A bit of background.   Chinese automaker BYD in March won a contract to supply the southern California city of Long Beach with 10 all-electric buses.  The city is using federal funding to cover some of the cost, so there is a requirement that at least 60% of the electric bus content be sources in the U.S. http://www.greencarcongress.com/2013/05/byd-20130503.html

Those buses will be built in Lancaster, a hot and windy city out in the desert northeast of Los Angeles.   BYD bought the building from Rexhall Industries, an RV maker.  The CEO of Rexhall, William Rex, will stay on at general manager of BYD Coach & Bus LLC, according to a BusinessWire story.  Some current Rexhall employees will also stay on, it said. Talk about creating goodwill! http://eon.businesswire.com/news/eon/20130501005574/en

On May 1, I attended the opening of BYD’s plant in Lancaster.   BYD likes Lancaster–  in July of 2010 it showed off a KB Home in Lancaster that was equipped with BYD solar panels, a BYD charging station in the garage, and a BYD e6 electric car in the driveway.  http://investor.kbhome.com/releasedetail.cfm?releaseid=487340

Well, the e6 has been relegated to the fleet heap, at least in the U.S.  There were several of latest iteration of the electric crossover vehicle at the Lancaster event on May 1.  But the model will only be used in fleets, several BYD folks told me.

Several BYD e6 were at the Lancaster plant. They are slotted for taxi fleets.

For now, BYD in the U.S. is all about buses.  The Lancaster plant is the first to be opened in the U.S. by a Chinese automaker and the first bus plant for BYD in North or South America said Li.  It has an annual capacity of more than 1,000 units.  Production is due to begin in October of 2013, “if we keep to our aggressive schedule,” said Li.  It aims to produce 50 units in the first year of operation.

As for local content, the battery pack will be assembled in Lancaster, in a building a few miles from the bus plant.  The cells will be imported from China.  That will likely account for a big chunk of local content.

Other local content includes the multiplex electronic controls, which will be supplied by I/O Controls www.iocontrols.com  in Azusa, CA, said Michael Kuang, regional vice president of engineering for Azusa. He was at the event.  There are plenty of other things that are easy to source domestically, such as seating and lighting, he suggested.

True that.  And, BYD can count the two inductive chargers that will be supplied by WAVE http://www.waveipt.com/ , a Utah-based start-up, as local content as well, says John Inglish, a board member at WAVE. He was also at the event.

As noted up top, there were several e6 BEVs parked at the event.  But Li said BYD is focused on taxi fleets for the e6 sales.  She also said, however, that BYD wants to sell cars to consumers in the U.S. in the next several years.  Assume she means electric vehicles, though I guess she could mean gasoline-powered cars.  In any case, Li said that if there was sufficient demand BYD might localize car production in the U.S. within 10 years.  That includes the fleet vehicles, I ‘m guessing.

One thing I know:  The City of Lancaster is pretty psyched to have BYD come to town.  All the city officials showed up for the plant opening, as did an assortment of state and county officials. Lancaster is part of Los Angeles County.  Inexplicably, there were at least a dozen LA County Sheriffs at the event.  Lancaster contracts with the Sheriffs to provide its police force, but surely they didn’t all need to turn out for the peaceful event….

I asked Los Angeles County Supervisor Mike Antonovich if he expected any blowback because BYD is a Chinese company.  There has been some noise in the press about Long Beach Transit awarding BYD the 10-bus contract over several U.S. companies.

Antonovich said:  “This is a global economy.  We have German companies here, we have companies from the United Kingdom here (in Los Angeles).  Just as we are selling our products in China, they are selling here.  What you don’t want to have is protectionism.”

Well said.

It was  cold and rainy at the Shanghai Auto Show, and the venue streches endlessly.

A few random thoughts:

Chinese automakers have really improved their design language.  Used to be bad or weird.  Now that many use the same design houses as the foreign automakers, and the others copy foreign automakers’ design, Chinese automakers’ vehicles are nice looking. But boring, just like most of the vehicles I saw at the show.  Still, it is an improvement.

Local automakers are trying to impress with their innovation in engines and transmissions, but they aren’t there yet.  They still borrow or copy much.  Separate blog soon on that from interview with Gary Tan, head of Ricardo China. www.ricardo.com

Mercedes www.mercedes.com is really trying to boost China sales.  The Mercedes stand was huge. Half a hall.  Not surprising. The luxury market in China is one of the fastest growing – sales rose 25% in the first two months of the year to 116,606 units according to LMC Automotive.  The passenger vehicle market as a whole rose 22% in the first two months of the year, though it fell 6% in February.  China’s luxury car segment is seen as the holy grail of China’s automotive market. http://www.forbes.com/sites/kenrapoza/2013/03/07/luxury-car-market-turning-chinese/

Mercedes is lagging in China http://www.businessweek.com/articles/2012-10-25/mercedes-needs-to-rethink-china .  It sure garnered some press with all the money it spent before and during the show.  That might result in bigger market share. But Mercedes www.mercedes.com.cn is still viewed as a bit less cool than BMW www.bmw.com.cn   and even Audi www.audi.com.cn  in China.

Not sure what GM’s plan is for Buick www.buick.com.cn  in China.  The Buick stand was boooring.  All the cars were champagne color or silver.  Or so it seemed to me.  The Chevy stand was filled with color and sound and new and old Chevy models.  Dan Akerson, GM’s chairman, has said Chevy and Cadillac will be the focus of GM’s global push. http://europe.autonews.com/article/20130225/ANE/302259730#axzz2SAlFKze1   Bob Socia, president of GM China, said at a press event during the show that GM’s focus in China would be luxury –which I figure means Caddy — and SUVs.  The SUV market is the other holy grail of China’s auto market– up 19% in the first two months of the year.   GM says it will introduce 9 new or refreshed SUVs to the China market over the next five years. Here is anotgher take on the press event:   http://online.wsj.com/article/SB10001424127887324493704578432144026830614.html

Where does that leave Buick?  Buick is big, big, big for GM China.   I guess GM could launch a Buick-badged SUV in China, but Buick is better known there for its executive van, the GL8.  It will be interesting to see how Buick fits into GM’s future in China given it is being relegated to the back of the line in the rest of the world.  To be fair, GM’s Riviera concept car, another fishlike concept car from PATAC, was badged Buick.   But it is only a concept….

The GM Riviera Concept car, designed at PATAC, is a PHEV.

The youth market is in! The Chevrolet www.chevrolet.com.cn presser was all about appealing to the youth market, which makes sense.  Relative youth will even be the focus of GM’s Cadillac marketing effort, it seems.  According to GM, the average luxury car buyer in China is 35 to 40 years old, ten years younger than in the U.S.  Other automakers were also courting the youth market at their stands and in their pressers (admission: I didn’t make it to that many pressers this year.  Was too busy walking around looking at stuff….).

As for electric vehicles, they were everywhere and nowhere, sort of like their market presence in China.  Every automaker an EV or two in its stand.  SAIC had a row of six EVs:  The SAIC 550 PHEV, the SAIC BEV550, a Shanghai brand Light Weight Fuel Cell Vehicle, the Roewe 750 light hybrid, the Shanghai Volkswagen e-Lavida sedan, and the Springo BEV from Shanghai GM.

Impressive, but then I ask the young men at the stand which of the EVs are available to buy right now.  Only the Roewe 750 is on the market, and sales are slow.  The PHEV will launch later this year, they said.  Shanghai GM  www.shanghaigm.com just started production of the Springo pure EV, David Dunahay, interim executive director of electrification strategy told me.   GM is going to “bring it out slowly,” he said.

The GM Riviera concept car was a PHEV.  Does that signal the future direction of GM’s www.gmchina.com EV strategy in China, I asked Dunahay?   “I wouldn’t take it as a signal,” he naturally told me.   “We want to participate in a variety of (EV) segments.”

BYD  www.byd.com wasn’t touting it pure-electric car, though it did have the next-gen e6 pure BEV at its stand.  Rather, it highlighted the latest generation of its “Dual Mode” hybrid technology, embodied in the Qin electric vehicle.  BYD claims the BYD DMII Qin can go 50 kilometers in pure electric mode. It will be launched in the third quarter of 2013, said a BYD spokesperson.

BYD was showing off its newest dual-mode hybrid drivetrain, on the next gen DMII Qin car.

(An aside.  I attended the opening of a BYD manufacturing plant here in California on May 1.  It will initially produce electric buses.  There were several e6 crossover EVs there.  They are intended for fleets, I was told.  Check out the rest of the story at http://www.plugincars.com/chinas-byd-opens-electric-bus-production-plant-california-127131.html )

Great Wall  www.gwm.com.cn had a tiny EV called the Kulla, but it was just for show and likely will never go into production.  The star of its booth, as befitting a company that is China’s largest SUV producer, was the H7 luxury SUV with a traditional engine.  But, Great Wall’s stand also had a Haval SUV plug-in hybrid electric.  Production will begin in 2015, I was told.  Great Wall plans to offer PHEVs across the entire Haval lineup in the future, Wang Dingcai, a new energy vehicle engineer at Great Wall’s engineering institute told me.

Word is that Beijing will issue a revised EV policy soon (not soon as in “mashang,” which could mean years, but soon as in “xianzai,” a matter of weeks) and the new policy will subsidize plug-in hybrid electric vehicles and even regular old hybrids at higher rates.  The way the subsidy is distributed may also be changed.  Right now it goes to the manufacturer; it may become a direct-to-consumer subsidy.

But no one knows for sure which technologies will be favored.  A Ford China executive put the situation in China’s EV sector bluntly:  “Automakers don’t know what technology the government supports so we have to support them all,”  said J.D. Tang, head of marketing, sales, and service for Ford Motor (China)’s import business. www.ford.com

Ford China is taking a cautious approach to China’s EV market.  It showed no electric vehicles at its stand in Shanghai.  It is waiting to see what types of EVs there is market demand for, said Kumar Galhotra, vice president of product development at Ford Asia Pacific.  “You have to have technology and we have it,” he told me.    “But whether or not we deploy it will come down to a demand for it.  It is not something that can be forced on the market.”   Tell that to Beijing.

I wonder if BYD can duplicate the method foreign automakers in China used to get around local sourcing requirements when they first began producing there.  They shipped most of the car in from the U.S. or Europe then put the wheels and a few other things on in China.    Seriously, I don’t think BYD would be able to get away with that nor would it try.  This bus deal is under a lot of scrutiny.  But, I eagerly await the day when I find out how it does meet the local content requirements.

First, some background.

The southern California city of Long Beach will buy 10 all-electric buses from Chinese automaker BYD. http://www.lbbusinessjournal.com/long-beach-business-journal-newswatch/1433-long-beach-transit-sides-with-byd-motors-for-future-buses.html  The details are still being worked out, but “we are expecting to have the buses in service during the first half of 2014,” Kevin Lee, spokesman for Long Beach Transit,  www.lbtransit.com told me.

BYD submitted a bid in October of 2012 for the contract along with some purely American companies such as Proterra.  www.proterra.com Based in South Carolina, Proterra also produces electric buses. It bitterly protested the recommendation of BYD.  http://green.autoblog.com/2013/03/26/proterra-slams-long-beach-electric-bus-contract-china-byd/ But let’s face it; BYD’s eBus is pretty nice.  At least one is already in operation here, as a shuttle bus for Hertz at LAX.  Many more are on the road in Shenzhen.  Plus, BYD makes charging stations and the like.  It had more to offer.

Long Beach Transit recommended in February of 2013 that the BYD bid be accepted.  The criteria Long Beach Transit used to select the BYD ebus included pricing and life cycle cost, charging station operational considerations, coach operational considerations, and the experience of the firm and its response to inquiries, said Lee.

Lee confirmed that the Transit Board approved awarding the contract to BYD on March 24, 2013.  It is for $11.5 million, which includes the 10 all-electric buses, charging equipment, diagnostic tools, training and spare parts.

Some of the money to purchase the 10 buses will come from federal funding, hence the 60% Made in American requirement.  Lee said before awarding the contract to BYD, Long Beach Transit hired third party consultants to audit BYD to verify they would meet the requirement.  “The results of that audit showed that they would meet the requirements, if not exceed them,” said Lee.  Long Beach Transit will continue to audit BYD to ensure the local content requirement is met, he added.

BYD also produces gasoline-powered cars and electric cars and buses in China.  It produces many of the components used in the cars itself, said an executive at a multinational supplier with significant sales in China.  BYD VP Michael Austin said that BYD will produce some components for the Long Beach buses at a plant in Lancaster, CA.   “Though BYD prides itself on our vertical integration for many components … there are still components we buy from third parties,” he added.  For example, the customer stipulates (his word) a “vast majority of components in the bus” such as seating, HVAC system, and even the types of rims and tires, he said.  “BYD must source these components from third parties for the Chinese and Lancaster plants and does not and will not be manufacturing these in house,” he said in an e-mail.

As for the Lancaster reference, BYD will produce the buses in an underutilized recreational vehicle plant in Lancaster, California, a southern California city about an hour from Los Angeles.  The plant was owned by recreational vehicle maker Rexhall Industries, Chenin Dow, projects assistant in the Lancaster’s Economic Development Office told me. www.cityoflancasterca.org

Currently, the buses are only produced in China, and the supplier base is in China.  BYD declined to comment on what steps it is taking to develop a supplier base here in the U.S.  That’s the burning question I will ask BYD execs at the Auto Show in Shanghai on April 20 (press day) and probably again at the Lancaster plant’s grand opening on May 1.

On March 20, ALTe announced it was forming a joint venture to produce medium-weight electric buses and light commercial electric vehicles.  http://altept.com/?p=1074 The partner is Henan Benma Co. Ltd, http://www.cnbenma.com/about.htm a state-owned company that produces a variety of vehicles, from three-wheeled agricultural vehicles to medium-weight trucks to low speed electric vehicles.  Henan Benma seems to be owned by the central government.  But, the ownership structure is confusing;  some elements may be owned by the provincial government, Thomas told me.  No surprise there. In any case, Henan Benma likely has good connections, which never hurts in China.

Wait a minute, you may be saying.  Didn’t you write a blog last September about ALTe forming a $200 million joint venture with S. Moody Alavi, a Dubai investor; and an unnamed Chinese private investor? Yep, that would be the case.  I also wrote that the deal with Alavi came about after Thomas had already been stiffed by two other Chinese investors. See my September 9, 2012 blog for full details.

This JV fell through after the Chinese investor lost access to funds.

Thomas thought the deal with Alavi and the Chinese investor was solid because Alavi was recommended by ALTe investor Simon Ahn, an Atlanta-based attorney and venture capitalist.  http://www.ahnlawfirm.com/Alas, Ahn had no control over the political situation in China.  After China’s change of leadership in November,  http://www.economist.com/news/china/21566685-china-shuffles-its-leadership-putting-princeling-command-changing-guard the Chinese investor “was no longer in possession of the funds he was previously,” said Thomas.  When the Chinese investor was gone, Alavi also dropped out of the deal.

Fortunately, the EV policy tide in China has turned in ALTe’s favor.  Initially China’s central government was hot about battery-electric vehicles. But it has realized the technology is not mature, and is now keen on the kind of EV technology that ALTe has.

That must have been why Henan Benma, a small player in the original joint venture, stepped in and saved the day.   In fact, ALTe plans a second joint venture with another small player in the original JV.  “Now we have two smaller deals, much more realistic, practical and manageable,” than the original $200 million deal, Thomas told me.  More on that later.  First, the Henan Benma deal.

The JV — which has a Chinese name that I believe includes the Chinese character ti2, meaning rising,  but am not sure because Thomas couldn’t pronounce it very well – will be 65% owned by Henan Benma and 35% owned by ALTe, said Thomas.  Henan Benma’s contribution is cash, and it has already sent some money to ALTe, said Thomas.   Its initial contribution is $50 million, the most a Chinese company can invest in a foreign joint venture without central government approval, he said.

ALTe will contribute a license to use its technology and manpower plus some other things, said Thomas.   “In a sense we found the right-sized strategic partner“in Henan Benma he said,   “They are a strategic partner and investor because they already produce commercial vehicles.”

ALTe hopes the complexity of its software will protect its intellectual property

Any time a company’s technology is used in China intellectual property protection is a big concern.  ALTe figures the coding in its software is too complex to be copied, which will provide some protection.   It has filed half a dozen patents in China, said Thomas.  Henan Benma has also taken “protective measures so no one can borrow the technology or be inspired by it,” he said diplomatically.

Though the JV has talked about producing 60,000 EVs annually, it will start with 10,000 and see what the market acceptance is, said Thomas.  According to its website, Henan Benma has a 300,000 unit production capacity.  I don’t know how much of that is utilized to produce its other vehicles.

The JV is not in a hurry to reach even 10,000, said Thomas.  That could take as long as three years.  But it might happen sooner, said Thomas.  The JV already has an order for electric buses – the majority of a multi-thousand-unit order, he said.  Thomas wouldn’t tell me who the customer but I’ll be it is a local government-owned company.   Creating business for a company you own part of is always good business.

Joint venture #2

ALTe is also setting up a second joint venture in China, and this is where it might run into the same kind of troubles with Chinese investors it has in the past.  The partner in the second venture is a retired government official in Beijing, said Thomas.  Setting up the second JV will lag the first JV by 30 to 60 days, he said, adding “We can’t say anything more.”

The second JV will manufacture electric powertrains.  Those might be used in the vehicles produced at the first JV.  Thomas doesn’t really want to say anything more until the money for the second JV arrives in ALTe’s bank account, it seems.  “We have learned to announce when the cash is moved, not when the deal is signed,” said Thomas.

For the time being, powertrains for the Henan Benma JV will be sourced from the U.S.  But part of the agreement is to begin locally sourcing as much as possible as soon as possible, said Thomas.  In early April, a team from ALTe will arrive in China to start vetting local suppliers.  ALTe wants to take small companies in China and turn them into qualified suppliers, said Thomas.  Of course, it will use Tier 1 suppliers in China when necessary.  And probably some of the suppliers those Tier 1 companies have already developed.  Thomas admits there is some benefit to not being the first EV powertrain company to set up in China.

The top Asia executive at a multination supplier once told me that even if the technology was mature, Chinese automakers simply lack the experience to produce an electric vehicle. It is too complex, he said.  ALTe figures it can solve that problem by sending the team that created its powertrain to work at the JV.  “That is the beauty of the symphony we conduct,” said Thomas.  “We worked on the software in partition diagrams, getting all the parts to interact.”  ALTe should be able to transplant that knowledge to China, he seems to assume.

Well, there is still a lot of integration that needs to take place.  And I wonder if Henan Benma’s experience with agricultural vehicles has given its workers the skills needed to assemble a functional REEV.   I guess we shall see.

Group 1 is listed on the New York Stock Exchange, so the management wants to do what is best for its shareholders at all times, and Group 1 thinks acquisitions are a good use of that cash.  It has its own way of evaluating a dealership’s worth, taking into account the cost savings gained from economies of scale because of Group 1’s size, said the executives.  And, Group 1 had cash because of some good decisions it made a few years back.

It won’t buy a dealership unless the investment will earn 15% return on a discounted cash flow, said Pete DeLongchamps, vice president of financial services and manufacturer relations.  “That is what our job is to our shareholders, to make acquisitions and provide those types of returns,” he said.  “We think acquisitions are the best use of our cash, followed by dividends or share buybacks.” www.autoretailbusiness.com

That got me thinking about Geely www.geely.com chairman Li Shufu’s acquisition splurge over the last few years.  Were those acquisitions the best use of shareholder’s cash?  Of course, I can’t be sure if the cash for the acquisitions came from the portion of Geely that is listed on the Hong Kong Stock Exchange.  But the question is valid nonetheless.  Were those purchases the best use of Geely’s cash?  Not in most cases.

The purchase of Swedish luxury automaker Volvo in 2010 was arguably a good use of Geely’s cash.  http://www.nytimes.com/2010/08/03/business/global/03volvo.html Geely obtained management and technical knowhow it could use.  But the brand was struggling when Geely bought it, and is still struggling.  In December Volvo borrowed $1.2 billion from China Development Bank to refinance existing loans in the face of falling sales and growing financial losses. http://www.reuters.com/article/2012/12/13/volvocars-loan-idUSL5E8ND9PI20121213

In February of this year, Geely bought British taxi cab maker Manganese Bronze Holdings, http://www.ft.com/intl/cms/s/0/a4fc2992-6c5c-11e2-b73a-00144feab49a.html#axzz2LUzZL0du a company in which Geely already owned a 20% stake.  That seems like a questionable use of cash.  Manganese Bronze was in “administration,” which seems to be a British term for something like a Chapter 11 bankruptcy in the U.S.  The taxi maker hadn’t posted a profit since 2007, had faced several recalls for faulty components in the last year, and posted a pretax loss of 3.6 million pounds in the first half of 2012, according to Bloomberg news.

Also in February, Geely subsidiary Shanghai Maple Guorun announced it would form a 50/50 joint venture with Kandi Technologies Inc., a producer of low-speed electric vehicles based in the east China province of Zhejiang. http://www.greencarcongress.com/2013/02/kandi-20130204.html  Also questionable.   Geely said in a statement that the consumer market in China for electric passenger vehicles had not materialized, and was not likely to be viable for a long time.   However, Geely believes electric vehicles will be a “major solution” for the current energy and traffic congestion problems, and “Geely took a fancy to Kandi’s smaller-sized low-cost and low-speed electric vehicles,” the company said.

China has dozens of low-speed electric vehicle producers, and Kandi’s EV technology has never been tested for mass production.  The company, which is listed on the NASDAQ stock exchange in the U.S., (KNDI) had net income of $3.88 million in the first nine months of 2012 vs. $9.94 million in the same period in 2011. Go cart sales are its main source of income right now.  Kandi says the fall in income is because it invested that money in R&D in hopes of establishing a leading position in the EV market. http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001062993%2D12%2D004743%2Etxt&FilePath=%5C2012%5C11%5C14%5C&CoName=KANDI+TECHNOLOGIES+CORP&FormType=10%2DQ&RcvdDate=11%2F14%2F2012&pdf=

According to a filing with the U.S. Securities and Exchange Commission, Kandi borrowed heavily the first three quarters of 2012, as well as standing as guarantor for $19.7 million in loans for local companies (who also stood as guarantors for Kandi’s loans) “It is a common business practice among companies in the region of China where Kandi is located to exchange guarantees for bank debt with no consideration given,” said the filing.

Which brings me to Geely’s bid for Fisker Automotive. www.fiskerautomotive.com Fisker has one model in production, the US $100,000 Karma.  Fisker is trying to launch a new, more moderately-priced PHEV, called the Atlantic.  But development of Atlantic is stalled waiting funding.

Meanwhile, the Karma has been plagued with problems. First, the batteries in a couple of Karmas spontaneously ignited. Then, the influential independent product review publication Consumer Reports bashed the Karma.  The battery failed on the first test drive by Consumer Reports, not a good start. http://news.consumerreports.org/cars/2012/03/video-bad-karma-our-fisker-karma-plug-in-hybrid-breaks-down.html

The Karma is currently Fisker’s only model. It need more cash to finish development its next model

When it did get to drive a Karma, Consumer Reports was not impressed.  It wrote that the Karma had “poor dash controls, limited visibility, a cramped interior, awkward access into and out of the seats, an engine that is noisy when running, long battery recharge times, and a small backseat and trunk.” Concluded the review, “The Karma’s heavy, SUV-like weight affects agility and performance, and the Karma lacks the oomph you would expect.”  Ouch.

What would Geely get out of owning Fisker?  Geely has access to plug-in vehicle technology through Volvo.  While there may be a market for Fisker’s cars in China – after all, Leonardo di Caprio owns one, who wouldn’t want one? – it will be small, while the investment to make Fisker a success will be big.

Li Shufu has big ambitions.  But I think he should study Group 1’s approach to investment and ask if his investments are the best use of Geely’s money.  The answer, in many cases, would be no.

Development of its next model, the Atlantic, is stalled awaiting funding.  Production of its current model, the Karma, was also stalled as Fisker waited to hear the fate of its battery maker, A123.  (and it didn’t have any money…)  Now it knows A123 will survive. “We will start to re-negotiate the contract for batteries with Wanxiang in the very near future now that the sale is complete,” Fisker spokesman Roger Ormisher told me.

Fisker halted production of the Karma because A123 couldn’t supply batteries and, frankly, Fisker couldn’t pay for them!

Wanxiang American www.wanxiang.com is willing to help Fisker with more than just batteries, it seems.  Wanxiang America president Pin Ni told me. “We will be interested in any way we can help Fisker since they are a customer of A123 and A123 is currently a shareholder of Fisker,” he said.    There is precedent for making a loan to Fisker. Wanxiang came to the rescue of A123 back in November 2012 with a $50 million loan.  http://www.bloomberg.com/news/2012-11-05/a123-systems-gets-50-million-loan-from-wanxiang.html  Guess it was worth it since Wanxiang owns A123 now.  Well, maybe it wasn’t worth it, but that is another blog….

But, sources tell me Fisker has also been talking to Dongfeng Motor Group www.dfmc.com and Beijing Automotive Industry Group Corp (BAIC) regarding some kind of investment.  State-owned Dongfeng, the former 3^rd Auto Works, is China’s second largest automotive group based on sales volume, according to LMC Automotive.  www.lmcautomotive.com  In case you were wondering, SAIC is the largest.  Of course, I am not sure if this includes all commercial vehicles.  It may only include light vehicles.  In any case, Dongfeng is big.

I am not sure what part of Dongfeng Fisker has been talking to.  Dongfeng is a kind of confusing company.   Dongfeng Motor Corp sold half its vehicle operations to Nissan back in 2003 and the resulting Dongfeng Motor Co. is 50% owned by Nissan.  http://www.dfl.com.cn/dfl/info/introduce_en.aspx But, Dongfeng the parent company also has joint ventures (these are separate companies formed to produce cars as opposed to the Nissan venture, in which Nissan actually bought part of the existing Dongfeng….) with PSA, Honda, Kia, and now it has formed a truck JV with Geely, uh I mean Volvo.

Anyway, Fisker talked to Dongfeng about getting some help, likely through a strategic partnership.  That went nowhere according to a source in China.  No wonder.  Dongfeng has its hands full, it seems. And access to EV technology from a variety of sources.  Indeed, Dongfeng has an EV subsidiary and has said it will be selling two EVs by 2015. One will be under its self-developed brand, Fengshen, another will be under the Venucia brand, which it produces with Nissan.  Got it?  Good cause I am not sure I do.  In any case, Dongfeng has some EV technology.   And its hands full with all those foreign partners.

Fisker has also approached Beijing Automotive Industry Group Corp. or BAIC about cooperation, sources tell me.  BAIC is China’s fifth largest automotive group, according to LMC.  I don’t know how that is progressing.    Last November BAIC said it would invest 1.7 billion RMB to build three plants to produce new energy vehicles by 2015.  That term, new energy vehicle, is rather vague, of course.  It could mean BEVs or PHEVs or even hybrids or CNG vehicles these days.  The definition has gotten a bit looser over the years.

But BAIC will likely have access to very good EV technology.  It already had a 50/50 joint venture with Daimler.  And the two companies just announced that Daimler will take a 12% stake in BAIC Motor, the passenger car unit of BAIC Group.  http://www.daimler.com/dccom/0-5-7153-1-1571316-1-0-0-0-0-0-9293-0-0-0-0-0-0-0-0.html Now this is likely confusing to those of you who don’t follow China’s auto scene obsessively.  But it is similar to what Nissan did with Dongfeng, on a smaller percentage basis.  Generally when a foreign automaker wants to produce cars in China it has formed a separate company –a joint venture – which is 50% owned by each party.  So, it is a separate corporate entity.  Nissan, and now Daimler, actually bought into the existing Chinese company.  Too much information, I know.  In any case, besides being busy sorting out how this new company that is 12% owned by Daimler will work, BAIC likely has access to EV technology now.

Fisker spokesman Ormisher would not confirm that Fisker had talked to Dongfeng and BAIC.  “We can confirm we have had a great deal of interest from companies across 3 continents,” he said in an email.

Another thing to consider is whether Fisker is a desirable partner.  The cars are nice looking, but the Karma was totally bashed by Consumer Reports in September of 2012.  Among the faults cited by Consumer Reports, aside from the fact the battery failed on the first drive:  “Poor dash controls, limited visibility, a cramped interior, awkward access into and out of the seats, an engine that is noisy when running, long battery recharge times, and a small backseat and trunk. The Karma’s heavy, SUV-like weight affects agility and performance, and the Karma lacks the oomph you would expect.”  Ouch. http://news.consumerreports.org/cars/2012/09/fisker-karma-earns-a-failing-grade-from-consumer-reports.html

Having said that, I do think there is a market for the Karma in China.  There is a certain segment of very rich Chinese who would want to own the same car as Leonardo DiCaprio, one of Fisker’s small stable of famous owners.

My advice to Fisker? (Not that they have asked for it, but if Fisker get funding from this source my arm will hurt from patting myself on the back.)  Hit up China Grand Auto http://www.chinagrandauto.com/ for money.  The dealership group has already agreed to be Fisker’s distributor in China.  http://www.chinagrandauto.com/ It is the second largest dealership group in China in terms of 2012 revenue.  It has plenty of cash, and is even weighing going public in China, which would boost its cash hoard.  Seems like an obvious choice.  Unless China Grand doesn’t have confidence in Fisker’s vehicles.

But will the model work in China?  There are many barriers, both structural and, in my mind, cultural. 

The business, whereby a consumer becomes a member of a company and then can use one of that company’s vehicles short-term in any city where it has a presence, is growing.     Zipcar www.zipcar.com says the car-sharing market could reach US $10 billion North America, Europe, and Asia.  For automakers, it is also a good way to introduce consumers –and many of the users of Zipcar’s services are a targeted young demographic – to new technologies such as pure electric vehicles.   American Honda has Fit EVs (a pure EV) as well as the Insight hybrid in the Zipcar fleet.  http://ir.zipcar.com/releasedetail.cfm?ReleaseID=663235 General Motors has Volt extended range electric vehicles in the Zipcar stable. http://chicago.cbslocal.com/2012/03/22/zipcar-to-add-5-chevy-volts-to-its-fleet-3-electric-cars-for-i-go/

Now, General Motors is hoping car-sharing can turn Chinese consumers on to electric vehicles.  But its approach in China is a bit more circuitous since there is not a Chinese version of Zipcar.  In China, however, GM is battling not just consumer reluctance to use an EVs but also bureaucratic infighting that is preventing the build out of a charging infrastructure.  How much to charge for the electricity is also an issue.   If the car-sharing program gets off the ground, I would add to that list a Chinese consumer indifference to taking good care of something that is only borrowed, not owned. 

In October of 2011, General Motors announced it had signed a Memorandum of Understanding with the Sino-Singapore Tianjin Eco-City Investment and Development Co. to integrate its EN-V personal mobility pure electric vehicles into the Eco-City.  http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Jun/0627_Signs_MOU.html The Tianjin Eco-City, located 40 kilometers from the center of the northeast China city of Tianjin, aims to build a sustainable community of 350,000 residents in a 30-square-kilometer area.  

Though it has not been widely discussed, a car sharing program is part of GM’s plan to introduce pure EVs to the inhabitants of the Eco-City.  It’s part of a wider scheme to convince Chinese to buy GM’s just-launched Sail SPRINGO EV, http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Jun/0627_Signs_MOU.html  but the SPRINGO (GM always caps that in its press releases so I am doing the same.  Perhaps it wants us to shout the name when we read it….) isn’t the car GM is using in the Eco-City experiment.  Rather, it will use a fleet of EN-Vs, the pod-like pure electric vehicle first introduced at the Shanghai World Expo in 2011.  GM showed an artist’s rendition of the EN-V 2.0, a more advanced version, at the Beijing auto show in 2012. 

The automaker aims to have a small demo fleet of EN-Vs in operation in the Eco-City within a few years, according to people familiar with the project.  If it can overcome some bureaucratic barriers, that is. GM envisions charging station installation in apartment parking areas and commercial buildings for workplace charging.  But currently there is no method to get permission to install charging stations. That might sound like a small thing.  But it isn’t in China. 

China’s various government ministries have also not agreed on what charging plug standard to use, though China has announced its own China GB standard.   The China GB standard is similar to the European IEC standard with some important differences that make it less safe.  The State Grid, www.sgcc.com.cn one of China’s two state-owned electric utilities, and SinoPec, http://english.sinopec.com/ a state-owned oil company that also owns gas stations, are arguing over how to resolve that issue. 

Another unresolved issue is who will be allowed to sell the electricity used for charging, and at what price. The electricity price to residential customers is much cheaper than to industrial customers, but the State Grid wants to charge more than the industrial price to its customer for EV charging.

There are already nascent car-sharing programs in China using electric vehicles.  The government of the east China city of Hangzhou  offers car sharing through its EVnet company.  Car leasing company Shanghai Dazhong has said it will offer car sharing, though it hasn’t said it will include electric vehicles.  And Shanghai’s Jiading District, home to Shanghai International Auto City, is also putting together a car-sharing program using local automaker SAIC’s pure electric Roewe E50 , sources tell me.  A source at an international car rental company says his company is also talking to Tianjin and Jiading about car-sharing. 

What I wonder is how Chinese consumers will treat these borrowed cars.  Okay, I don’t wonder. I fear.  Perhaps the assumedly younger consumers who will want to become members in an electric car-sharing program will return the cars in pristine shape, both inside and out.  But I doubt it.  I envision smoke-filled vehicles with much trash in them and cigarette ash strewn throughout.  I hope I’m wrong.

I have always been interested in Wuling, but my interest increased a few months ago when Ray Bierzynski, GM China’s executive director of electrification strategy, was transferred to Liuzhou to become an EVP at SGMW.  http://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Oct/1012_Bierzynski.html   What was GM up to?  At the time I speculated that GM wanted to boost SGMW’s importance as an export base.  I still believe that.  I think GM sees SGMW as its growth engine going forward in China, as well.  China’s inland cities are where the growth opportunities are now for automakers.  SGMW produces a model that is perfect for aspiring middle-class families in China’s interior – the Hong Guang minivan.  Nah, say not that it is a minivan.  When SGMW launched it in September of 2010, it was labeled “China’s first compact business vehicle.”  Said Kevin Wale, then president of GM China Group (since retired): “The Hong Guang addresses the growing need for a small, economical vehicle for business use and family travel.”  https://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2010/Sept/0914_wuling.html  Translation:  It is the poor man’s GL8! Okay, not poor man’s.  The less wealthy man’s GL8.  The GL8 is GM’s wildly successful MPV.  The GL8 First Land model – the lower end – starts at 228,000 RMB (US $36,580).   GM China sold 58,566 GL8s in China in Jan-Oct according to LMC Automotive.

The Hong Guang  has seven models priced between 44,800 RMB and 60,800 RMB.  Quite a price difference from the GL8, but income levels are lower in China’s inland areas.  And not bad for a rear-wheel drive seven-seater with power windows and locks, airco, radio with an MP3 port, and a CD player, among other amenities.   And here’s a news flash–remember you read it here first.  SGMW will produce a front-wheel drive version of the Hong Guang. Currently it is only offered in RWD.  And, they may start badging it Baojun rather than Wuling.  Makes sense.  The Wuling name stands for workhorse small commercial vans.  SGMW is marketing the Hong Guang as a sophisticated business car that can double as a family van on weekends.

SGMW sold 258,678 Hong Guangs in January through October of 2012, according to LMC Automotive.  No comparison figure was available.   Wuling’s aging Sunshine minivan is still SGMW’s best-selling model at 442,593 units sold in January through October of 2012.  But that was down 27% on-year.  The king is dead, long live the new king!

SGMW isn’t giving up on the Sunshine.  It will continue to sell well — albeit at a declining rate — for many years.  So SGMW is building a new plant in the inland China city of Chongqing. Sources tell me Sunshine production will be transferred there. http://www.reuters.com/article/2012/11/28/us-gm-china-idUSBRE8AR0LV20121128  The plant, which will begin producing minivans in 2015, will have a 400,000 unit capacity and also produce 400,000 engines annually.  A side note:  Chongqing is home to Changan, another large minivan producer.  A source tells me that the Chongqing government asked SGMW, “Why are you doing this?”  when the new plant was announced.  SGMW said it considered Chongqing and Chengdu as locations, but decided Chongqing was superior.  I’ll bet it is.  It has a ready supplier base, courtesy of Changan and joint venture partner Ford as well as good logistics, courtesy of Ford and Changan.  Hey, nobody said business was friendly.

Meanwhile, back in Liuzhou, where SGMW is located, capacity has been cleared to produce lots of Hong Guang compact business vehicles.  Indeed, space being used to produce the Baojun passenger cars is available now,  Also in November, SGMW opened a new 400,000-unit plant in Liuzhou to produce passenger cars. http://media.gm.com/content/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Nov/1118_Wuling.html

As for the Hong Guang, SGMW is already exporting the vehicle to multiple countries, including India, where it is assembled from a kit and badged a Chevrolet.  . But trouble is brewing in India between GM and SAIC.  In October SAIC divested itself of shares in the GM-SAIC joint venture in India, reducing its stake to 7% from 50%.   The China Daily said SAIC did so after the JV failed to make a profit but sources tell me SAIC wants to market its own brand cars in India.  http://www.chinadaily.com.cn/cndy/2012-10/29/content_15852533.htm

Ray Bierzynski left his position as executive director of electrification strategy at GM China to become EVP of its joint venture with SAIC and Wuling. Will part of his new job be chief diplomat?

Which brings me back to speculation about why Bierzynski was moved to SGMW.  He has years of experience working with SAIC – he was head of PATAC, GM and SAIC’s 50-50 research and engineering venture, after all.  Seems his diplomatic skills may be needed to preserve the partnership as SGMW boosts it exports.  He may need a strong liver, though.  Those talks may involve some long nights over bai jiu.

Few casual observers of the Chinese auto market realize how crucial SGMW www.wulingmotors.com has been to GM’s sales growth in China.  Of the 2.33 million vehicles GM sold in China in the first ten months of this year, 51% were produced at SGMW.  http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Nov/1105_Oct_Sales.html A lot of those vehicles didn’t have a GM-brand badge on them, though the venture is producing Chevrolet models.  They were badged Wuling and Baojun.

I have long kept my eye on SGMW.  But I realized just how much importance GM was placing on this venture in October when GM announced that Ray Bierzynski, one of its most able and China-savvy executives, had been appointed executive vice president of the venture.  http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Oct/1012_Bierzynski.html   I’ve known Ray since the mid-2000’s when he assumed the leading role at PATAC,  www.patac.com.cn the GM-SAIC design and engineering joint venture in Shanghai. More recently he served as executive director of electrification strategy for GM China.  Why would a man with Ray’s background be sent to Wuling, I mulled?   Now I think it is because SGMW is set to become a big export base for GM in China and GM wanted to send a very capable guy to oversee that expansion.

Among other recent SGMW news:  In August, GM announced the Lechi mini car built on the Daewoo Matiz platform (can you say Chevrolet Spark?) was being rebadged Baojun. http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Aug/0815_Lechi.html  Baojun is SGMW’s own brand; it targets buyers in China’s second- and third-tier cities.  The Lechi minicar is also “GM’s new global strategic product,” according to SGMW website.  (It was previously being produced at SGMW but badged a Chevy).

The Chevy Spark became an SGMW model, re-badged Baojun and re-named the Lechi. It is a global model for GM, but initially aimed at China’s smaller cities.

In mid-November, SGMW opened a new 400,000 unit passenger car production base “initially” producing Baojun brand cars.  http://media.gm.com/media/cn/en/gm/news.detail.html/content/Pages/news/cn/en/2012/Nov/1118_Wuling.html  It is also building an engine plant with annual capacity of 400,000 due to begin operating in September 2013.   Adds the press release announcing the new plant:  “SGMW also plans to enhance its R&D capability …. Integrating engineering design and testing resources, and establishing a systematic capability for product development and technical research.  The aim is to fully support the overall development strategy of SGMW by helping it achieve 2 million annual vehicle sales goal (and) grow its export business.”

SGMW is counting on exports – badged Wuling and Chevy and Baojun — to help reach that 2 million unit sales goal.  GM China spokesperson Dayna Hart wrote in a November 20 email to me that in 2012 SGMW has exported 12,773 units year-to-date.  The list of countries SGMW exports to – and its exports in general– is growing.   SGMW models badged Chevrolet are exported to 15 markets through GM’s Chevrolet distribution channels.  “Our export models fill a gap in the existing Chevrolet portfolio in other market,” she wrote in the email.  Yeah, a gap for inexpensive minivans and trucks!  Those Chevy-badged exports are Wuling products.

As for Wuling-badged models, they are exported to some 40 countries overall, says the SGMW website.

The exported models are segment leaders in Chile, Ecuador, and Colombia, said Hart, and are in the top six in their segment in other markets such as Egypt.  As you may have figured out, the SGMW-produced cars are mainly exported to developing countries.   But the U.S., Japan, Germany, and the U.K. are also among the 19 country sites on the SGMW site.  So at least a few of the exports are also going to developed countries, it seems.   SGMW has even exported at least several hundred minitrucks or vans to the U.S.

Most of those exports were minivans and minitrucks.  But you can bet GM aims to export growing numbers of mini cars and even compact sedans such as the Baojun 630, a model based on the same platform as the Buick Excelle platform. I mean exports to all destinations, not just the U.S…..

A bit about Liuzhou Wuling and the SGMW joint venture.   Launched in November of 2002, SGMW was formed with investment from GM, SAIC, and Liuzhou Wuling Motors Co. Ltd.  Wuling was as China’s largest maker (and seller) of minivans – known in China as mianbao che, or “bread box cars.”  At the time it was formed GM had only a 34% stake in the joint venture.  SAIC had 50.1% and Wuling 15.9%.  In late 2010, however, GM boosted its share to 44%, leaving Wuling with 5.9%.    SGMW produces China’s best-selling minivan, the Wuling Sunshine.  In 2011, it sold 731,749 Sunshine minivans down3%.  In the first ten months of 2012, SGMW sold 442,593 Sunshine units, down 27%.  Minivan sales were boosted artificially in 2011 by a government rebate program.

Liuzhou Wuling was China’s largest minivan manufacturer before the joint venture formation, but it transferred most of that business to the joint venture.  The state-owned Chinese company seems to have merged in 2007 with Dragon Hill Holdings Ltd.  and transformed into  Liuzhou Wuling Automobile Industry Co. Ltd. www.wulingauto.com.cn The new entity produces electric vans, trucks, and pickups (some of which are exported to the U.S. and sold through EcoCentre dealerships. www.ecocentre.us  See my earlier blog on that topic).  It also produces components including brakes, axles, pressing and jointing parts, instrument panels, seats, and door winder assemblies.  SGMW is among its customers.  And, it produces gasoline engines.

Given that Ray Bierzynski just came off an assignment as director of electrification strategy for GM China, I’ll be interested to see if SGMW now starts producing electric vehicles, too.  But I’ll be more interested to keep following SGMW’s development overall.  I predict big things for the venture in the not-too-distant future.

Ray Bierzynski left his position as executive director of electrification strategy at GM China to become EVP of its joint venture with SAIC and Wuling.

I visited Liuzhou Wuling in the south China province of Guangxi in 2001 before it had officially become GM’s partner.  At the time I interviewed Wuling president Shen Yang and toured the Wuling production line.  Shen at that time wore fairly tacky Chinese suits, had bad teeth, and wore transparent Chinese socks.  The plant was already transforming.  Though the building exterior was old and the machinery inside somewhat out-of-date, the manufacturing process was already changing over to GM’s system.  Red lines delineated where visitors could walk, signs noted how many injury-free days the plant had recorded.  I’m sure there were many other changes I couldn’t see.

I ran into Shen Yang, who is now president of the JV, at the Shanghai Auto Show five or six years ago.  He was wearing a very nice suit; I’m guessing his socks weren’t see-through and his teeth were perfect.  In Liuzhou, Wuling has built a new plant and is adding another.  I’ll have to visit again to see the changes for myself.

EDI, as the company is usually known, is based in the northern California town of Dixon, near the university town of Davis.  Though it has been around for a while – it was founded in 2006 – EDI is still small and hungry just like a start-up.  Only recently, in the wake of finishing development of a new PHEV parallel/series drivetrain for delivery trucks, EDI has begun to grow.  Now, it is also about to seek more funding.  I spoke with CEO Joerg Ferchau to learn what’s new at EDI.  (Full disclosure:  I do some business development work for EDI and also write a short story each month for its company newsletter.  The newsletter is free – subscribe! http://www.efficientdrivetrains.com/newsletter.html And not just to read my stories.  It also has company updates and insights from Ferchau and EDI founder Andy Frank, considered the father of the PHEV.)

But I digress.  As I mentioned, EDI just finished work on a new PHEV drivetrain.  Usually, EV drivetrains are either parallel – switching back and forth between electric and gas propulsion—or series, using the electric drivetrain then switching to the gasoline drivetrain, but not back to the electric again.  (I hope I got that right.  I am not an engineer….)

Prof. Andy Frank, co-founder of EDI, attempts to explain the difference between series and parallel hybrid drivetrains to me at EDI world headquarters in Dixon, CA.

It usually costs less to develop a series hybrid than a parallel hybrid, said Ferchau, because the parallel control system is more complex.  But, a parallel system costs less to build.  Ferchau claims EDI’s new drivetrain is less expensive than many series hybrids because EDI already had a number of patented designs that it could leverage in this new design.  It has fewer components and smaller motors than a pure series, he said.   “Also we are willing to go minimum on engineering costs because product sales are what we are after,” said Ferchau.

EDI just finished a demo truck built on a GM platform using the new PHEV system. That truck is going to China.  While EDI has a handful of customers here in the U.S., including Siemens, China is where it sees real growth potential.  Now, China has been talking about becoming a big market for electric vehicles since 2009 and not much has happened.  But even less has happened here in the U.S., points out Ferchau.  “For EDI, China is high priority,” he says.

To be sure, China’s central government hasn’t given up on the technology.  In July, it issued the latest new energy vehicle policy.  http://www.gov.cn/zwgk/2012-07/09/content_2179032.htm   http://www.greencarcongress.com/2012/07/china-20120709.html  It placed more emphasis on PHEVs than in the past, and stated fairly strongly that China’s municipal governments should get started on electrifying their fleets. That is good news for EDI.  It is focusing on fleet vehicles – especially light and medium-duty trucks such as the small delivery vans that zip through urban alleys.   Besides trucks, EDI can design or work with partners to design drivetrains for SUVs, sedans, and even busses, says Ferchau.  “We can do PHEV, HEV, or EV but are most interested in PHEV opportunities,” he says.

EDI already has a Chinese customer, Ankai Bus www.ankai.com , a manufacturer in central China’s Anhui province.  The two have been working together since around 2008, says Ferchau.  They will launch a PHEV bus in the first quarter of next year, he says.  http://english.ankai.com/news/company-news/2012110601.html Ankai is already promoting the PHEV bus with EDI technology inside on its website.   And it seems the central government has already started more aggressively pushing for municipal fleet electrification.    Ankai reports on its website:  “In September 2012, the Ministry of Finance … issued a notice on promoting the hybrid bus demonstration cities to change from 25 cities to all over China.  And the promotion goal amount of the buses are (sic) 3,000 – 5,000 units.  The highest subsidy of a single bus can reach RMB 420,000 (US $67,300).”

Ferchau says EDI should be announcing several other projects in China in the next few months.

That’s one reason it is seeking new funding.  Up until now, EDI has gotten funding from a handful of sources:  Seed investors; a small low-interest loan from the city of Dixon; a venture capital group partly supported by the government of Wuxi, China; and revenue from customers.  But to meet its anticipated growth needs in the U.S. and China over the next year,  EDI will open up in the first quarter of 2013 for US $2-3 million in investment,  providing Preferred Series A shares in exchange, said Ferchau.

EDI is already ramping up its China presence.  In June, it registered a wholly-owned company in Wuxi, a small city east of Shanghai.  http://www.efficientdrivetrains.com/news.html#global  The company, New Energy Automotive Technology, or NEAT, is recruiting engineers now.  It is talking to two or three groups in China about forming joint ventures, says Ferchau.  “That is a big part of our strategies, forming JVs,” he said.

What about your intellectual property? I asked Ferchau.  How will you protect it?  Much of EDI’s intellectual property is contained in the software and controllers it provides, he said.  That kind of IP can be hard to copy.  Still, “you always have to be worried about intellectual property,” said Ferchau.  “I have lost three other products with other companies.”   But IP protection is an issue anywhere one does business, he says philosophically.  EDI hopes its joint venture partners and investors will show a vested interest in protecting the ventures intellectual property.

In any case, Ferchau is (not unexpectedly) optimistic about the future for companies such as EDI.  There are fewer companies competing for what he figures will be a surge in orders from companies and from the U.S. and Chinese governments and militaries, all of whom are committed to greater electrification of their fleets.   He predicts the market will really start heating up in 2015.

EDI has not grown too quickly, as did many companies that went under, says Ferchau. It still only has several dozen engineers.   “The last year and a half we have had our heads down to get the vehicle and drivetrain down,” says Ferchau.  But EDI has a demo vehicle now so it can more aggressively court new customers.  The new funding – or deals it now has in the pipeline – will allow EDI to scale up quickly if it needs to, he says.  I guess we will know if Ferchau is right in a year or so ….