Andy Frank talks China EV policy with me. I see wasted resources but a nice way to test new technologies.
I visited Efficient Drivetrains Inc. www.efficientdrivetrains.com last week for the first time. EDI, as it is usually known, produces a plug-in hybrid electric drivetrain and a continuously variable transmission. I met EDI founder Andy Frank, the father of the plug-in hybrid electric vehicle, a few years ago at a conference in San Francisco. I now know EDI CEO Joerg Ferchau and others at the small company, as well, and do some work for EDI. But this was my first time to visit. EDI is located in an office park in Dixon, CA, which is between Davis and San Francisco. Its current space is small—just a few offices and a larger garage-like area. But it recently rented more space in the business park, tripling its footprint there. The growth is business-driven, fortunately, and some of the business is in China. EDI opened an office in Wuxi, east of Shanghai, a few months ago. The China deal that is the farthest along is an agreement to produce a PHEV bus optimized for both city and high-speed highway travel. The Chinese company is bus producer Anhui Ankai Automobile Co. http://www.chinabuses.com/english/manufacturer/ankai.htm based in central China’s Anhui province. China is the initial target, but export is also possible Joerg told me. Ankai has already exported buses to the U.K. and the U.S.
Andy and Joerg visit China frequently. Both meet with a variety of company and government sorts and have great insights into the direction China’s EV policy is taking. Joerg was out of the office, but I had a great talk with Andy about the China market.
It seems to me that some resources are going to be wasted by the rather scattered approach China is taking to EV development. On the other hand, some good technologies may emerge as well. And Beijing is determined to develop China’s EV industry, it is clear.
Beijing i.e. China’s central government, recently released its new energy and fuel efficient vehicle development plan. http://www.greencarcongress.com/2012/07/china-20120709.html The plan calls for China to have 500,000 PHEVs and/or BEVs on the road by 2015. Since Chinese consumers aren’t going to be buying EVs in anything close to those numbers in the next few years, the government is brainstorming for ways that goal can be reached. One idea it is considering, said Frank, is short distance (duan tu) vehicles. I immediately said: “Oh, Shandong province will like that because it has so many low-speed EV producers.” No, said Andy, these are not low-speed EVs. They are short distance EVs. Of course the details of this potential strategy aren’t worked out. But as Andy explained it, these would meet regular vehicle standards but their batteries would not have much range. I guess they would be city vehicles. Range is the biggest issue with the current crop of batteries. Sure, one can find batteries that can go hundreds of kilometers on one charge. But those batteries cost a lot. Producing a BEV with a limited range would lower the cost and potentially make it more commercially viable.
I have said a number of times that municipal fleets are the way Beijing will meet its EV goals. http://www.chinadaily.com.cn/cndy/2012-07/30/content_15628934.htm That, in my estimation, is why so many municipal governments are now investing in companies with electric drivetrain and battery technology. An executive at a foreign automaker in China that works with the Chinese government on electrification concurred that fleets are the likely solution. He listed garbage trucks, street sweeping, postal and package delivery, and taxi and bus fleets as good candidates for electrification. Some of those types vehicles – postal and package delivery and street sweeping for example – are also good candidates for the short-distance EV strategy.
Once upon a time, like 2009, Beijing thought China could become the BEV capital of the world quickly. Now it is more interested in PHEVs in the near term. Beijing thinks BEV is the ultimate, “but the technology is not here,” Frank told me. “They feel the problem now, and the problem is to displace gas.” That’s for sure. A recent report by consultancy McKinsey says oil imports in China are likely to double by 2020, when it could amount to 16% of total world oil demand. Andy is a true-believer in PHEVs, so he naturally thinks that the PHEV is better than a pure electric vehicle in any case. As fpr the short-distance EVs, I’m not sure how the mix between BEVs and PHEVs might play out. After all, if range isn’t a big issue then BEVs might be more appealing. I’m sure Beijing doesn’t currently know what the mix will be either. It will make up that part of the policy up as it goes. Are short-distance EVs the way to go? I think it would be an enormous waste of resources. The minute the government hints that it is interested in a short-distance EV tons of companies will jump into that sea. I can imagine many, many of the low-speed vehicle makers in Shandong going down that road. Many already are, judging from what I saw at EVS25 in Shenzhen in 2010. The majority would make a product that would be poor quality and find little market. But some good technology might emerge. I guess that is a chance the central government wants to take.
Andy also helped me see that the pressure on local governments to electrify their fleets, while on the one hand a big waste of resources since economies of scale aren’t possible, is also a great way to test different technologies. Think about it. For a recent story for Automotive News, companies I talked to included PowerGenix www.powergenix.com , which has its own Nickel-Zinc battery chemistry and is working in part with a local government in central China’s Anhui province; Protean Electric www.proteanelectric.com , which has in-wheel electrification and is working with the local government in the east China city of Liyang; and battery maker Boston-Power www.boston-power.com , which has Chinese investment and is also building a plant in Liyang. (Both B-P and Protean work with venture capitalist Sonny Wu, managing director of GSR Ventures. www.gsrventures.com Clearly Sonny has some guanxi in Liyang).
What China is doing, said Andy, is getting local governments to test different technologies. “After four or five years, they can see what works best,” he said. Seems brilliant to me, though it will involve waste of local government resources. A problem with that strategy is that gathering good data will be tough if the central government doesn’t step in. Beijing had better get busy developing a data collection strategy.
Wanxiang Group www.wanxiang.com , China’s largest automotive supplier, has always seemed like a fairly forward-looking company to me. That impression was reinforced by a recent conversation with Bryan Hansel, CEO of Smith Electric Vehicles www.smithelectric.com in Kansas City, MO. In February of this year Wanxiang Electric Vehicles announced it would make a $25 million equity investment in Smith Electric. Wanxiang and Smith also signed a letter of intent for an up to $75 million investment in a joint venture to produce electric school buses and commercial vehicles. http://www.greencarcongress.com/2012/02/smith-20120217.html
Seems like a shuang ying (win-win) arrangement to me. Wanxiang gained access to proven EV technology that will be used to produce electric vehicles in two areas with promise for a big market. And Smith Electric got operating money and access to a potentially very large market (I shy away from saying “huge.” That remains to be seen.) Plus, it could make Smith Electric more attractive to non-Chinese investors in the longer term.
The agreement made me think back to my visit to Wanxiang Electric Vehicle Co. http://www.wanxiang.com/Wanxiang%20EV_general.pdf in April of 2011 and a conversation I had with Li Pingyi, executive director of Wanxiang EV. I asked it how it was to be in charge of such an important new division of Wanxiang, which started out as a producer of universal joints and other somewhat low-tech components back in 1969. “The pressure is huge,” said Li. Well, the cooperation with Smith should help relieve at least a bit of that pressure.
I asked Hansel, who co-founded Smith Electric, how the partnership with Wanxiang came about. About a year and a half ago, Pin Ni, president of Wanxiang North America, called me, said Hansel. “Electrification is viewed as critical by China and they have struggled with it,” said Hansel. “Wanxiang started EV years ago but wasn’t able to get it up and running.” Seems the relationship developed in the typical way—incrementally. A small equity investment was the first step—Hansel didn’t say what he meant by “small.” The two companies stayed in touch and got to know each other. In late 2011 Ni suggested they talk about a joint venture. Wanxiang could help Smith take cost out of its vehicles by providing components, said Ni. (I have written previously about Wanxiang’s joint venture with Ener1, through which it gained access to battery pack technology.)
Last October, Smith launched its electric school bus. http://smithelectric.com/wp-content/uploads/2011/10/SMITH-ELECTRIC-VEHICLES-ANNOUNCES-AVAILABILITY-OF-ALL-ELECTRIC-SCHOOL-BUS1.pdf There is a big push to improve the safety standards of school buses in China after some high-profile accidents in China. Plus the government is pushing electric vehicles. Double whammy! The pace of cooperation accelerated. In early February a Letter of Intent was signed. Wanxiang provides the physical factory and components, Smith bring the EV technology. The JV is “plus or minus 50/50,” said Hansel. Which means Wanxiang has a majority, he admitted. Now both are making cash investments to create the business, said Hansel. Smith will get royalty payments in the future, he said.
Wanxiang EV has a lot of floor space in its Hangzhou plant; the JV will initially be based in the Wanxiang EV warehouse, said Hansel. Smith will contribute its assembly and manufacturing processes. While the JV is not contractually obligated to use the batteries produced at Wanxiang EV, it probably will, said Hansel. Hansel sees China as critical to making the EV industry a reality. It is the largest truck market in the world, he said. “If I can deliver volume, it drives down our costs,” said Hansel. Just as important is China’s willingness to invest in the industry, he said. Said Hansel of Wanxiang Group chairman Lu Guanqiu: “He understands that new technology takes investment. If you are going to make a new industry a success you have to invest for the long term. Finding that kind of long term vision is critical for an industry such as ours.”
Naturally China’s potential as a market for Smith’s technology also made Wanxiang an especially appealing partner, said Hansel. “Wanxiang could have been in any major market and be interesting but the fact that they are in the largest market makes a lot of strategic sense for us,” he said. That helps compensate for the fact that China isn’t the easiest place to do business, said Hansel. “It does take exponentially longer to do a transaction,” he said. China also has its intellectual property challenges, said Hansel. That is why choosing a high quality partner – such as Wanxiang – is important, he said.
Production in China awaits final government approval of the joint venture. Approval seems likely—the recently released new energy vehicle policy encourages cooperation with foreign companies. “We can be up and running very quickly,” said Hansel. Here in the U.S., Smith Electric’s manufacturing footprint is decentralized, said Hansel. It has a plant in Kansas City and committed to one in New York, he said. It aims to follow a similar strategy in China, said Hansel.
Well, that may be easier said than done…. Still, Smith Electric may have hit a sweet spot in China, time-wise. Besides encouraging foreign cooperation, the new policy also encourages EV purchases by local governments. http://www.chinadaily.com.cn/cndy/2012-07/30/content_15628934.htm. “Consistent government backing is fundamental,” said Hansel. And that could help Smith with investment on this side of the pond, as well. Smith’s strategic investors are happy with the China connection, said Hansel. “Volume from anywhere helps everywhere,” said Hansel. “Seeing the kind of scale and support that a Wanxiang can offer is very important.”
I’ve written about U.S. alternative fuel tech companies that turned to China for funding after being shunned by the U.S. Department of Energy. Well, some U.S. companies that looked to China for funding even didn’t even bother to apply with the DOE. https://lpo.energy.gov/?page_id=43
“We did not apply for a DOE loan,” Protean Electric Inc. CEO Bob Purcell told me. “We thought our technology had enough promise to attract private investors. “ Those investors turned out to be in China, and not all are private.
Protean , of Troy, MI, produces in-wheel motors for electric drive systems. On July 9 it announced it had landed an investment of $84 million from a group of Chinese investors: GSR Ventures; a Liyang, China – based company called New Times Group; and the government of Liyang. www.proteanelectric.com
Chinese investors seek proven technology and Protean’s in-wheel system is proven—sort of. Not proven for high-volume production, but at least proven in a car that one can drive around. Protean’s system was installed on the Trumpchi EV that the Guangzhou Automobile Corp (GAC, which I hate to say because it sounds like the noise my cat makes when he is about to cough up a hairball. GAC, GAC….) www.gaic.com.cn showed at the 2011 Guangzhou Auto Show, http://chinaautoweb.com/2012/03/gac-to-release-hybrid-4wd-trumpchi-sedan-this-year/ as well as three Mercedes E –Class sedans at the 2011 Frankfurt Motor Show.
China offered Protean more than just money; it also offered a potentially huge market, said Purcell. “The general frame on all of this is you want to launch the technology in the market that has the most real demand potential,” he said. “The Chinese government for some years now has expressed a very strong industry in moving to electric based technologies. I give the policy makers a lot of credit for passing policies to promote the major components inside of China.”
Indeed, the Chinese government has stuck to its guns regarding growing the new energy vehicle segment in China (which includes electrified vehicles). And it has issued policies that offer preferential treatment to companies producing the major components of an EV system. The problem: Chinese companies couldn’t produce many of the most important components, such as battery management systems. So the recently-issued Fuel Efficient and New Energy Vehicle Policy encourage cooperation with foreign firms. All the better for companies such as Protean.
I get comments on my blog fairly often about how Chinese companies just want to steal the technology. Fair enough and intellectual property protection should be a major concern of any U.S. company working with Chinese partners. But as Dan Squilller, CEO of PowerGenix www.powergenix.com told me (more on what PowerGenix is up to soon): “When you get married to somebody you don’t go into it expecting the person to cheat.” Of course, cheating does occur nonetheless.
I asked Purcell about intellectual property concerns. Purcell, who has a long history in Asia including working closely with GM’s powertrain joint ventures in China, told me the best protection is being partnered with the right people because they want to protect the IP, too. I know nothing about Liyang or Jiangsu New Times Group. I guess we will see. Purcell said Protean would also soon be partnered with some automakers.
The city of Liyang has provided space for Protean to begin prototype production of its in-wheel drive systems. That should start in early 2013, said Purcell. Liyang is also “supporting our ability to build a factory,” he said. I assume that means free land and low taxes. The factory should be finished by early 2014, said Purcell. Protean is aiming to produce 100,000 motors annually – each vehicle uses 2-4 motors. You do the math. That’s not too many vehicles. But Protean’s main goal is licensing, so selling motors it has produced won’t be its primary income stream, it seems. Purcell said he is already talking with potential customers in China, the U.S., and Europe. “We will help our customers early on with motors produced in our plant,” he said. The first customers are likely to be Chinese, said Purcell.
Protean’s current in-wheel electric drive system fits an 18-inch road wheel, which is the type on larger passenger vehicles and light commercial vehicles. Protean expects early customers to be light vehicle manufacturers, said Purcell. “It is ideal for minivans,” he said. Also the smaller delivery vans (I guess he means mianbao che) and executive sedans. The cost of the in-wheel motors and electronics is $1,500. A battery pack and system control (I guess he means BMS) is extra. “The advantage we have is our regenerative capability is very high,” said Purcell, “so the battery can be downsized.” So less expensive, I guess.
Purcell claims the strength of Protean’s in-wheel system is that it can be used on existing vehicles, so “we are the fastest path to high volume application of hybrid systems in the world.” I do not claim to be a technical expert so readers can weigh in on this assertion. In any case, it can be used on pure EVs or PHEVs, Purcell said. He figures, however that converting existing vehicles to PHEVs will be the first use of Protean’s system in China. Purcell says the best application is for light city delivery vehicles. What advice would he have for U.S. companies with alt fuel tech eyeing China as a source of investors, I asked Purcell? “Go for it,” he said. But there was a caveat. “You have to create a world presence for your technology,” he added.
I heard that same advice, phrased slightly differently, from a handful of companies I recently talked to for an upcoming story in Automotive News, that is, make sure you have technology that is already tested and has commercial applications. China isn’t looking to nurture new tech firms, at least not non-Chinese firms. It wants technology it can put to use immediately.
Of course, none of the companies I talked to had technology that has been tested in high-volume production. So China is actually doing the U.S. a favor by investing in these companies. If the technology is as good as the companies always claim it is the U.S. can also use it after it has been tested in China. For a price….
China’s recently-released plan to promote fuel efficient and (mainly) battery electric and plug-in hybrid electric vehicles touches on fleets, but sadly doesn’t do much to address this most important segment for widespread electrification. http://www.gov.cn/zwgk/2012-07/09/content_2179032.htm Perhaps some of the two dozen cities Beijing designated as experimental sites for public fleet electrification are making huge efforts in that direction, but I doubt it. They certainly weren’t not long ago. http://www.chinadaily.com.cn/business/2012autoshow/2012-04/23/content_15114562.htm
Beijing (by this I mean China’s central government) would do well to pay more attention to fleets, and to promote more cross-industry cooperation of the kind I found here in the U.S. when I talked to Dave Meisel, director of transportation for Pacific Gas & Electric www.pge.com, or PG&E. As one of the largest public utilities in the U.S., PG&E has a huge fleet—some 14,000 vehicles. That’s a pretty big Petri dish for testing out alternative fuel technologies, and PG&E has been doing that for years, says Meisel, who says he has been in the business for 35 years. The utility has gotten much more active in testing alternative fuel technology vehicles in the last four or five years, he says, which makes sense because finding replacements for gasoline as a vehicle fuel has become a much hotter topic in the last four or five years.
PG&E isn’t doing this out of the goodness of its heart. Partly, it is compelled by California law to have a certain percentage of low-emission vehicles in its fleet. www.arb.ca.gov But PG&E is also looking to save money. Isn’t PG&E a bit special because it has a huge fleet so small savings can equal a large amount? I asked Meisel. (Sort of like a small percentage of the Chinese population can still equal a big market.) He said: “(Alt-fuel vehicles) makes sense everywhere but the dollars are much bigger for PG&E because of our fleet size. We actually do (the alt-fuel vehicles) because they make business sense. Sometimes they make sense because you are improving your carbon footprint, sometimes they save money.” Some examples of money-saving later in this blog.
As you might expect, PG&E is trying out various kinds of electrified vehicles. It has a varying numbers of vehicles in its fleet from a wide range of companies including VIA Motors (extended range electric vehicles) www.viamotors.com, Efficient Drivetrains Inc. (PHEVs) www.efficientdrivetrains.com , and Quantum Technologies (multiple kinds of electric drivetrains and fuels) www.qtww.com . PG&E also works with battery makers such as A123 www.a123systems.com and Dow Kokam http://dowkokam.com/technology.htm and with OEs such as General Motors www.gm.com on development. What I found unique and useful for not just PG&E and the companies it works with, but also eventually for consumers of alt fuel vehicles, is that PG&E influences the design of the vehicles so that they better meet its needs. That is why VIA Motors extended-range Chevy Silverado pickups come with an optional on-board inverter that can be used in place of an external generator. PG&E suggested VIA add that feature, says Meisel. At around $79,000 per truck (“Anticipated selling price is $79,000 at volume” says the VIA website), the EREVs are pricey. But the ability to one day use a fleet of them to light up a neighborhood that has lost power makes that price acceptable, says Meisel. Utilities are judged by their ability to provide continuous service, he says, and this could contribute to that that ability. Having input from a potential future customer helps both parties out, adds Meisel. “Sometimes when you are a pickup truck manufacturer you look at it purely from your perspective. I have a different perspective,” he says. “I ask them if it can do things that would help us out, have conversations about how to make it a good deal for everybody.” Since other utilities have the same needs as PG&E, this also helps create a market for the vehicles, says Meisel.
The money for these projects comes from different sources. Sometimes the technology company pays for the modification, says Meisel. Sometimes PG&E chips in. Sometimes there is government money involved. For example, PG&E is working with Peterbilt Motors Co. www.peterbiltmotors.com (think really really big trucks) on a Class 7 extended range electric truck. PG&E contributed grant money from the California Energy Commission www.energy.ca.gov to the project.
When I spoke with him Meisel has just returned from Toronto, where he met with General Motors (Meisel is on an advisory board) about GM’s b-fuel compressed natural gas Chevy Silverado and GMC extended cab pickups. http://www.worktruckonline.com/News/Story/2012/03/Video-GM-s-Ed-Peper-Discusses-New-Bi-Fuel-CNG-Pickup-Trucks.aspx Meisel is excited about this technology. Though CNG is cheaper to use than gasoline, the re-fueling infrastructure is not as extensive. “Straight CNG is pretty hard for us,” he says. But the 17 gallons of CNG is enough for PG&E’s trucks to get pretty much anywhere they need to, he says. After that, they can run on widely-available gasoline. The bi-fuel option adds $11,000 to the price, says Meisel, but he figures the payback period won’t be that long with the cost of gas these days. GM is taking orders now for 2014 delivery.
PG&E is electrifying its entire fleet of bucket trucks (as the name suggests, those are the trucks with those bucket-like lifts that a person stands in to repair electric lines and the like), says Meisel. He didn’t go into detail about what kind of electrification (or rather I didn’t ask) though he did say PG&E is working with several companies. The payback period for the $24,000 conversion cost is only 3.5 years, says Meisel. “In the old version we would idle a vehicle 7-8 hours a day. In the new version it is zero,” he says. There’s also a substantial environmental benefit, I couldn’t help thinking….
How big is his budget for alt-fuel vehicles? I asked Meisel. PG&E doesn’t have a budget just for alt-fuel vehicles, he says. “What we do is we have a vehicle acquisition budget,” he says. “We know we are going to add, delete, buy sell vehicles.” Right now, he seems pretty high on VIA, or companies with similar technology. “We really like the idea of an extended range electric a lot, we like the idea of exportable power, we are spending a lot of time on that,” says Meisel.
If you don’t have a bi-fuel pickup or an extended –range EV with exportable power, however, don’t despair. Just keep track of where Meisel is spending his time. He speaks at about 100 events a year, says Meisel. People approach him about new technologies at these events all the time, or the technology is on display and PG&E likes it.
Now, I must return to China’s situation. Are China Southern Grid http://eng.csg.cn/ and State Grid www.sgcc.com.cn guys hanging out at various alt-fuel vehicle events to find promising new technologies for their fleets? I can only hope so.
China’s State Council finally released the official “Plan for the Development of the Energy Efficient and New Energy Automotive Industry (2012-2020)” last week. http://www.gov.cn/zwgk/2012-07/09/content_2179032.htm The plan is dated June 28, 2012 but the complete document wasn’t posted immediately. That delay means little since the plan mainly reiterates what Wen Jiabao said in April. http://news.xinhuanet.com/english/china/2012-04/18/c_131536124.htm
And like that April announcement, this Plan is a bit disappointing. By focusing on the production side of the equation rather than the market side, the Plan shows that China’s government still hasn’t figured out how to actually get Chinese to buy the vehicles after they are produced, or they don’t think that is important. The emphasis on using foreign technology whenever necessary shows that on the production side the government has recognized there are serious shortcomings in China’s domestic industry. At least, however, the Plan shows that the government is still set on growing China’s EV sector—even if it doesn’t quite have a good way to do that.
There are already plenty of stories out there about the Plan. http://www.greencarcongress.com/2012/07/china-20120709.html Just in case you haven’t read any of them, a few details. Cumulative production and sales of battery electric and plug-in hybrid electric vehicles will reach 500,000 units by 2015 and 2 million by 2020. That’s a pretty big leap given that only around 5,500 were sold in 2011 despite government subsidies of up to 120,000 RMB in some cities. The latest Plan talks about building out infrastructure and admits that China is woefully behind in that area, as well. (This might be an eye-opener for those silly people who write about how China has a huge EV industry and infrastructure, for some reason believing it does just because the government said a few years ago it was going to….).
To be sure, the Plan does give lip service to all the right areas needed to build out an EV industry and market, and the Plan may seem detailed after a cursory reading. It stresses the need to build an aftersales service network and a charging network. It says China needs to explore both battery swapping and charging stations as network models, as well as fast and slow public charging stations. It mentions the load on the electrical network as a concern. The Plan mentions the need to deal with recycling of batteries. It says standards will be out by 2013. It mentions the need for financial policy support for electrification of public fleet.
On the consumer side, there will be experiments in consumer subsidies to boost demand, it says. The plan even mentions trying out battery rental. China needs to build out financing, insurance, logistics, and a second hand market for new energy vehicle, it says. The report goes into technical details such as: By 2015 BEVs and PHEVs should have a maximum speed of at least 100 km/h (62 mph). Battery power should be 150W/kg at 2 RMB/Wh $0.31/Wh) with a cycle life of 2,000 or more than 10 years. The electric drive system power density should be 2.5 Kw/kg at a cost of 200 yuan/kW. By 2020, the battery module should have a specific energy of 300 Wh/kg or more. (Thanks to Green Car Congress for these technical details; it would have taken me forever to translate them.) Okay, my eyes are glazing over. I read the original Chinese version of this report, straight from the State Council website. Anyone who has read these Chinese plans knows there is A LOT of repetition.
Sounds great, right? The Chinese government is finally getting down to business with the EV sector. But wait a minute. Weren’t a lot of these goals announced a few years ago? How much progress has been made? (Answer: Very little) The lack of details on how to boost the market is telling. Purchase subsidies have done little to attract buyers. (Though giving the money straight to the consumer rather than to the OE might help…) And how is it going to get cities to build out infrastructure? The Plan also ignores regular hybrids though at one point not too long ago the government seemed to be warming to them as an interim step. And though fleets are where China should be concentrating its electrification, efforts there is little about fleet electrification in the report aside from a few throw away lines about subsidizing public vehicle electrification.
Nonetheless, I am encouraged by this plan. What is does show is that the Chinese government continues to be serious about supporting the EV sector. And rather than simply dictate how charging networks, financing, etc. should develop, the Plan says that China will try different models to see what works best. That is a great approach if politics don’t get in the way. That is a big if, naturally. Competing interests in China have very different ideas about how vital elements such as charging standards should develop. If China shares the data from its experiments, the entire global industry will benefit. Again, kind of a big if given China’s reluctance to share that kind of information.
Foreign suppliers with EV technology should be encouraged by the Plan. China has finally admitted (well, Wen Jiabao actually said this months ago) that China’s domestic companies don’t have the all technology needed to grow the sector. So the Plan is full of references to foreign cooperation and using foreign technology. Now, if China can just resist mandating that foreign companies provide technology as a price of entry. I talk to a lot of smaller EV drivetrain companies here in the U.S. and they are all signing deals with Chinese companies. A good example of such an agreement—one that I’m pretty certain will bear fruit—is Wanxiang EV’s agreement with Smith Electric to produce electric buses in China. I talked with Bryan Hansel, CEO of Smith Electric (a full blog on that soon) a few days ago and he said that Wanxiang approached Smith about using Smith’s pure electric drivetrain technology about a year and a half ago. Initially sides were just talking, but when Smith came out with an electric school bus Wanxiang was suddenly interested in full JV, said Hansel. (There is big push to make school buses safer in China. Smith had that technology as well as an electric drive train, so working with Smith was killing the proverbial two birds with one stone.)
There are many other examples out there. Will some of those deals fall through? Definitely. But the fact that the Chinese parties are looking for technology in the U.S. means they see the government’s policy as lasting. Can China get it right with the EV sector? Well, it sure ain’t gonna hit the numbers this plan lays out. And there are so many vested interests in China trying to get their way with how the system is built out that it could yet flounder. But as I’ve written before, China makes policy by using the “crossing the river by feeling for the stones” method. This Plan is one more stone to feel for as it crosses the EV river.
BYD e6 taxi fire still not fully explained; China EV market and BYD would benefit from more disclosure
It has been a bit over a month since a BYD e6 electric taxi caught fire in the south China city of Shenzhen and burned to a crisp, killing the three people inside. http://www.nytimes.com/2012/05/30/business/global/byd-releases-details-about-electric-taxi-fire.html?_r=1 The taxi was struck by a Nissan GT-R being driven by a drunk driver at 112 mph. Naturally, the initial reaction was to blame the EVs lithium-iron phosphate battery, which BYD www.byd.com claims is one of the safest batteries around.
The Shenzhen police snatched the fried taxi to investigate the cause of the fire. The most recent report on the investigation, according to BYD, was released on June 11. The report that BYD provided to me concluded that the fire was caused by either a short in electrical wires igniting the car interior and/or high-friction heat and fire from the skidding tires. The battery did not explode during the crash, the report concluded. Pretty inconclusive conclusion, actually. http://www.businessweek.com/news/2012-06-07/byd-executive-says-electric-car-battery-didn-t-cause-crash-fire
Investors in Hong Kong-listed BYD seem to have gotten over that incident. To be sure, the share price of BYD Co. (HK 1211) dropped on the news of the accident. http://www.marketwatch.com/story/car-maker-byd-shares-fall-after-fatal-taxi-crash-2012-05-28 But it recovered in a few days. Of course, recovery is relative—the stock continued its gradual downward trend, really what one would expect from a company that is seeing sales fall in its major product areas. On the Hong Kong stock exchange website, BYD’s principal activities are listed as research, development and sale of rechargeable batteries, handset components, and assembley (sic) service as well as automobiles and related products.
But have potential buyers of a BYD electric vehicle gotten over the taxi fire issue? It seems to have vanished from the news cycle. ( I can’t search Chinese-language websites very well on my laptop so maybe the story is all over those sites. I doubt it, though. I do read some Chinese-language auto sites regularly.) Yet there still hasn’t been a thorough analysis of what actually happened, or at least we don’t know about it. Has BYD gotten its hands on the car and has it done an analysis? Or is it satisfied with the official report that absolves the battery of blame?
Studys show Chinese consumers are leery of the new technology in electric vehicles especially as it comes at a premium. And safety ranks first or second in many polls ranking what Chinese consumers look for in a car. It seems BYD could have reaped some good publicity by doing its own tests on the cause of the crash and being very transparent about the results, which would hopefully prove BYD’s assertion that the battery is very safe.
Okay, now I’m going to re-purpose content from a column I wrote for auto163.com, a Chinese automotive website. http://alyshawebb.blog.163.com/
The Chinese government—and BYD—should study the way the U.S. government and General Motors handled the case of a battery fire in a Chevrolet Volt Extended Range Electric Vehicle after a crash test. The transparency with which that problem was dealt with—including the full explanation of the tests performed –helped maintain consumer confidence in the Volt’s safety. http://www.nhtsa.gov/PR/Volt
A bit of background on the Volt issue (in case you don’t already know): On November 25, 2011, the National Highway Traffic Safety Administration (NHTSA) announced it would open an investigation regarding the safety of the battery in the Chevrolet Volt. Among its many responsibilities, the NHTSA sets vehicle safety standards, investigates possible safety defects, and tracks safety recalls. The NHTSA had conducted a crash test on the Volt; three weeks later the car’s battery caught fire because of a ruptured coolant line and a damaged battery casing. No one was injured in the fire; it apparently occurred when the car was sitting in a NHTSA garage. The NHTSA said it would be working with the Department of Energy, Department of Defense, and General Motors to “complete rigorous tests of the Volt’s lithium-ion battery.
The NHTSA described in detail the tests it conducted after the fire, and all the information is available online. It conducted three tests that intentionally damaged the battery pack. “In each of the battery tests conducted in the past two weeks, the Volt’s battery was impacted and rotated to simulate a real-world, side-impact collision into a narrow object such as a tree or a pole followed by a rollover,” said the NHTSA
No fire resulted from the first two tests though a rise in temperature was detected after the second test. In the third test, however, “the battery pack was rotated within hours after it was impacted and began to smoke and emit sparks shortly after rotation to 180 degrees,” said the NHTSA. It continues to monitor the battery from the second test, said the NHTSA. The NHTSA also issued recommendations to consumers and emergency responders in case of a crash involving an electric vehicle.
GM offered to loan Volt owners a car or to buy back the Volt. No Volt owners wanted to sell their car back to GM. Meanwhile, GM quickly crafted a fix for the problem—it installed more shielding to protect the battery. The NHTSA tested Volts with the fix; no fires resulted. http://blogs.automotive.com/gm-to-strengthen-chevy-volt-battery-pack-in-response-to-nhtsa-investigation-72663.html
Sorry to bore you with all these details, but I wanted to show you how much information the U.S. government released regarding the Volt fire, and the way GM responded to the incident. To be sure, there are inconclusive EV fires here in the U.S. We still don’t know exactly what happened with that Fisker Karma that burned up in a garage in Texas. At least no one died there.
The BYD case is a bit different from the Volt case—the fire was caused after the e6 was pushed into a tree after being struck by a car going 180 km/hour. Any car, electric or not, would likely burst into flame after such an impact. However, the Chinese authorities—and BYD—should be no less diligent in investigating the problem. BYD’s response that the e6 had passed all the relevant tests is not sufficient. The Volt has also passed all the relevant tests. But EV technology is so new that it is difficult to know what the relevant tests—or potential problems—are. China’s government has just announced policies to expand the use of electric vehicles in its municipal bus fleets, and to encourage more consumer purchases of electric vehicles. Riders in those buses, and buyers of those EVs, deserve to know how safe the vehicles they are riding in are.
Would release of the full test results from the e6 accident boost sales of the e6? Maybe not since I don’t even think the e6 is available for consumers to purchase in China yet. But it couldn’t hurt, and might show BYD in a positive light. Of course, BYD may not want to spend the money right now on more extensive testing. In late June, the Chinese press reported that BYD was cutting pay by 14% to save money.
This May, China approached the American National Standards Institute (ANSI) www.ansi.org with a request to hold a workshop on electric vehicle standards in Beijing. The workshop will be held July 23rd and is a stepping stone in China’s plan to be a leader in electric vehicle standards. Success on that front will be tough, not least because it will require more openness from China than it is used to or comfortable with. But the meeting also serves an important purpose for ANSI.
Just a few years ago, China aimed to be the pure electric vehicle production and sales leader. It figured that its dominance in the consumer good lithium-ion battery industry would give it an insurmountable lead in the pure EV industry. http://www.greencarcongress.com/2010/10/12th-five-year-plan-for-chinas-auto-industry-to-make-new-energy-vehicles-priority.html But producing a li-ion battery for an electric car (and all the systems that make the car actually run) turned out to be a lot tougher than making one for a mobile phone. So that plan stalled. Not one to give up on a goal which after all was immortalized in the 12th Five Year Plan (2010-2015) Beijing adjusted. Now it is focusing on plug-in hybrid electric vehicles in the near term and leaving pure electric vehicle domination as a future goal.
Beijing would still like to be a leader in the EV industry, however, and it sees standards as another possible candidate. To accomplish that, it is wholeheartedly engaging in, and planning, lots of international events related to EV standards, from workshops to conferences. They are useful to learn and, probably as a future goal, lobby participants to support Chinese standards. “Being part active in the international standardization is a big part of the strategy,” Elise Owen, ANSI’s director of international development told me. “But China will be pushing for Chinese technologies and solutions, too.” The meetings are also strategic for ANSI, however.
Chinese participation in the International Organization for Standardization ( ISO) www.iso.org and International Electrotechnical Commission (IEC), www.iec.ch two international standards bodies, has “catapulted” in the last few years, says Owen. “I have never seen a country get involved so quickly.” And the involvement isn’t low-level technical apparatchiks, it is top-level government official, she says. “Everything starts with high-level blessing and is implemented from there,” says Owen.
That is one thing that makes ANSI’s work in China different from the U.S., says Owen. In the U.S., the top officials get involved after technical experts have fleshed out a policy. In China, because it is official government policy for China to dominate the EV sector, “high level officials are expected to show what they are doing to advance these things. They are involved to a much greater degree than in other countries.”
I call that meddling, but of course Owen didn’t use that word. ANSI does not take a stand on China’s approach, she says. It just accepts the reality and figures out a way to make it work for ANSI members. In the case of China, that means ANSI gets involved in the policy-making process very early-on. It hopes to influence not just those who formulate the policies but the officials who will ultimately okay it. “By the time things hit the international stage, you might have people at very high levels that have decided on a position,” says Owen.
ANSI wants to ensure that its members’ voices are heard as that position is decided upon. So ANSI President and CEO Joe Bhatia makes the rounds of the related agencies and ministries in China at least once a year. He will also address the workshop in Beijing in July. ANSI is asking China to send equally high-level participants. Workshops are one of the most “strongest tools we have in our arsenal” to influence China’s standard-making, says Owen.
Hoping China uses a U.S. map
In April, ANSI released its Standardization Roadmap for Electric Vehicles. http://www.ansi.org/standards_activities/standards_boards_panels/evsp/overview.aspx?menuid=3 Just to give you an idea of how complicated this standards thing is, ANSI has 365 EV standards from 34 different organizations, Jim McCabe, senior director of standards facilitation told me. (That does include some regulations, he added.) To come up with the Roadmap ANSI considered 22 near-term priorities that it wants to address in the next two years. They fall into three main areas: Vehicles, charging infrastructure, and support services.
In Beijing in July, ANSI will give a fairly in-depth overview of the Roadmap and how it was arrived at. ANSI will ask China to do the same, says Owen. (Good luck with that. China hasn’t announced any detailed standardization plans yet and probably won’t get around to it. More wiggle room that way. But I’m just being cynical….)
China should overcome its inherent secrecy and share how it goes about formulating its standards if it aims to be a leader in standard development. Because international standards call for openness and cooperation. And becoming a leader is is the goal. Zhou Rong of the Automotive Standardization Research Institute at the China Automotive Technology and Research Center (CATARC) www.catarc.ac.cn last year in a presentation to a workshop at Argonne National Lab www.anl.gov summarized China’s strategy as: “The strategy of standards development will be transformed from a follower to a leader.” (Okay, that was a first bullet point. But it set the tone.)
China likely won’t be able to be a leader in all standards. For example, leading in plug standards might be a stretch. China already has a Level 1 and Level 2 plug standard. The Chinese standard resembles the German standard, Ted Bohn, a power electronics engineer at the Advanced Powertrain Research Facility in the Argonne National Laboratory told me last year. But the Chinese standard cuts out an interlocking circuit, he said. The circuit is an extra safety measure; without it, the car could not be sold in the United States, said Bohn.
One area where China may be able to lead in standard development is battery swapping, says ANSI’s McCabe. Last summer, China drafted several standards related to battery swapping, he says, and China is forming a work program within the IEC to take up battery swapping standards at an international level. “This seems to be one area where the Chinese seem to have a lead in the market,” says McCabe.
To be sure, both of China’s state-owned utilities are experimenting with battery swapping. Southern Grid www.eng.csg.cn has a project with Better Place www.betterplace.com in Guangzhou, and State Grid www.sgcc.com.cn has said it will also build some swap stations. But automakers aren’t too keen on the idea, and they have to build EVs that are set up for battery swapping. If the central government thinks China can set an international standard for battery swapping, however, I expect some of the larger state-owned automakers to manufacture some enthusiasm for the idea, and maybe even a few EVs with swappable batteries. Oh, wait a minute, Beijing Auto showed an EV with a swappable battery at EVS25 in Shenzhen in November of 2011. http://www.autoblog.com/2010/04/23/beijing-2010-baic-saab-c60-and-c71-and-swappable-batteries/ Wadda ya know.