If you look at China and you look at the development of the market here in China, it is an inevitable consequence that the largest auto market in the world is likely going to lead a revolution in automotive paradigms. The way cars are used here, the ways in which cars interact with the environment, the way in which human beings reside in urban centers in China are profoundly going to seed the development of the auto industry in every other part of the world.

With increasing pressure from air pollution, oil consumption and congestion, China is compelled to reinvent propulsion technologies. … The irony of all this is that the need for a change in the paradigm of personal transportation needs to happen here, moreso than it needs to happen anywhere else. But the ironic piece is that the [Chinese] companies that are trying to reinvent transportation have the least experience at developing the automobile. China wants to lead a revolution in transportation, not follow.

Why? Because the needs are different in China, and quite frankly, it’s an industrial development plan. If you choose a path to electrification, you want to choose a path that gives advantage to Chinese industries. If Chinese companies follow the conventional hybrid path, the diesel path, those are led by other automotive centers. New energy vehicles is a relatively blue ocean.

—William Russo, President and CEO, Synergistics

Policy background. China’s government has been investing in alternative automotive propulsion technology for more than a decade. The first target (1999-2002) was compressed natural gas (CNG), liquid petroleum gas (LPG) and other combustion alternative fuel vehicles (CAFVs), in a program called the Clean Auto Auction.

With the 10^th 5-year Plan (“10-5”, 2002-2006), the government introduced the goal of developing and commercializing electric vehicles. The development of hybrid vehicles became a key element in China’s “863 program”—a national high-tech plan initiated in March 1986 (earlier post). The Electric Vehicle Project identified fuel-cell vehicles (FCVs), battery-electric vehicles (BEVs), and hybrid electric vehicles (HEVs) as the priorities for the development of alternative propulsion technologies. The government committed RMB800 million (then the equivalent of $97 million) from the State High Tech Development Plan.

The government increased spending in a third phase, from 2006, to RMB 1.1 billion ($138 million), and in a fourth phase, since 2009, with the range of power sources under investigation broadening to include batteries.

Under the 12^th Five Year Plan (“12-5”), covering the 2011-15 period, electric vehicles are identified as one of seven strategic emerging industries to be given special support. An alternative-energy vehicles development plan for 2011-20 provides for investment of RMB100 billion ($15 billion) in research and development. (Earlier post.)

In 2012, China’s State Council announced a target of 500,000 plug-in vehicles by 2015, jumping up to 5 million by 2020. (Earlier post.) However, by the end of 2012, only 27,800 EVs were on the road (not counting two-wheelers or e-bikes), 80% of which are buses.

Accompanying those unit targets are some specific technology and cost targets: batteries are to offer 150 Wh/kg and cost 2 RMB/Watt (US$0.33/W) by 2015, with an increase in density to 300 Wh/kg and concomitant reduction in cost to 1.5 RMB/Watt (US$0.25/Watt) by 2020.

China requires a reduction in average fuel consumption of the passenger vehicle to 6.9 l/100 km in 2015 and to 5.0 l/100 km in 2020. The average fuel consumption of the passenger vehicles made in China was 7.3 l/100 km in 2012—a clear gap compared with 2015 objective and a great challenge compared with 2020 objective.

Current status. In his overview of China’s work on New Energy Vehicles, Dr. Wu explained that with 12-5 plan, China began concentrating on an R&D framework with three powertrain verticals: fuel cell vehicles, plug-in hybrid vehicles and hybrid electric vehicles, and three component technology verticals: batteries, motor drive systems, and energy management systems.

China is also starting with electrifying what Dr. Wu called the high-end (trucks and buses) and the low-end (micro-vehicles) and then plans to come to the mid-range.

From 2008 to 2010, China began increasing pubic demonstrations to evaluate the technology; these are being expanded from 2010 to 2015. By 2020, China is targeting the mass production of EVs, as well as launching R&D for the next generation of EVs.

The development of EVs is very important to China: for haze, pollution and energy security. With the development of EVs, the China auto industry can transform from a big producer to the leading producer. We hope that innovation and our development capacity can be increased. We can also see that the policy incentives and support from the government are the strongest in the world. China will become the largest producer of and largest market for EVs.

—Dr. Zhixin Wu

A perspective on the US. Dr. Huei Peng, Professor of Mechanical Engineering at the University of Michigan and the US Director of the US-China Clean Energy Research Center-Clean Vehicle Consortium, provided the predominantly Chinese audience at the SAE New Energy Vehicle Forum with a perspective on development efforts in the US. Dr. Peng was quick to note that “I do not speak for the US approach, I do not think there is a single US approach.”

Does the US government have a clear strategy? Not compared to China. However, the US DOE has high level strategic thinking, nicely captured by the quadrennial technology review.

… One characteristic of the US approach is “all of the above.” The US does not believe in home run solution—in other words, someone makes a breakthrough in batteries, and all is well and all problems are solved. More likely, I think [all of the above] is a fundamental philosophy of many people in the Department of Energy and people who do new energy vehicle development. They believe that the future belongs to the use and integration of technologies that are cost-effective and mature and gradually making progress for the future. “All of the above” is not because we can’t make a decision, “all of the above” is because we believe there are many important aspects [to the problem].

All of the above means we will continue to support alternative hydrocarbon fuels; electrification; improve energy efficiency (very important); lightweight materials (very important); motors and power electronics (very important) and perhaps fuel cells.

—Dr. Huei Peng

The differences in US and Chinese markets and R&D suggest complementary research, according to Dr. Peng. He suggested the examples listed in the table below:

China characteristics and the impact on NEV development. While a number of speakers referred to the special characteristics of the China market, Ken Doweskin, Director, China Research and Insight Center, Deloitte Touche Tohmatsu Ltd, and a Beijing resident, sketched out the basics.

• With an aging population of 1.35 billion people, auto density is still low, but it is growing fast.

• Soaring land and real estate prices constrain parking spaces, and drive new residential development further and further from the city center. Cities, and new residents, are becoming extremely spread out. While there is a great deal of density in the city center, the cities are becoming extremely large.

• To keep employment levels up, cities have to provide a means of mobility.

• Urban personal vehicle use will fit between high speed intercity rail and densely constructed urban light rail and subway systems, following a satellite-style urban expansion. Intercity personal vehicle use will fit with high-speed intercity and regional rail—e.g., people will drive to a rail station, take the train, and pickup some form of mobility on the destination end.

• Personal mobility options will shift from ownership to fee-based shared usage. People will buy point-to-point mobility services.

• The government will deploy considerable muscle and multiple levers in shaping mobility options. Examples are the reduction in license plate availability, restricted driving, and so on.

• The imperatives to do something about air quality are much tougher than in Europe.

• The key threat to China’s trade balance is oil and LNG imports.

China is not far away from blocking emitting vehicles in city centers. We can study whether consumers like [EVs] or not, but the reality is, we are seeing very strong movement toward restrictions of license plates and registrations that are going to evolve into very tough zero emissions requirements for inner city driving.

… China is not that much different from the US and other markets in having strong government interest [in EVs] and consumer reluctance. The reason things are fundamentally different is the leverage the government is deploying.

… In the eyes of China’s leadership, the very best outcome is that everyone buys a car and no one uses it.

—Ken Doweskin

You have to think differently about future, because the high growth economies are going to define a significant shift in where investments are made in the automotive industry and where the transportation needs are going to be quite different from what we were solving when Henry Ford and Gottlieb Daimler invented the autonomous vehicle, the automobile. That invention was for a different time. The new energy vehicles are about a future, and a world that will be quite different from the past.

—William Russo

Resources

• China’s Automotive Opportunity Leading the Transition To New Energy Vehicles

• The Circuitous Path to Electrification of China’s Automotive Industry