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PHEVs in China: An Introduction to Many Players

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  • Felix Kramer
    The roundup below includes the notes for our presentation to a forum, US-China Cleantech - An Update, that was organized by Jim Hurd, premier networker and
    Message 1 of 1 , Jul 14, 2009
      The roundup below includes the notes for our
      presentation to a forum, "US-China Cleantech - An
      Update," that was organized by Jim Hurd, premier
      networker and founder of GreenScienceExcvhange
      http://www.greenscienceexchange.com ("The
      Entrepreneur's Think and Do Tank"), with help
      from foreign trade consultant Eugene Chen of
      Marco Polo Group. It was held July 13 in the San
      Francisco office of global law firm K&L Gates
      http://www.klgates.com (which has five offices in
      China). While not complete, we thought it worth
      giving our readers a snapshot of the auto
      industry in this all-important country.

      (Shortly after it goes out on email, this posting
      will also be viewable at
      http://www.calcars.org/news-archive.html -- there
      you can add CalCars-News to your RSS feed.)

      This year, China will overtake the US as the
      world's biggest automaker. Will it also take the
      leadership in the race for green vehicles,
      especially plug-in cars? We don't know yet. We do know two big facts:

      CHINA IS ABOUT TO BECOME THE LARGEST CARMAKER:
      The Chinese Association of Auto Manufacturers
      said on July 9 that China will sell more than 11
      million cars this year, 17% more than the 9.3
      million last year and ahead of the association's
      prediction of 10.2 million. Meanwhile, US
      annualized sales are under 10 million.

      CHINA IS WAY AHEAD OF THE U.S. IN FUEL SIPPERS.
      The attention-getting fact is that U.S. cars are
      so thirsty they can't be sold in China. China's
      average new car gets almost 36 MPG -- that's the
      level American CAFE requirements see for U.S.
      cars six years from now, in 2015. By then, China
      will be over 42 MPG. If they do jump in to
      plug-in vehicles, their lead will be far greater.
      (China imports few cars, and puts a tax up to 40%
      on domestically produced gas-guzzlers.)

      And it looks like China is going green as fast as
      possible. Look at a Harvard Business Review piece
      about China's emerging environmental priorities
      at
      http://blogs.harvardbusiness.org/hbr/hbreditors/2009/07/hummer_tengzhong_and_the_new_g.html
      . It links to "Advancing Sustainable
      Competitiveness of China's Transnational
      Corporations,"
      http://www.accountability21.net/publications.aspx?id=4074
      , in which Long Guoqiang, deputy director of the
      Development Research Center of China's State
      Council, and Simon Zadek and Joshua Wickerham of
      Londono-based Account Ability, echo Thomas
      Friedman and others in arguing that this is how
      China will gain global leadership.

      A SNAPSHOT OF SOME OF THE KEY AUTOMAKERS AND
      THEIR PLANS: Today's Chinese automotive market is
      a complex free-for-all. At the San Francisco
      forum, Cliff Nakayama from Mostwell International
      LLC and the US-China Green Energy Council
      http://ucgef.org Automotive Task Force, which is
      holding a series of seminars on PHEVs
      http://ucgef.org/en/activities/seminar/transportation1
      , described government efforts to consolidate
      China's fragmented auto industry, with over 100
      companies, into a handful of top players through
      subsidies, rebates and procurement policies. See
      a February report on the government's "boost"
      plan at
      http://autonews.gasgoo.com/auto-news/1009455/China-aims-to-merge-carmaking-groups-to-10.html
      . (If, as may be possible, I am able to visit
      China in October or November, and meet with some
      of the players, perhaps I can promote plug-in
      vehicles and return with more insight from
      insiders.) Meanwhile, here's a research rundown:


      * BYD, evolving from one of the world's largest
      batterymakers to a carmaker, is the poster-child
      for China's PHEVs, with several vehicles in
      development. The F3DM is the first production
      PHEV to be sold in the world; it's on sale
      already in China. Last September, the company
      sold a 10% share to Warren Buffet's MidAmerican
      Energy Holdings company, and in late May inked a
      Memorandum of Understanding with Volkswagen for
      to provide batteries and to work together on
      "electric mobility." We hope that this will
      include VW helping BYD advance its designs,
      especially its vehicles'"fit and finish" (so
      critical in the U.S. market) so they can begin
      global automotive sales sooner rather than later.
      We can only imagine the impact of a PHEV selling
      in the U.S. for $20-$25,000 minus s$7,500 in tax credits!

      * In a widely publicized development, in early
      June, GM agreed to sell its Hummer brand to
      Chengdu-based Sichuan Tengzhong Heavy Industrial
      Machinery, which is now in formal discussions
      with Chinese regulators. GM plans to continue
      building Hummers on a contract basis at its
      Shreveport, LA plant. The new company, with
      little automotive experience, has discussed more
      efficient models. And as we reported in June at
      http://www.calcars.org/calcars-news/1061.html ,
      we do have a recent encouraging precedent in GM
      providing inside technical information and a new
      small engine to Raser Technologies to convert an H3 to a series PHEV.

      * Fiat has a 50-50 joint venture with Guangzhou
      Automobile Group (which has previously partnered
      with Isuzu, Honda and Toyota) to build vehicles
      that meet the Chinese government's requirement
      for fuel-efficient, low-emission vehicles. Fiat's
      planned joint venture with Chery fell apart. It
      looks like that this partnership will make
      aerodynamic CVs (combustion vehicles), initially
      for sale only in China, but eventually perhaps
      for export, including, via the Chrysler connection, to the U.S.

      * Chery, the largest independent automaker, has
      shown several EVs that it says may arrive in
      2010. Johnson Controls-SAFT may provide batteries.

      * Shanghai Automotive Industry Corporation, which
      has partnered primarily with GM but also with
      Volkswagen in the past, expects to sell hybrids
      in 2010 and EVs between then and 2012. Johnson
      Controls-SAFT may provide batteries.

      * Geely Holding Group has shown a concept plug-in
      sedan. Geely and Ford have both denied that they
      are in discussions about Volvo, which has been
      advancing its concept cars toward a 2012 PHEV.

      * Beijing Automotive Industry Holding Co. remains
      in contention to buy GM's Opel decision, which is
      currently expected to be sold to a consortium led
      by Canadian integrator and parts supplier Magna
      International, backed by two Russian companies,
      the state-controlled lender Sberbank Rossia and
      auto maker OAO GAZ Group. GM has said it is not
      concerned about possible competition in China
      from Opel for GM sales. (For plug-ins, Opel is
      developing the Ampera, the diesel version of the Chevy Volt.)

      * Donfeng Motor Company, formerly Second
      Automobile works, based in Wuhan, has a joint
      venture with Netherlands-based Detroit Electric
      Holdings (reviving an EV name from the early 20th
      century), to build EVs in China; Detroit Electric
      plans to build the same vehicles in Malaysia with
      Proton for sale in Europe and the U.S.

      * Hafei Auto Group (Harin HF), a recently
      established consortium, is partnering with a new
      Southern California startup, Coda, spun out of
      Miles EV, to build in China a $45,000 EV for sale
      the U.S. Coda has a management team from the US
      high-tech world and the international auto
      industry, and many auto industry and EV veterans
      among its directors and advisors,

      * Shenzhen Goch Investment is investing $15
      million in a joint venture with Phoenix-based
      ECOtality to build and distributed charging
      stations in China. (The recent Pike Research
      report sees a $1.9 billion market in charging
      equipment by 2015, with almost half coming from China.)

      In Monday'sWall Street Journal, former Intel CEO
      Andy Grove, who remains a strong advocate for
      plug-in vehicles, as well as conversion of
      already-built gas-guzzlers, has a piece about the
      US auto industry and Washington titled " What
      Detroit Can Learn From Silicon Valley"
      http://online.wsj.com/article/SB124744046341629787.html
      It compares US efforts aimed primarily at saving
      automotive jobs with Chinese industrial policies
      to focus especially on battery manufacturing; he
      concludes, "Which is the better investment
      strategy? It is too early to say¬Ö.The strategic
      bets being placed by each country may determine
      which one will end up as the world's leader in
      automotive technology and manufacturing."

      Finally, we've been very gratified to see the
      recognition of the pioneering role of Feng An,
      who has been working for over a decade to connect
      U.S. and Chinese organizations and advance
      low-carbon cars in China. We first met him in
      2004, when we brought our first converted Prius
      to Michigan.In a broad NY Times review of the
      Chinese industry
      http://www.nytimes.com/2009/05/28/business/energy-environment/28fuel.html,
      veteran journalist Keith Bradshear describes this
      founder of the Innovation Center for Energy and
      Transportation in Beijing
      http://www.icet.org.cn/en/home_en.html as
      "leading architect of China's existing fuel economy regulations."

      -- -- -- -- -- -- -- -- -- -- -- --
      Felix Kramer fkramer@...
      Founder California Cars Initiative
      http://www.calcars.org
      http://www.calcars.org/news-archive.html
      -- -- -- -- -- -- -- -- -- -- -- --
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