China’s Automakers Eye India For Future Growth

India Automotive Monthly: Executive Summary – December, 2012.

China’s big automakers Beiqi Foton and Great Wall Motor are now entering India. The rapid emergence of India as a major automotive powerhouse coupled with the ambitions of China’s automakers to go global are the principal drivers behind this planned entry.

Foton aims to become a key global player over the next decade according to its 2020 Strategy. Under the truck maker’s ‘5+3+1’ strategy, India is a key element of this plan along with Brazil, Mexico, Russia and Indonesia. This is why Foton signed a Memorandum of Understanding (MoU) with the Maharashtra government last April to establish a manufacturing unit at an investment cost of $307 million over five years. It is currently in the process of setting up its plant in Chakan (near Pune) to build light, medium and heavy commercial vehicles.

We believe strong candidates for an India launch include the Foton Forland light truck, Foton Mini Truck and Foton View light van. Each of these models is a volume seller for Foton in China.

For instance, Foton Forland is the truck maker’s biggest light commercial vehicle model with sales of 292,000 units between January and October of this year. The Foton Mini Truck ranks No. 2 with sales of 89,000 units, while Foton sold 16,000 units of the Midi.

To download 8-page report, please click here.

Source: LMC AutomotiveGAI


China Automotive Monthly – Executive Summary October, 2012

The Reshuffle of the Car Market: Who’s Opportunity?

The unforeseen disaster of the Japanese car manufacturers.

2012 is a year full of surprise for the automotive industry. With Inventory surges, price wars and a license restriction policy, car manufacturers have had a hard time. Yet performance of the passenger car market was remarkable, with sales in August increasing by 8%. Japanese car makers were extremely active and spared no effort in an attempt to offset the previous year’s loss as a result of the earthquake. As an example, in order to promote the new hybrid star, the Prius, FAW Toyota spent over one hundred million RMB to subsidize sales. The aim of this move was to achieve a sales volume of over 3000 units.

In addition to this, GAC Toyota has cut the price of its hybrid Camry significantly, with the move an apparent declaration of war with the turbocharger technology of German cars. However, despite these efforts on the part of Japanese car makers, they have not had a lucky year: last year they suffered from a natural disaster, and this year they have been hit hard by a man-made one. The aggressive stance of the Japanese government concerning the matter of the Diaoyu Islands has not only devastated the normalization of Sino-Chinese relations of the pass 40 years, but also destroyed the “territory” gained by Japanese car makers’ years of hard work. The released sales statistics of September have attested to this:

Japanese car sales have decreased by over 40% year-on-year, a sales loss of about 110 thousand units, with a direct economic loss of over 2 billion US dollars. The car industry has long been the pearl of the economic crown of Japan. With Japan suffering from a bleak economy for many years, and such electronic giants as Panasonic and Sharp performing badly, the importance of the automotive industry cannot be overestimated.

To download 8-page report, please click here.

Source: LMC Automotive
GAI

 


Overcapacity: A Potential ‘Speed Bump’ in the World’s Largest Automotive Market

Overcapacity in the auto industry is not an issue across the board. Rather, it is a structural issue with “over” inefficient capacity and “under” efficient capacity.  To ease the problem, there needs an industry consolidation by eliminating inefficient capacities. Moreover, carmakers need to enhance capabilities in strategic positioning, brand management, core technologies, product planning, operational management and human resource development.

To download 16-page report, please click here.

Source: KPMGGAI

 


China Leads World in Global Light Vehicle Assembly Growth

Presenting challenges and opportunities to automotive suppliers.

There has been a great deal of media coverage regarding the growth in new vehicle demand in the BRIC countries, with much of that growth taking place in China. This is related to a growing Chinese middle class with growing net worth, which is creating a market of many first-time new vehicle buyers.

To view graph “Light Vehicle Assembly Volumes: BRIC Countries”, please click here.

However, there has been less attention provided to the rapidly growing light vehicle assembly volumes in China as automakers are expanding capacity to meet the demand for new vehicles. This trend has a significant impact on component suppliers shipping products to these newly constructed assembly plants. Over the past 10 years, China light vehicle assembly volumes grew 592% from 2.5 million in 2002 to an anticipated 17.5 million vehicles this year (2012), which amounts to 34% of all vehicles produced in the world. To put this into perspective, this year China will produce more vehicles than all of North America (14.5 million vehicles) and Western Europe (13.1 million vehicles).

Polk anticipates this trend to continue as demand for new vehicles continues in China. Our forecast for China light vehicle assembly in 2022 is over 30 million vehicles, which will account for over 42% of all vehicles produced in the world.

This trend puts significant pressure on automotive component suppliers to invest in China as they hope to benefit from this growth. Many suppliers anticipated this significant growth in China and have invested in plants and engineering capabilities. These early movers into China are benefiting from their investment plans, in the form of market share growth and higher profits. For example, China represented 95% of total light vehicle assembly growth between 2007 and 2012. During this period, suppliers to Chinese assembly plants were able to benefit from this growth and off set significant market declines in other regions during the global recession.

However, many suppliers who were late to invest in China are not benefiting from this growth. As a result, they will likely struggle to maintain global market share as most organic vehicle assembly growth will continue to take place in China. Polk anticipates China will contribute 38% of total light vehicle assembly growth between 2012 and 2022.

This stresses the importance of having a global growth strategy. It also shows the importance of working with a forecast provider like Polk, who can assist suppliers in developing a global business plan. However, identifying future trends is only part of the equation. Suppliers must use forecasted trends as they execute strategic plans and allocate capital resources to pursue growth.

To view graph “Light Vehicle Assembly Volumes: China”, please click here.

Source: POLKGAI

 


China Automotive Monthly: Executive Summary (April, 2012)

Sailing in Storm Seas.

In 2011, a total of 850,000 vehicles were shipped out from different harbors in China to the world. This was a 50% increase over the previous year. They contributed US$ 11 billion to the country’s trade balance, up 57% from 2010. With most of the Chinese home-grown brands are suffering to some extent from declining market share in the domestic market, the surging exports might help them to counter this decline.

Chery, the largest Chinese carmaker, recorded sales of 642,000 units in 2011, down 6% year on year. Its export volume reached 160,000 units, one-quarter of the company’s total sales. In July, a US$ 400 million fullyowned factory with a complete production line was set up in Brazil. It became the Wuhu-based carmaker’s 17th overseas plant. While this growth and investment is happening internationally, the company announced it would drastically reduce its investments for on-going R&D projects for the local market.

Great Wall Motors, the second largest vehicle exporter, shipped 83,000 units to 128 African, European, Asia Pacific, Middle Eastern and Latin American countries. Its export volumes accounted for 17% of its total 487,000 sales in 2011. It also owns 12 production facilities overseas.

Most global players started to approach overseas markets only after seizing a robust market share at home. In contrast, more and more Chinese OEMs are putting more resources outside of China. As many have yet to secure a strong foothold in their home market, it could be a considerable risk to focus so much overseas.

To download 8-page report, please click here.

Source: LMC Automotive – GAI

 


China-EV.org Blog: Toyota EV guru Bill Reinert not keen on pure electric; China government would agree for now

Toyota rules the hybrid market here in the U.S.—sales of its Prius account for about half of all hybrids sold here. And the Prius family is growing – it now includes a larger Prius than the original model, a smaller Prius, and a plug-in hybrid Prius.  So it might surprise you to learn that Bill Reinert, Toyota’s advanced technology guru, is pessimistic about the potential for plug-in hybrid and pure electric cars.  Hell, he is even pessimistic about the future for hybrids.  His reasons are familiar—the battery is too expensive and thus the vehicles themselves.  Consumers are most concerned about fuel efficiency, he said, and if they can get that in a car with an internal combustion engine that costs less than an electric vehicle of any kind, they will go with the ICE-powered vehicle.

Reinert’s remarks seem to validate the decision by China’s government to focus more on hybrids and PHEVs in the near term while they wait for battery electric vehicle technology to mature.  His comments also add fuel to the fire currently raging in Washington, DC about the Department of Energy’s program to provide loan guarantees and outright loans to companies developing EV technology.

I think Reinert would agree, however, that those programs, and the Chinese government’s continued support of BEVs in the longer term, make sense.  Remember when mobile phones were as big as a bread box?  Only more research created the tiny mobile phones we use today. And only more research will improve battery technology.  Just who will fund that, at least in the U.S., is up in the air, however. China seems to be forging ahead. Hey, maybe China will fulfill its dream of being a first mover in BEVs after all. With help from many U.S. and European companies’ technology….

But I digress.  Bill had too many valuable things to say for me to simply pull some comments and write a story. Below are edited comments from our conversation. Good stuff.

China-EV:  Your title is National Manager, Advanced Technology Group at Toyota. What does that encompass?

Reinert:  We look 20 to 30 years out to determine what are the trends and technologies coming along, when will they likely be mature, what does that mean to our fleet and our business model and brand,

China-EV:  When did you start to look at the future of the battery electric vehicle?

Reinert:  About 1999, when the RAV4 battery electric vehicle was offered for leasing,   we did a deep dive and saw that even though there were a lot of hand raisers (who said they were interested in a pure EV), there weren’t a lot of wallets on the table.   We were 100% subsidizing that product.   Events in  2006,7 and 8 led us to believe there was not a first mover advantage to electric cars.  The sales numbers bear that out.

China-EV:  Why are other automakers seemingly rushing to offer pure electric vehicles?

Reinert:  Sometimes you get wishful thinking marketing caught up in the reality of engineering.  We could see right away there wasn’t the strongest business case in the world for a bigger battery in the car.   The business case got upside down.

China-EV:  Toyota pretty much rules the hybrid segment in the U.S., but sales in that segment in general haven’t shown much strength. Why not?

Reinert:  Because the economic conditions in the U.S. and other economically developed countries,  don’t favor spending a lot of money on fuel economy. The hybrid is still misunderstood,  (and) if you can get a small 4 cylinder car that gets 40 miles to the gallon that meets your needs, why pay a premium for a hybrid?

China-EV:  What don’t people understand about hybrids?

Reinert:   People believe the technology might have a shorter life than gas engines (and that) battery replacement costs are high.

China-EV:  What should automakers do to create demand for alternative fuel vehicles? Is it possible to “create” a market or does it have to emerge organically?

Reinert:   I don’t know why you would want to create demand that would be supposing there is some kind of market out there.   Alternative fuel vehicles are the result of regulatory push.   Manufacturers should create a market for the best fuel economy cars that fit the buyers’ needs.  There is a market for efficient cars.

China-EV:  Must automakers have electric vehicles as part of their portfolio?

Reinert:  Automakers see the need and desire to provide electrification of the powertrain, not the pure electric vehicle. A lot of that is from regulatory push. Start stop will become a bigger part of the mix, five years from now almost all cars will have start stop.

China-EV:  What percentage of light vehicle sales in the U.S. will be alternative fuel vehicles in 2020?

Reinert:  I’m a little pessimistic on compressed natural gas in light duty cars.  It needs tanks that are light weight, have more pressure, etc. I think CNG is going to be problem. There are a wide variety of fuels that come out of natural gas such as methanol, gas to liquid, etc.   By the late 2020’s you might have a substantial number of liquid fuels being made from non-petroleum fuels. Could be hybrid or traditional internal combustion engines.  As internal combustion engines become much more efficient, hybrids and all the other alternative fuels will struggle to compete against ICEs.

China-EV:  What about hybrids and pure electric vehicles?  What is your prediction?

Reinert:  I look at hybrids as 8-10% of the market by 2020,  including advanced start-stop.    Of that maybe 2% may be plug in hybrids. Battery electric cars by 2020 — .5% of the market.   Fuel cells maybe .5% by 2020ish.   I expect fuel cells over time to outsell BEVs but that won’t’ start until the late 20’s.

China-EV:  What about the global market?

Reinert:  It depends on how governments act.

China-EV:  What country will have the largest market in the world for alternative fuel light vehicles in 2020?

Reinert:  That is hard to say. It might be India, it might be China.   The vehicles might be bicycles.   Pure hybrids are probably going to be the domain of Canada and the U.S., as will plug-in hybrid electric vehicles.   Battery electric vehicles (will do well in) managed economies (that do it for political reasons).

China-EV:  You said at the Meeting of the Minds confab in last November that PHEVs didn’t make a lot of sense for consumers. Why is that? It seems PHEVs are being touted as the perfect answer to range anxiety….

Reinert:  If you are going to put a bigger battery in a car than a PHEV is what you want to do.  But the payback could be long.  If you care about the numbers,  then your motivation for buying a PHEV has to be different then motivation for buying a hybrid.

China-EV:  How big a problem will EV battery disposal be for Toyota and other automakers in another 5 years? 10 years?

Reinert:  It absolutely will be a problem.  We know Nickel-Metal Hydride batteries.   We can recycle everything except the battery case economically.  But getting the lithium out of a battery is complex. We are talking more about battery disposal.  We have an internal deal that we want 100% of our car to be recycled in the longer term.  We have experimental factories to show how to recycle the cars, to develop recycling for the cars.  Now you have these batteries (as well).    We are looking for solutions. How can we keep them from ending up in landfills?   In lieu of for-profit recycling, it looks like it is a manufacturer or societal burden.

China-EV:  What other EV-specific issues do you see arising down the road?

Reinert:  We can work the expectations on hybrids, but they are overblown on plug-ins and pure electric vehicles.  (There is also) a lot of work to do on reducing auxiliary loads (on the battery), such as heating, cooling, windshields demisting, all that stuff.  Is on a per-mile load, it goes up in heavier traffic.   If you reduce those loads and manage them it is not range anxiety it is range repeatability.   The load on battery makes range unpredictable.

China-EV:  How to reduce auxiliary loads? Lighter-weight materials? Better technology? A Combination?

Reiner:  Work occurs everywhere—it might be better bearings on the air conditioner band, moving heaters, new materials, etc.

China-EV:  Is it worth the investment?

Reinert:  Yes. Most of these improvements spread across board—they also help internal combustion engines. Improved telematics will also help EV drivers.  We also need bigger recharge infrastructure, and need to allow a for-profit charge infrastructure.

China-EV:  What is coming in the future for the electric vehicle?

Reinert:  Electric vehicles will move toward a shorter range, around 100 miles.  Then (the market) will just jump right into fuel cells.   We can get the cost down on a hydrogen fuel cell car.

China-EV:  What does Toyota have in the fuel-cell segment?

Reinert:  We have the FCHV – Adv.  There are about  160 on the road.   Hydrogen infrastructure modeling is being done at UC Irvine; they seeing how that overlaps with electric vehicle infrastructure.  In pure electric cars there will be distributed mass transit—that means share cars, etc. It is not about selling the car, it is about taking out a monthly subscription to use one.

China-EV:  So do you think the lower-cost Mitsubishi “i”, which Mitsu is marketing as a city car, is the future?

Reinert:  At Toyota we have the IQ Scion EVs.  We are studying how to take them to market in a non-traditional manner.   Urban is the market, urban is a high rise environment. They are coming to market tests.  The model is an extension of work Toyota did in 1999. But then telematics were on desktop computers (and so not convenient).   That is solved now.

Source: China-EV.org – GAI


The Circuitous Path to Electrification of China’s Automotive Industry

As the balance of world market and economic power shifts from West to East, China will emerge as the key location in the battle for dominance of the 21st century’s global auto industry.

Due to increasing pressure from air pollution, oil consumption and urban congestion, the focus of the country’s auto industry will increasingly switch from internal combustion driven vehicles to alternative propulsion technologies, particularly those powered by electricity. Already many observers believe that the government’s ambitious series of programs and policies designed to accelerate the development of new energy vehicles run over the last decade will lead to the emergence of China as the key location for a global “green” mobility revolution. As this happens, the eventual electrification of the automotive powertrain will transform the automotive industry, and even society itself.

To download 16-page report, please click here.

Source: Booz & Co. – GAI

 


China Automotive Monthly: Executive Summary (January, 2012)

2012 to Be a Year of Transition
With 2011 now closed, attention turns to the prospects for China’s automotive industry in 2012. While naysayers are talking about a continuation of the weak market seen in 2011 and optimists are talking about a rebound, we at LMC Automotive prefer to focus on the key changes we can expect to see in the market this year, as we expect there to be many. We believe that 2012 will be a key transitional year in the development in China’s automotive industry.

Transition of the Economy
The economic environment is one of the most critical factors driving the automotive market. Influenced by both external and internal difficulties, China’s GDP growth in 2012 will most likely go below 9%, its lowest level since 2001.

The global economy is facing its greatest downward pressure since 2008, largely due to the debt crisis in the Eurozone, a slow recovery of the US and Japanese markets and the unrest in Middle East and North Africa. China, like all developing countries, will inevitably feel the impact of the downturn in the mature markets, with declining exports, retreating foreign capital and the increasing risk of inflation.

The domestic economy is also getting worse. Though some positive signals of the tightening monetary policies have been seen, controlling inflation will remain a priority for Beijing this year. We have seen the halting of a large number of projects in high-speed railways, real estate and high energy-consuming industries in the second half of 2011 due to a shortage of loans, and we believe this situation will remain the same through 2012. A weak stock market and rising product prices will also weaken domestic consumption.

The old “three carriages” (investment, export and consumption) of China’s economy are struggling to pull with as much force as they have done in the previous decades. Beijing is being forced to change the way it structures the economy and its development. We can expect the dependence on domestic demand to increase and a decreased reliance on foreign demand. The year 2012 is going to be the beginning of this transition.

Transition of the Policy
Policy continues to play a very important role in the development of the automotive industry. The crown of being the largest market in the world was assumed proudly, but the environmental problems caused by the soaring vehicle population is putting increased pressure on the government. Recent changes in taxation, fees and some regulations indicate a transition in policy.

To download 8-page report, please click here.

Source: LMC Automotive – GAI

 


Chinese auto firms buy into European markets

Chinese automakers have returned in force to Europe, buying up brands and plants after earlier efforts to get a foothold in one of the world’s largest car markets failed.

Great Wall Motor is the latest Chinese entrant, with production at its plant in Bulgaria scheduled to start tomorrow, giving it access to the European market of about 500 million people with a very competitive line up which could give Europe’s established firms pause for thought.

Prices for its base Voleex C10 model, the Steed 5 pick-up and Hoover H5 four-by-four run from just 8,000 euros to 14,700 euros (US$10,600 to US$19,400) and the company, which has 10 sites in China, says is aiming to produce 500,000 vehicles overseas by 2015.

Analysts have said that while it might be considered surprising Chinese firms are so determined to get into Europe, a saturated market where car sales are declining, there are benefits for them, especially in terms of branding and prestige.

“It is a way for them to make progress in quality levels,” said Yann Lacroix, an analyst at Euler Hermes in Paris.

In Britain, Geely Motors plans to start selling a mid-range sedan by the end of the year at a very competitive 10,000 (US$15,460).

Announcing the move in December, the company, which owns Sweden’s Volvo Cars, said “the leaps and bounds made in manufacturing mean that China’s car makers are rapidly closely the gap with Europe’s establishment. We will be aiming to widen our range just as quickly as possible, probably at least a new model range every year for the next four to five years.”

Reflecting the growing global ambitions of Chinese automakers, Geely bought Volvo from US auto giant Ford for US$1.5 billion in 2010, less than a quarter of what Ford paid for the company in 1999.

“In that way, the company made a very significant technological jump,” Lacroix said.

Meanwhile, China’s largest home-grown carmaker Chery Automobile has established a base in Italy with local company DR Motor and at the end of last year bought a Fiat plant at Termini Imerese in Sicily.

Chery is developing its own marque for Europe, Qoros, in cooperation with an Israeli company which should make its first model next year.

Chinese auto companies have also shown an interest in acquiring European firms that have run into hard times as their home markets falter.

Beijing Automotive Industry Holding Co expressed an interest in acquiring General Motors’ European operations grouped in the Opel business as the US motor giant collapsed into bankruptcy and has only just emerged.

In the event, GM — which has large Chinese operations of its own — turned down the sale on concerns about technology transfer and decided to keep Opel.

Similarly, it refused to sell its Saab auto business to two Chinese firms — Youngman, a constructor, and distributor Pang Da — with the unit eventually being taken on by a Dutch group before it failed and was forced to file for bankruptcy in December.

Swedish press reports have said Youngman might still be interested in buying the company and be ready to make a multi–million US dollar bid.

Youngman was interested in snapping up Saab before it declared bankruptcy, but its efforts were thwarted by GM, which balked at transferring the necessary technology licenses.

Analysts said that Chinese manufacturers got off to a bad start in Europe in their first efforts as critics highlighted safety concerns and lack of individual styling.

Since then, China has emerged as the world’s largest auto market, coveted by the major US and European brands as a major source of growth and profits, and standards have improved dramatically.

“We are seeing spectacular progress,” said a spokesman for the European New Car Assessment Programme, the safety standards authority which tests all cars for safety in Europe.

Source: Taipei Times – GAI

 


China-EV.org Blog: Better Place EV battery swapping might find a sort of good place in China

In mid-December, battery-swapping promoter Better Place announced it had, with the China Southern Power Grid, opened China’s first Switchable Electric Car Experience Center in the south China city of Guangzhou. The Center aims to introduce people to the concept of battery swapping, an alternative to battery recharging as a way to refuel a pure electric vehicle.

I recently spoke with Dan Cohen, vice president of strategic initiatives at Better Place, about his company’s plans in China. As you might expect, he was optimistic about the possibilities for Better Place in China. To be sure, I have been hearing from various industry sources that battery swapping is gaining favor with the Chinese government. But I came away from my talk with Cohen thinking Better Place faces some pretty big obstacles in China. At best I think it will be a small player in China’s electric vehicle charging market.

As there are only a handful of pure electric vehicles on the road in China right now anyway, the country is still trying out different charging models.  “We will still see for a while trials in different areas” of China, said Cohen. “What is very clear is that the swappable battery has gained a lot of traction and makes a lot of sense for them.”

First, a quick lesson on the concept of battery swapping. One of the big barriers to consumer acceptance of pure electric vehicles is range anxiety, the fear that one will run out of “gas” in some strange place and not be able to “refill” the battery easily or quickly. Better Place proposes battery swapping as a solution.

Using a Better Place battery swapping station is somewhat like going through a drive-through car wash. Your car (with or without you in it) is moved by a conveyor belt onto a spot where the battery is automatically removed and a new one installed in a matter of minutes. The depleted battery is placed on a storage rack for recharging. When that battery is full, it is placed in another electric vehicle.

Sounds simple, but first there is the consumer trust hurdle. Consumers have to believe the battery they are receiving is of the same quality as the one they gave up, and it truly fully-recharged. John Proctor, the Better Place PR guy, assured me that Better Place is focused on “taking the risk and worry out of it for consumers.” But this is China, the place where a company used substandard ingredients in baby formula to make a few bucks. I’m just saying.

Then there is the issue of having electric car models that are able to use the battery swapping model. Cohen said Better Place is “in discussion” with more than one automaker in China. “Hopefully we will have some real cooperation,” he said. Well, only one Chinese automaker, BYD, is thus far making pure EVs in China.   A BYD source told me BYD didn’t like the battery swapping model because it didn’t want to risk having its battery technology intellectual property being stolen.

Of course, there are many other automakers in China. But I heard from a supplier source that few are actively pursuing pure electric vehicles right now because the government isn’t promoting them. Because battery technology isn’t mature, it has backed off from pure electric in the near term to focus on plug-in hybrid electric and hybrids.

Next is the issue of who will supply the batteries for the swapping stations. Better Place uses A123  batteries in some other parts of the world. In China, Cohen said, “it will depend on who we work with. Probably a local battery manufacturer” will supply them. Chinese battery manufacturers are “advancing very quickly on quality,” he added. Well, sort of. Even the Chinese government admits the industry has a ways to go before it can meet global standards. At least Better Place will likely have the option of using batteries manufactured in China at the SAIC-A123 joint venture.

On its website Better Place touts its commitment to promoting a global standard for an EV recharging plug. Meanwhile, China has yet to announce a national plug standard, much less sign on to a global standard. How does Better Place feel about that, I asked Cohen? He said: “You definitely you see more and more committees in China discussing standards. We are obviously engaged in trying to help China. This is a long process. We are in there. We hope to see it mature here as well.”

China hasn’t joined in any international standard groups or put forth a national standard of its own yet because various ministries in Beijing are fighting over who has the right to determine what the standard will be. Those same ministries fight over many other aspects of the electric vehicle industry. Cohen admitted that the plethora of government ministries—from the Ministry of Information Industry and Technology to the National Reform and Development Council– weighing in on EV policy was confusing. “In the beginning, it was hard for us to navigate,” he said. “It was hard for us to know what was policy and what was opinion.” The issuance of the 12th Five Year Plan, with its emphasis on promoting electric vehicles, made the direction much clearer, said Cohen.

In recent months, of course, the government has changed its emphasis in the sector from pure electric to plug-in hybrid electric and hybrid. So the direction, at least in the near term, isn’t all that clear.

Finally, the last hurdle I am going to talk about right now—the fact that Better Place’s partner, the Southern Grid, is not a national utility. In late 2002, China’s monolithic electric company divided in two. The Southern Grid, as its name suggests, assumed responsibility for providing electricity to five provinces in south China, Guangdong, Guangxi, Yunnan, Guizhou, and Hainan. The other utility, the State Grid provides electricity for the rest—26 provinces, autonomous regions, and municipalities.

Better Place began talking with Southern Grid about seven months ago, said Cohen. Turned out Southern Grid was also looking for a partner. After some shuttling between Israel and Guangzhou, the two chairmen met and the deal was done. Better Place also talked with State Grid, but nothing came of those talks, said Cohen. What that means for now, of course, is that Better Place can only spread its battery swapping mantra in the five provinces where Southern Grid operates.

Of course, these are very early days in China’s recharging infrastructure market. And Better Place knows  battery swapping will likely not be the only recharging solution in China. “It still is not a done deal in terms of a full China directive,” said Cohen. Better Place also has other services and products that could find a market in China, for example its EV network software that helps a utility balance the demand on the grid for electricity. “We provide a completely managed service. Better Place knows how to distribute that energy,” says Cohen.

And the new Experience Center in Guangzhou is mainly aimed at governments and businesses right now, said Cohen. So if Better Place can manage its expectations where its China business is concerned, and by that I mean keep them really low, the Guangzhou investment could turn out to be a good one. But don’t expect to see China covered with Better Place swapping stations anytime soon.

Source: China-EV.org – GAI