though it could still rear its ugly head. But the government seems to positively hunger for foreign EV technology these days, and issuing a law such as that would not be a good way to feed that hunger.
The main casualty of China’s shift in NEV development strategy looks to be those forecasting firms who swallowed the government’s initial announcements without looking behind the façade. I won’t name names, but you know who you are. As I’ve written here before, China will likely be the world’s largest market for electric vehicles one day. But just how it will arrive at that point is still being worked out, like so many other elements of the whole electric vehicle story.
Coda Great Wall letter of intent–filing for divorce from Hafei?
I am going to make a prediction about Coda Holdings, www.codaautomotive.com the Santa Monica-based company that has for what seems like years—probably because it started saying it in 2009—that it will sell electric vehicles assembled here in the U.S. http://www.codaautomotive.com/news-press-release/2009/060309-unveils-2010-all-electric-cars-consumers.html The glider (i.e. body) was to be produced at Hafei Motors in China; the battery produced at a Coda joint venture with Tianjin Lishen www.lishen.com.cn in China. Other drive train parts would come from U.S. supplier companies (but some of those parts are probably made in China, too.)
Those EVs still aren’t here. But, on August 15, Coda announced it had signed a letter of intent with Great Wall Motor Co. www.gwm.com.cn to develop electric vehicles. http://www.prnewswire.com/news-releases/coda-and-great-wall-motors-enter-into-electric-vehicle-agreement-127798853.html Coda will contribute the EV drive train and Great Wall the rest, I assume. Though Phil Murtaugh, CEO of Coda, told me the deal with Hafei was still on, I predict that Hafei will soon be little more than a bad memory and that Coda and Great Wall be happily married.
One only need consider the two potential partners to arrive at that conclusion. Great Wall is one of China’s fastest-growing automakers. Its sales grew 76% in 2010 to 397,362 units, according to J.D. Power and Associates. www.jdpa.com Great Wall exports to some 120 countries, according to Murtaugh. That includes European countries and Australia. It expects to export some 80,000 units this year, according to Great Wall’s website.
Great Wall is privately-owned, sort of. The chairman, Wei Jianjun, owns a big chunk of the company. But the Baoding government, where Great Wall is based, owns a chunk, too. Or used to. And, part of Great Wall is listed on the Hong Kong stock exchange. In any case, it operates somewhat like a private company. And by that I mean it is very open to new ideas and flexible in its thinking. And of course, Wang Fengying, the president of Great Wall, is a woman, which can only mean the company is very forward-looking!
Great Wall started out producing pickups, then added SUVs. In recent years, it has added a line of passenger cars that have a reputation for being
quite well made. At least I read that in a J.D. Power report, and would JDPA say it if it wasn’t true? Great Wall has a technical center, designs its own vehicles, and works with a number of foreign suppliers.
I visited Great Wall back around 2005, before it has really started to grow. It was only producing pickups and SUVs at that time. Then, Wang told me about its expansion plans, including hiring engineers from other countries. Baoding isn’t exactly the most exciting place to live, I countered. Do you think it will be hard to attract them? (Baoding is a small, non-descript city about an hour and a half from Beijing. Maybe less now; a very nice highway connects the two cities.) Oh, she said, they can live in Beijing. They can even live overseas. I thought that was pretty flexible. Overall, I was impressed.
So for years I’ve said good things about Great Wall. And I’m pleased that my initial impression seems to have been correct. Murtaugh said he
has known Great Wall since 2002, during his days at General Motors. www.gm.com It seems he has been looking for a way to work with Great Wall every since. “I approached them when I was at General Motors, with Chrysler, www.chrysler.com with Coda. They are a good company, they are trying to do EVs, they showed me their EV. ‘I said I think we can help,’” he told me.
Now let’s consider Hafei. Hafei Motor Co. is a subsidiary of state-owned Chana (aka Changan) Group, www.chanaglobal.com China’s fourth largest auto group. Chana bought Hafei Motor Co. in 2009. Hafei sold 220,330 units in 2010, down 10% on the previous year, according to J.D. Power.
You be the judge. Where does Coda’s future lie?
UC Davis Institute for Transportation Studies looks to make China, and the world, a greener place
I visited the University of California at Davis Institute for Transportation Studies www.its.ucdavis.edu the first part of this week. It is doing a lot of interesting stuff that closely matches some of my interests. So naturally I enjoyed talking with Yunshi Wang, the director of the China Center for Energy and Transportation http://chinacenter.ucdavis.edu/ part of the Institute, and others there. Wang knows me through my blog, which reached him via Andy Burke, a professor at UC Davis whom I met last year at a conference. You get the picture. I also met Dan Sperling, director of the Institute.
Testing batteries is among the Institute’s many activities. Burke took me to see his (well, the University’s, but really it’s his lab) Hybrid Vehicle Power Systems Lab. The place is a battery nut’s dream. It is housed in a non-descript metal building on the edge of campus near where the farm animals hang out (Seriously. UCD has a huge agriculture science program. UCD sports team is called the Aggies, same as Texas a&M.).
Andy Burke's battery testing lab can handle everything from modules up to battery packs. Here, Burke stands proudly among his machines.
Inside a windowless room, Burke, who has worked at the Center for nearly two decades, proudly showed off high-tech machines that can test everything from a module to a full battery pack as large 400V and 500 amps. The Lab can even test battery/battery management system combinations. Battery manufacturers bring their goods to the lab to be tested, said Burke. A large battery pack from a Ford Escape Hybrid www.ford.com/suvs/escape was lying on the floor in the lab. But it came from Nissan www.nissanusa.com , said Burke. Nissan bought the Escape and didn’t need the battery anymore, he said.
Aside from the Ford battery pack, there were no batteries from the companies that supply major automakers. “Any battery maker that ships batteries directly to automakers isn’t about to ship a battery to a third party,” said Burke.
He walked to a metal cabinet and pulled out a box full of ultracapacitors. Ultracapacitors are able to quickly charge and discharge energy up to a million times. They look somewhat like very large regular battery (Think how big a rat is compared to a mouse. A really big rat that is). A capacitor is great for hybrid vehicles, and much smaller than the regular battery packs that are currently being used. Such as the one from the Ford Escape, which was flat and about the size of a collapsed card table. Ultr capacitors can also discharge 75% of their stored energy, said Burke. Okay, I’m getting into technical waters that I can’t even dog paddle in, much less swim. So I will say no more. It was fun to see the box’o apacitors, however.
Burke’s lab is only one of many endeavors at the Institute for Transportation Studies. It has a Plug-In Hybrid and Electric Vehicle Research Center that studies how marketable EVs are. It has a Sustainable Transportation Center. Etc. Look at the website. www.its.ucdavis.edu
The Institute also includes the Sustainable Transportation Energy Pathways (STEPS) www.steps.ucdavis.edu program. It is sponsored by a consortium of companies. The first STEPS program, which had 21 sponsors, ended in 2010. On Jan 1 the new program—predictably called NextSTEPS—started. It will run through 2014. Sponsors cough up $60,000 annually to be members. Up until April, NextSTEPS members included automakers such as Nissan, GM, Honda, and BMW; oil companies such as BP and Indian Oil; and government bodies such as the California Air Resources Board www.arb.ca.gov (of which Dan Sperling is a member). The Institute is seeking more.
Besides meetings two or three times a year, member companies can attend Institute seminars and have access to the Institute’s 100 research projects. And of course they can exchange ideas, pointed out Paul Gruber, the STEPS program manager.
The China Center at the Institute is involved in various projects with Chinese universities and assorted government bodies in China. Among the more interesting: A project to use Chongming Island, http://www.chinahighlights.com/shanghai/chongming-island/ near Shanghai, as a sort of new energy vehicle Petri dish. The idea is to slowly wean the island, which is small with a smallish population and a fairly undeveloped road system, from all but electric vehicles of various kinds.
That seems feasible. After all, the Shanghai Municipal Government (which I believe governs Chongming) can mandate it. But a proposed project to develop a low-carbon development in the heart of Beijing’s Central Business District seems too good to ever come true.
I know that area well—used to ride my bike through it a lot when I lived in Beijing. Already, it has changed immensely with older buildings torn down to make way for shiny new high-rise shopping, business, and residential developments. And the plan is for the CDB to double in size according to a presentation Wang showed me. (Of course, that would involve tearing down more old housing and making those people move to the suburbs so they would have to commute to their jobs. But Beijing has an extensive subway system now. And the new buildings and green space are prettier….)
The Center would advise on making the area livable, including lots of green space and good schools, etc., while making it increasingly carbon-free by migrating the inhabitants from private vehicles to NEVs to public transit to bicycles or walking.
Hmmm. Regressing (in many Chinese minds) back to bicycles. Maybe it will happen someday. But right now, even with the horrendous commute many Beijingers face (one slide in the presentation says there were a record 140 traffic jams on Beijing roads on September 17,2010.) they relish the freedom (?) and status driving to work confers.
The plan is long range. Bicycles don’t appear as the main form of transportation in the new CBD until 2030. And the chart is labeled “Idealized CO2 Reduction Source in CBD 2030.” Hey, it’s always good to dream.
BYD Co. www.byd.com is the world’s largest producer of mobile phone batteries, but it is better known these days for its cars. In China, the brand was first associated with cheap, small cars of so-so quality, and more recently with electric vehicles. BYD would, not surprisingly, prefer to be known as a high-tech firm that produces not just electric vehicles, but premium-brand EVs. And, it would like to tack solar panels and storage devices i.e. high-tech batteries on to that image.
Here in the U.S., the brand is not well known. But it wants to be known as a high-tech green company that produces—you got it, electric vehicles, solar panels, and high-tech storage batteries.
BYD senior vice president Stella Li and vice president Michael Austin talked with China-EV recently in Los Angeles about BYD’s brand strategy and the challenges it faces. An edited transcript follows.
China-EV: BYD is delivering 300 electric taxis to the 2011 International Universiade Games in Shenzhen this summer. http://www.hybridsevolution.com/2011/07/byd-signs-500-unit-electric-vehicle-deal-with-city-of-shenzhen/
And it already some 50 in another taxi fleet in Shenzhen.
China-EV: But have you started selling your e6 electric crossover vehicle to consumers in China?
Li: Not yet. All the production is fully booked by the taxis. We plan to begin consumer sales in China in September or October of this year.
China-EV: You mentioned that you are capacity constrained where battery production is concerned. How will that impact your consumer sales?
Li: We invested in our battery—the IPO—to increase our battery capacity. (BYD raised 1.42 billion RMB, or US $220.7 million at current exchange rates, in an initial public offering on the Shenzhen Stock Exchange in mid-June.) http://www.autoblog.com/2011/06/21/byd-raises-219-million-in-china-ipo/
China-EV: BYD’s sales of regular cars have taken a hit in China recently—sales were down 24% for the first half of 2011, according to J.D. Power and Associates . Will that impact your ability to grow your EV operations?
Li: The sales for BYD … the company is in a transforming stage. In the past we are more focused on pushing the volume. Now we push the … now the focus will be maybe more on green car. In 2013-14 you will see BYD will introduce a different size, a series of EVs. We will also introduce new Dual Mode car and at the same time there will be more focus on technology and quality.
Now we are more strict on the car’s quality. Recently you see our launch for the f6 the fit and finish is very different. In the future you will see everything will be upgraded so you get into the car and it is more like a feeling of a luxury car, a high tech car.
Li says BYD's days of favoring sales volume over quality are gone.
China-EV: So you are upgrading your internal combustion engine cars as well?
Li: Yes, so we will be more focused on quality, fit and finish.
China-EV: Fit and finish has been a huge issue for Chinese cars in the past….
Li: Exactly, that is the mistake we made in the past. We would push volume, so our quality on fit and finish was not there. Now we will be more focused on that. Several times we have had an internal review; we talk about how we make it. You know we can make a lot of beautiful parts. All the cars we make, if we only use a small part of our high tech knowledge in building our autos, they will be super high tech.
China-EV: Yes, you have a high tech imagine but you also build cheap cars. There’s a contradiction….
Li: That is the mistake we had in the past three years, but when the new guy goes to the market we had to push some volume but sometimes we didn’t focus on bringing the good quality high tech image to the car. Now we are in the transforming stage to make our products to be more high tech.
I will share with you– when is the auto show? We are going to debut our “I”system. The I system—if I am here and my car is in the parking lot, I can call and say “can you unlock?” Then I can tell the car I need a repair and the car can set up the repair appointment. You can do all these
things with the technology in the new car. When we introduce the g6 we will have the I system. It’s a very intelligent car.
Austin: It links a lot of the information in electronic systems to the user. Like is it fully charged, is it not fully charged? How much longer will it take to fully charge? What is the remaining state of charge?
China-EV: What about your traditional cars?
Li: They will also have all these high-tech functions. They can plot locations, you can also send navigation information to other people’s cars. These kinds of cool things are in our I systems.
China-EV: Nonetheless, earlier this year when sales dropped in China BYD still resorted to price cuts to push cars. Once you start launching
these new lines of higher tech cars do will BYD still need this tactic?
Li: We have to deal with that. Chinese people pay a lot of attention to face, and to brand. If they have money, they want to get a foreign brand.
China-EV: Right, that is a whole branding issue….
Li: Now it will take some time for BYD to rebuild our branding to be a high premium car imagine. Then maybe we can improve our sales price.
Recently our s6 was introduced to the China market at only 90,000 RMB. It is an SUV, everyone wants to get that car. So you see this kind of car still sells, but it is starting to change our image.
BYD hopes the S6 SUV will aid the transformation of its image to a more upscale brand
China-EV: How long do you think it will take to change BYD’s brand image in China from a producer of cheap cars to a high-tech producer of premium brand cars?
Li: BMW, Daimler, they have 100 years. For good branding, I think it will take 20 years or 30 years. But for this kind of image, we have the best chance for a green car, to introduce a green car with a good status. Also we have had several internal reviews. We cancelled a lot of projects which did not fulfill our new strategy. We need to start to fulfill our product roadmap. So normally this will take three years, so maybe in five years you will see BYD brand car will be totally different than today.
Austin: That is something that will benefit from the Daimler/Mercedes relationship as well.
(BYD and Daimler AG, maker of the Mercedes Benz brand, in May of 2010 formed a joint venture in China to produce electric vehicles. BYD will provide the battery and powertrain technology.) http://www.insideline.com/byd/daimler-byd-ink-ev-joint-venture-in-china.html
China-EV: Are you launching a new brand with Daimler www.daimler.com ?
Li: Yes, it a pure EV brand.
Austin: And those engineers have relocated to Shenzhen. There is already cross-pollination going on.
Stella: They have 30 or 40 engineers.
China-EV: When is the brand due to launch?
Stella: 2013. We may announce the car’s brand name by this year. Two companies—the JV, so it is taking longer to decide on the brand name. Only one company we can decide by one person. But now it is two people.
China-EV: What is your main area of responsibility?
Li: BYD overseas sales. Plus for auto I need to take care of the U.S. market.
China-EV: What is happening with the F3DM hybrid car in the China market?
Li: Some sales in China starting in September. We are now upgrading the new platform for the 2013 models.
China-EV: What is your sense of the government’s emphasis in China as far as new energy vehicles goes?
Li: They will not really encourage a hybrid, they will be more focused on EV and PHEVs. They will accept hybrid but the (big) incentive for hybrid is not there.
China-EV: I just read an essay by Chinese premier Wen Jiabao in Qiushi http://www.qstheory.cn/zywz/201107/t20110716_93475.htm where he talked about how the BEV technology was not mature and the investment in the sector was not focused.
Li: I think in China, the government said it would incentivize EV purchases so a lot of EV companies jumped in, they never made a car or battery before. A lot of ebus companies are that way. Then there were several accidents. This has brought confusion to the consumer and a lot of trouble to the government. You know China does things like a swarm of bees. Now they say the government gives you subsidies for EVs, they swarm to invest. They waste a lot of investment.
China-EV: Is BYD importing any of the technology for its EV, such as the battery management system?
Li: We delivered 2.2 billion cell phone batteries.
China-EV: But the strains on a cell phone battery are less than those on a vehicle battery….
Li: But we have to do lots of tests on the batteries. When you are cooking at home and you drop it in a hot place, you don’t want it to explode, for example. So we have done a lot of extreme testing under extreme conditions on our cell phone batteries.
This is a re-post of a blog I did for plugincars.com. www.plugincars.com
Educating consumers about electric vehicles is like being a psychologist, says Debra Hotaling, manager of Western region communications for Ford Motor Co. www.ford.com Hotaling was a speaker at a July 25-27 conference in Los Angeles on promoting consumer confidence in EVs. (Full disclosure: I was also a speaker.)
Ford will start deliveries of its battery-electric Focus later this year and the automaker is spending a lot of time trying to parse consumer attitudes towards electric vehicles. One thing it has discovered: People are really struggling to understand what the parameters are around an EV, said Hotaling. For example, they ask questions such as “Will my car short out if I drive through deep water?”
Living here in California, which is pretty much EV central (My running club was running up in the hills of Pacific Palisades a few weeks ago. Three cars along the curb: Two Pruii, one Volt.), we forget that that EVs are sort of like flying saucers to a good portion of U.S. consumers.
Hotaling was a good balance to speakers such as EV zealot Paul Scott, vice president of Plug In America, www.pluginamerica.org who can’t imagine why everyone doesn’t want to own an EV.
In fact, many consumers don’t really have a good grasp of the basics of an electric vehicle, says Hotaling. So Ford spends a lot of time “myth busting,” she says. Figuring out how to sell EVs to consumers is pretty important to Ford given that it has declared that from 10 to 25% of its portfolio will be electrified by 2020.
One thing is clear, said Hotaling. People won’t settle for a de-contented car, even if it is electric. They want all the goodies they can get on a traditional gas-powered vehicle. And, they want to car to look good. “You can’t just jam this down people’s throats,” she says. “People won’t buy this if it is not a car they can love.”
Hotaling also says that a business model that relies on government incentives is not a good business model. She may have been reading a recently-released study by Harvard’s Henry Lee and Grant Lovellette, “Will Electric Cars Transform the U.S. Vehicle Market? An Analysis of the Key Determinants.” http://belfercenter.ksg.harvard.edu/publication/21216/will_electric_cars_transform_the_us_vehicle_market.html
I like reading these academic studies. They can be dry, but they are refreshingly straightforward and generally free of biases. This report is skeptical. One of its conclusions: “Significant penetration of electric cars into the U.S. marketplace will only occur if the vehicles are competitive with conventional vehicles, not only on a cost basis, but also on an attribute
basis.”
I asked Hotaling if it made automakers such as Ford nervous to sink lots of resources into a technology that had an uncertain future. She said that by using the same global platforms for traditional and electric vehicles, Ford was reducing the risk.
That strategy also allows it to come out with a wider selection of vehicles with some form of electric drive train. “We don’t have to bet the farm on
one car,” says Hotaling.
Of course, there are many EV makers out there that are basically betting the farm on one car. The travails of Norway’s Think, which just got a third lease on life when a Russian investor agree to buy it, may be a sign of what awaits other small EV makers. http://www.autoobserver.com/2011/07/russian-investor-purchases-think-ev-operations.html
Will the big OEs be the only ones left standing in the EV segment a decade from now? I fear the answer is yes, but hope I am wrong.
There are a lot of battery companies in China. According to a report by Fourin Inc, www.fourin.com a Japanese research company, as of December, 2010, China had 52 rechargeable battery makers. That number has likely grown.
Many of the batteries produced by those companies will likely not meet stringent quality standards. A report by InterChina Consulting www.interchinaconsulting.com in Beijing says Chinese battery makers are weak in production technology and process. China has not invested in fundamental materials research, said InterChina, “For example, China’s best LiFePO4 materials attain a purity of 94%.” Ideally, the purity level would be less than one millionth. The process used by local suppliers can’t attain that level, said InterChina. Separator films are another weakness—China depends on imports, said the report.
Unfortunately, a lot of these companies may not even care that their quality is not top-notch. Why? The cha bu duo problem. Cha bu duo (literally “less no more”) means “good enough.” Something gets the job done, though it may not be the very best it could be. That attitude needs to end if China’s battery makers hope to be competitive in China, must less globally.
Here’s a good example of the cha bu duo mentality: About 7 years ago I in Wuhu, China visiting an Italian company that was a supplier to Chinese automaker Chery www.cheryinternational.com. I was chatting with the GM of the supplier, a Chinese man who had a PhD from an Italian university and who had worked for Fiat. He was extremely frustrated by the attitude of the Chery managers towards their product. They accepted quality that was only so-so rather than striving for first-class, he said.
Let’s go to lunch, he said. We went to his car, a Chery model, and he opened the trunk. He looked at the exposed wiring for the trunk
light and the wide spaces between the trunk hood and the car body. “See, just good enough,” he said in Chinese. “Good enough is not okay!”
That mentality persists in China’s battery makers, according to Jeff Seidel, CFO of Ener1 Inc. www.ener1.com of New York. Ener1 just got approval from the Chinese government to form a battery joint venture with Wanxiang Electric Vehicle Co. www.wanxiang.com of Hangzhou, China. Ener1 owns 40% of the venture, which will be based in Hangzhou.
Seidel visited other battery makers in China. There is a lot of ‘good enough’ thinking in China, he said. “I saw some rush jobs and they looked rushed,” Seidel told me. What Ener1 liked about Wanxiang, Seidel said, was it “brings to the table a better process and better integration.” In other words, Wanxiang isn’t satisfied with good enough.
Seidel found many of China's battery makers accepted quality that was just "good enough," he said.
The joint venture’s battery cells will be produced at Wanxiang’s existing factory. I visited the factory earlier this year. It is very modern. But, Seidel said one shortcoming was the battery pack assembly. “It was entirely manual,” he said. “You might of seen (in the plant) guys with a socket wrench assembling packs.”
Ener1 uses a mechanical process for battery pack assembly, said Seidel. That allows for consistency and large volume production.
One thing that attracted Wanxiang to Ener1 was its pack assembly technology, he said. “They are probably 2-3 years behind in terms
of their pack design and not as far in terms of their cell,” said Seidel. “The integration of our pack design and their cell should give them a great leap forward in the China market.”
In fact, Wanxiang’s battery cell technology, while not world-class, was “not that far away,” said Seidel. To bring the JV up to speed quickly, Ener1’s Taison Tan, “a cell design guy” will be the JV’s chief technical officer. Wanxiang engineers are also coming to the U.S. to train, and half a dozen Ener1 engineers will work with the JV in China, he said. Wanxiang “would like 12 or 13” Ener1 engineers, quipped Seidel.
Ener1 is putting a lot of intellectual property into the joint venture with Wanxiang. In May, when Ener1 and Wanxiang signed the letter of intent, I asked Tom Goesch, president of the transportation group at Ener1, whether Ener1 was worried about its intellectual property being stolen. He told me: “We feel the strategy of having a partner like Wanxiang, a China-based company, will provide us the best protection we can find. Wanxiang has all the reason in the world to protect that intellectual property.”
Talking with Seidel, I learned that Ener1 had also been worried about Wanxiang itself using the technology to land business deals outside of China, deals which would hurt Ener1’s business in the ex-China market. Indeed, Ener1 initially tried to limit the JV’s business scope to China. Wanxiang was (understandably) “not enthralled” at that provision, said Seidel.
The solution? According the contract, the JV’s board must unanimously approve any deal outside of China that is greater than 5% of the previous year’s total revenue. That way, “if it is to the detriment of Ener1, our one vote could stop” the deal, said Seidel. (Ener1 owns 40% of the JV and therefore appoints 40% of the board, said Ener1 spokesman Brian Sinderson.)
Ener1 has big hopes for the JV. If the battery cell quality is as good as those produced at its plant in Korea, and the cost is competitive, Ener hopes to source batteries in China for global operations. He hopes the Wanxiang JV can become Ener1’s low-cost manufacturing model, Seidel told me.
Wanxiang EV is concentrating on electric buses initially. It figures Ener1's expertise will give it an edge over local competitors.
For now, however, the JV is just getting started. It will initially concentrate on fulfilling existing contracts Wanxiang has with some local bus companies. By 2014, it should have annual cell manufacturing capacity of 300 million Ampere hours, or about 40,000 EV battery packs according to a press release.
Said Seidel: “I’m very optimistic for the JV.”
Alysha Webb
