china powertrain trend in the new environment - ihs … · china powertrain trend in the new...

China Powertrain Trend in The New Environment

Tianshu XinDirector of Global Powertrain Forecasting

Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE

Presentation Outline

• What challenges are we facing in China?

• How does legislation address energy and environmental concerns?

• How will China respond to the challenges? – What impacts will the government’s latest

development plan have on the market?

– Will EV achieve breakthrough in China?


What Challenges Are We Facing?

Nation Challenges• Environmental concerns• Lack of oil resources• Traffic jam

Auto Industry Challenges• Irrational industry

structure • Lack of technology know-

how• Weak independent R&D

capabilities• Incomplete market

demand/incentive policy


2008•Phase II Fuel Consumption Standard•Revised Consumption Tax2006

•New Consumption Tax•New Fuel Price Policy

2007• National Climate Change Programme

• Euro III Emission Standard• Govern Alternative Fuel vehicle development

Legislation Addresses Energy and Emission Concerns. But It Might Not Be Enough

1994Auto Industry Policy

2004•Overloading Restriction•New Auto Industry Policy•EURO II Emission Standard Implementation•Auto Loan Policy

2005•New Official Vehicle Classification System•New Local Content Regulation•Auto Distribution Regulation•Phase I Fuel Consumption Standard•Hybrid Standards

Sustainable Growth can only be achieved with appropriate regulatory guidance


StrengthStrength• 30% fuel efficiency• 25% better torque• 30% less CO2 emission• Mature diesel technology

WeaknessWeakness• Higher initial cost

Can Diesel Cars be the Solution in China?

OpportunityOpportunity• Uncertain market:

Dieselisation or Hybridisation?• Lack of oil resource• Increasing consumer fuel

economy awareness

ThreatThreat• Poor customer perception• Hybrid technologies• No difference on fuel price• Poor diesel quality• Lack of government’s financial

support

0.01.02.03.04.05.06.07.0

2000

2001

2002

Feb-03

May-03

Jul-0

3Dec

-03Mar-

04May

-04Aug

-04Mar-

05May

-05Ju

n-05

Jul-0

5Mar-

06May

-06Ja

n-07

Nov-07

Jun-0

8May

-09

Fuel PriceFuel Price


0.9%0.6%0.7%

0.9%

1.3%

1.3%

1.3%

1.3%1.2%

0.8%

0.0%

1.0%

2.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Diesel Solution is Unlikely to Be the Winner

Jetta was and still is the only diesel sedan with mass production.


Can Gasoline Technologies Provide the Solution?

40

42

44

46

48

50

52

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gas

olin

e En

gine

Pow

er D

ensi

ty (k

w/l)

Local Engine KW/L Imported Engine KW/L

• The localisation of advanced engines help to reduce the gap of power density between locally produced and imported gasoline engines.

• Technical support from the independent engineering houses such as AVL and FEV also assists local OEMs in designing more advanced gasoline engines.

The power density gap has been closing very quickly


Is the Evolution of Gasoline Technologies Significant Enough?

0%

1%

2%

3%

4%

5%

6%

7%

8%

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%

10%

20%

30%

40%

50%

60%

Turbocharger Gasoline DI VVT

Gasoline turbocharger will rise due to trend of downsizing

Gasoline direct injection will only achieved modest growth due to poor fuel quality and higher cost

Variable valve train will become popular


But Chinese OEMs Are Still Behind

Japan

China

30

35

40

45

50

55

60

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Japan USA W. Europe World China

4 years

>10 years

kW/LChina is behind Japan for more than 10 years

Gasoline Engine Power Density


2008•Phase II Fuel Consumption Standard•Revised Consumption Tax2006

•New Consumption Tax•New Fuel Price Policy

2007• National Climate Change Programme

• Euro III Emission Standard• Govern Alternative Fuel vehicle development

2010 …•Euro IV Emission Standard•Government subsidies on alternative-powertrain•Emission Tax•Stricter Fuel Consumption Standards•Euro V/VI Emission Standards

More Drastic Changes are Needed…

1994Auto Industry Policy

2004•Overloading Restriction•New Auto Industry Policy•EURO II Emission Standard Implementation•Auto Loan Policy

2005•New Official Vehicle Classification System•New Local Content Regulation•Auto Distribution Regulation•Phase I Fuel Consumption Standard•Hybrid Standards

2009• Fuel Tax• Development Plan to Aid Auto Industry

• Stimulus Package for New Energy Vehicles


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000km/year

Fuel

Cos

t and

Roa

d M

aint

aine

nce

Cos

t rm

b/ye

ar

1.6L with fuel tax 1.6L with RMF SUV with fuel tax SUV with RMF

Advantage Disadvantage

Impact of Fuel Tax on Consumers is Marginal

• Fuel consumption: Excelle 1.6L MT 8L/100km;

CR-V 2.0L 2WD AT 10L/100km

• Road Maintenance Fee: 1200 RMB/Year

• Gasoline Price: 5.2 RMB/L, including 1 RMB/L fuel tax

Tax:1

4.2

Tax:0.8

4.08

0

2

4

6

rmb/

lFuel Price Structure

Gasoline Diesel


Japan 1.0L

Japan 1.5L

Target 1.5L

Target 1.0L

China 1.6L

China 1.5L

China 1.0L

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005 2006 2007 2008 2009

Ambitious Target? Will China Become a Kei Car Market

Purchasing Tax Cut


Learn from Best Practice with an Opportunity to Leapfrog

Plug-in Hybrid

•Downsizing•Gasoline valve train•European emission standards•DCT

•GDI•Strong downsizing•Hybrid focus•Small car•CVT

•C02 Focus•Diesel CMR•Strong downsizing•DCT

•Stricter emission stand.•Gasoline valve train•Automatic Trans

Legislation&Technology

EV

Non Plug-in Hybrid

Diesel

Gasoline


SAICRoewe 750 Shanghai EV Shanghai FCV

JAC

GAICBingyue

Concept car Concept car

HafeiSaibao

GeelyPanda

LiebaoLiebao

Lifan320 EV

CheryTiggo 3 Fulwin

BYD

F6DM

ZOTYEe6

Riich m1

Kylin

FAWBestun B50

2008EV

DFMShuaike EV

BAIC863

WandeEV

ChangAnJiexun

Aeolus

GreatwallKulla2 EV

Haimame

NissanNuvu

ToyotaCamry Hi-CT Prius

Hyundai AVANTE

HondaInsight Civic

SuzukiSX4 FCV

FCHV

FCX Clarity

BenzS400

BMWMini E BMW7

There is No Shortage of Innovation…

I-Car

FC


Government Target: Establish 500K production capacity for new energy vehicles (HEV+BEV+FCV) by 2011 AND sales of these vehicles account for 5% of Passenger car sales (425K) by 2011

Short Term Target with a Long Term View

425K

The fuel saving only accounts for about 1.4% of 2008 imported oil. The fuel saving is NOT significant enough to reduce China’s reliance on oil import.


Cost

InfrastructureIndustry

Standard

Behaviour

Build Infrastructure

Quick battery recharging stations/swap stations

Household charging facilities

Set up Standards

•Industries

•Technical Foster Demand

Consumer education

Financial incentives

Reduce Cost

Vehicle

BatteryDevelop Industries

Battery

Motor

Control system

What Chinese Government Would Like to Achieve…


Actions From Chinese Government

6.0100%Pure EV25.0100%Fuel Cell

3.22.8

10%-20%Maximum Electric Power Rate

5.0>40%

5%-10%Hybrid

4.54.230%-40%

4.23.620%-30%3.20.410%-20%

30%-100%20%-30%BSG*Fuel

SavingVehicle Type

Subsidy on Public Use PCs and LCVs (rmb0000/unit)

*Belt Starter GeneratorNote: Plug-in hybrid are covered in the maximum electric power rate over 30%


Cost is Too High for Consumers

Consider the following…BYD F3 1.6AT BYD F3DM

Purchase Price: 68,000 RMBCombined Fuel Consumption: 12L/100Km

Purchase Price: 149,800 RMB Government Subsidy: 50,000 RMBElectricity Consumption: 16KWh/100Km

Adjusted Price Difference: 31,800 RMB


And Payback Period is Too Long, But if…

60

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120

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140

150

1 2 3 4 5 6

Thou

sand

s rm

b

Year

Initi

al O

utla

y +

Fuel

(Ele

ctric

ity) C

ost

1.6AT+Fuel Cost DM+Peakhour Charging DM+Offhour Charging Cost Reduced DM+Peakhour Charging

Assume 15,000 Km/year, 10% annual increase of gasoline price and 2% rise of electricity price

Less sensitive to charge timing leads to more flexibility

Economy of scale achieved if 200K units reached. The cost to the government will be 10 billion RMB.


0

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1999

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2019

US$

/bar

rel

0

2

4

6

8

10

12

14

rmb/

litre

And Cheap Oil Has Dried Up -Meanwhile, Competition is on for Fuel Efficiency

WTI Oil Price (Annual Averages)

Gasoline Retail Price(Annual Averages)

Short term volatility and long term return to high oil price and

pressure for Fuel Economy

Tipping Point?


Hybrids and EVs Will Have a Significant Role to Play in China

All Hybrid and Electric Passenger Car Sales

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

China has an opportunity to leapfrog in Plug-in Hybrid and EVs.


Points to Take Away…

• Chinese government is taking a greater step to meet its challenges and the focus will move to sustainable growth

• Conventional powertrain technologies will still play an important role in reducing fuel consumption and emission

• However, China presents a great opportunity for new energy vehicle development

• Develop your Winning Strategies - shift the attention from low cost to advanced technologies – “Bring the Global Powertrain to China” – Mr Fritz Henderson, GM CEO

• BYD Phenomena!!!

Tianshu XinDirector, Global Powertrain Forecasting

[email protected]

Thank You!

china powertrain trend in the new environment - ihs … · china powertrain trend in the new...

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