Chinese carmakers veer to green

By Keith Bradsher

Friday, April 20, 2007

SHANGHAI: Worried by severe air pollution and rising dependence on imports of Middle Eastern oil, the government of China is putting enormous pressure on domestic and foreign automakers alike to help the country catch up in the use of gasoline-electric hybrid engines and other advanced technology.

Chinese automakers at the Shanghai auto show on Friday unveiled a broad array of prototypes for fuel cell cars, gasoline-electric hybrid cars and electric battery cars. The variety and sophistication showed a dramatic improvement, not just since the previous Shanghai auto show two years ago when the Chinese demonstrated scant technological innovation, but even since the Beijing auto show in November.

Multinational carmakers like General Motors and Volkswagen have begun cooperating closely with Chinese partners on the development of hybrid gasoline-electric vehicles. Larry Burns, the GM vice president for research and development, said that the company also was in talks with a Chinese joint venture partner on the sharing of hydrogen fuel cell technology.

Universities and technical institutes across China have started advanced vehicle propulsion research programs, combining strong government financial backing with rapidly growing ranks of skilled engineers in China.

China has already imposed more stringent fuel economy standards than the United States - although not quite as stringent as the semi-voluntary standards that automakers have accepted in the European Union.

China has raised its consumption tax to as much as 20 percent on gas guzzlers, while cutting it to 1 percent for cars with small, fuel-sipping engines. And Chinese tax authorities are studying whether to introduce tax incentives for buyers of hybrids.

Xu Liu Ping, the chief executive of Changan Automobile in Chongqing, said that the Chinese auto industry was working with the government to improve the country's energy security through more energy-efficient designs.

Changan itself showed a hybrid gasoline-electric minivan in Shanghai; Xu said that he had lined up local governments that promised to use it, making it possible for Changan to start manufacturing the vehicle next year.

"The speed will be accelerated because available energy supplies are dwindling and because of the environmental protection aspect," Xu said in during an interview. "The central government has given broad support to energy conservation."

Rick Wagoner, the GM chairman and chief executive, and Nick Reilly, the president of GM's Asian and Pacific regional operations, met with senior Chinese officials in Beijing on Thursday to discuss the automaker's energy-efficiency plans, Reilly said. The Chinese government has not chosen among options like electric battery cars, fuel cells, hybrids, ethanol combustion and the like, but wants the industry to move quickly.

"It's absolutely at the top of the agenda" of the Chinese leadership, Reilly said.

China was a net exporter of oil as recently as 1994, but it now imports more than half of its oil.

Western environmentalists have long speculated whether China might actually leapfrog the West in personal transportation by embracing new automotive technologies before the country's oil and carmaking industries can become too wedded to internal combustion engines.

That now seems less likely as nobody has yet surmounted the technological obstacles that still prevent a broad switch from gasoline technology to hydrogen fuel cells, said Feng An, the executive director of the Innovation Center for Energy and Transportation, which is based in Beijing.

Japanese companies, particularly Toyota Motor and Honda Motor, already are far ahead in the hybrid designs to which Chinese companies are now turning, said Kelly Sims Gallagher, the director of Harvard University's Energy Technology Innovation Project.

Multinationals face repeated demands from Chinese joint venture partners to share the most advanced technology available. Katsumi Nakamura, president and chief executive of Dongfeng Motor, a joint venture in Hubei province between Nissan Motor and the Dongfeng Group of China, said that the Dongfeng side had tried to negotiate an agreement that would require the sharing of the latest technology.

But at Nissan's insistence, the final pact only calls for the sharing of "appropriate" technology. There may not be enough demand in China for advanced technologies like hybrid engines to justify the cost of setting up production in China that duplicate those in Japan, Nakamura warned.

Auto executives are reluctant to mention the illegal copying of technology in China, a problem that discouraged Chrysler from even trying to build minivans in China in the 1990s.

Burns said that GM's lawyers had said that the automaker could share fuel cell technology with a joint venture partner, the Shanghai Automotive Industry Corporation, even though the automaker had collaborated with the federal government in the United States on the project. American export control laws are mainly aimed at preventing the transfer of military technology, not civilian technology, to foreign powers.

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