China Powertrain Trend in The New Environment Tianshu Xin Director of Global Powertrain Forecasting
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?
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What Challenges Are We Facing? Nation Challenges • Environmental concerns • Lack of oil resources • Traffic jam
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Auto Industry Challenges • Irrational industry structure • Lack of technology knowhow • Weak independent R&D capabilities • Incomplete market demand/incentive policy
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Legislation Addresses Energy and Emission Concerns. But It Might Not Be Enough Sustainable Growth can only be achieved with appropriate regulatory guidance 2007 2005 •New Official Vehicle Classification System •New Local Content Regulation •Auto Distribution Regulation •Phase I Fuel Consumption Standard •Hybrid Standards
2004 1994 Auto Industry Policy Copyright © 2009 IHS Global Insight. All Rights Reserved.
• National Climate Change Programme • Euro III Emission Standard • Govern Alternative Fuel vehicle development
2006
2008 •Phase II Fuel Consumption Standard •Revised Consumption Tax
•New Consumption Tax •New Fuel Price Policy
•Overloading Restriction •New Auto Industry Policy •EURO II Emission Standard Implementation •Auto Loan Policy GLOBAL AUTOMOTIVE CONFERENCE
Can Diesel Cars be the Solution in China? Strength • • • •
Fuel Price
30% fuel efficiency 25% better torque 30% less CO2 emission Mature diesel technology
7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 20 00 20 01 20 Fe 02 b M -03 ay J u 03 l-0 D 3 ec M -03 ar M -04 ay Au -04 g M -04 ar M -05 ay J u 05 n0 Ju 5 l-0 M 5 ar M -06 ay J a 06 nN 07 ov J u -07 n M -0 8 ay -0 9
Weakness • Higher initial cost
Opportunity • Uncertain market: Dieselisation or Hybridisation? • Lack of oil resource • Increasing consumer fuel economy awareness
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Threat • • • • •
Poor customer perception Hybrid technologies No difference on fuel price Poor diesel quality Lack of government’s financial support GLOBAL AUTOMOTIVE CONFERENCE
Diesel Solution is Unlikely to Be the Winner 2.0%
Jetta was and still is the only diesel sedan with mass production. 1.3%
1.3%
1.2%
0.9%
1.0%
0.7%
0.6%
0.9%
2008
2009
1.3%
1.3%
0.8%
0.0% 2005
2006
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2007
2010
2011
2012
2013
2014
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Can Gasoline Technologies Provide the Solution? The power density gap has been closing very quickly
52
• The localisation of advanced engines help to reduce the gap of power density between locally produced and imported gasoline engines.
Gasoline Engine Power Density (kw/l)
50
48
• Technical support from the independent engineering houses such as AVL and FEV also assists local OEMs in designing more advanced gasoline engines.
46
44
42
40 2003
2004
2005
2006
2007
2008
Local Engine KW/L
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2009
2010
2011
2012
2013
Imported Engine KW/L
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Is the Evolution of Gasoline Technologies Significant Enough? Gasoline turbocharger will rise due to trend of downsizing
8%
60%
7% 50% 6%
Variable valve train will become popular
40%
5%
30%
4%
3% 20% 2%
Gasoline direct injection will only achieved modest growth due to poor fuel quality and higher cost
1%
10%
0%
0% 2005
2006
2007
2008
2009 Turbocharger
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2010
2011
Gasoline DI
VVT
2012
2013
2014
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But Chinese OEMs Are Still Behind Gasoline Engine Power Density
60 kW/L
China is behind Japan for more than 10 years
Japan
55
50
>10 years China
45 4 years 40
35
30 1990
1992 Japan
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1994
1996 USA
1998
2000 W. Europe
2002
2004 World
2006
2008
2010
China
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More Drastic Changes are Needed… 2009 • Fuel Tax • Development Plan to Aid Auto Industry • Stimulus Package for New Energy Vehicles 2007 • National Climate Change Programme 2005 • Euro III Emission Standard •New Official Vehicle • Govern Alternative Fuel 2008 Classification System vehicle development •Phase II Fuel •New Local Content Consumption Regulation Standard •Auto Distribution Regulation •Revised •Phase I Fuel Consumption Consumption Tax Standard 2006 •Hybrid Standards •New Consumption Tax •New Fuel Price Policy
2010 … •Euro IV Emission Standard •Government subsidies on alternativepowertrain •Emission Tax •Stricter Fuel Consumption Standards •Euro V/VI Emission Standards
2004
1994 Auto Industry Policy Copyright © 2009 IHS Global Insight. All Rights Reserved.
•Overloading Restriction •New Auto Industry Policy •EURO II Emission Standard Implementation •Auto Loan Policy GLOBAL AUTOMOTIVE CONFERENCE
Impact of Fuel Tax on Consumers is Marginal 18,000
Fuel Price Structure
Fuel Cost and Road Maintainence Cost rmb/year
16,000 14,000
rmb/l
6 4 4.2
4.08
Tax:1
Tax:0.8
2 0
Gasoline
12,000
Diesel
10,000 8,000 • Fuel consumption: Excelle 1.6L MT 8L/100km;
6,000
CR-V 2.0L 2WD AT 10L/100km • Road Maintenance Fee: 1200 RMB/Year
4,000
• Gasoline Price: 5.2 RMB/L, including 1 RMB/L fuel tax
2,000
Disadvantage
Advantage 0 10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000 km/year
1.6L with fuel tax
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1.6L with RMF
SUV with fuel tax
SUV with RMF
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Ambitious Target? Will China Become a Kei Car Market Purchasing Tax Cut
80%
China 1.6L
70% Japan 1.5L
60% 50%
China 1.5L
40% Target 1.5L Japan 1.0L
30% 20% 10%
Target 1.0L China 1.0L
0% 2005
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2006
2007
2008
2009
GLOBAL AUTOMOTIVE CONFERENCE
Learn from Best Practice with an Opportunity to Leapfrog
Legislation& Technology
•Stricter emission stand. •Gasoline valve train •Automatic Trans
•C02 Focus •Diesel CMR •Strong downsizing •DCT
•GDI •Strong downsizing •Hybrid focus •Small car •CVT
•Downsizing •Gasoline valve train •European emission standards •DCT
Gasoline Diesel Non Plug-in Hybrid Plug-in Hybrid EV
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There is No Shortage of Innovation… ChangAn
FAW Bestun B50
JAC
BAIC
Roewe 750 Shanghai EV Shanghai FCV
FC
Bingyue
863
GAIC Concept car
SAIC
Jiexun
Concept car
DFM
Haima
Nissan Shuaike EV
Aeolus
Nuvu
me I-Car
Hafei Saibao
Hyundai
AVANTE
Geely Panda
Liebao
Liebao
Toyota
Kylin
Greatwall
Lifan 320 EV
Camry Kulla2 EV
Chery Tiggo 3
Fulwin
Riich m1
BYD ZOTYE
e6
Mini E
2008EV Copyright © 2009 IHS Global Insight. All Rights Reserved.
FCHV
BMW7
Honda Suzuki
Wande
Prius
BMW
Insight F6DM
Hi-CT
Civic
FCX Clarity
Benz SX4 FCV
S400
EV GLOBAL AUTOMOTIVE CONFERENCE
Short Term Target with a Long Term View 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
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.
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What Chinese Government Would Like to Achieve… Build Infrastructure Quick battery recharging stations/swap stations Household charging facilities Infrastructure
Industry
Reduce Cost Vehicle Battery
Develop Industries Battery
Cost
Motor Control system Standard Behaviour
Set up Standards •Industries
Foster Demand
•Technical
Consumer education Financial incentives Copyright © 2009 IHS Global Insight. All Rights Reserved.
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Actions From Chinese Government Subsidy on Public Use PCs and LCVs (rmb0000/unit) Vehicle Type
Fuel Saving
Hybrid
5%-10% 10%-20% 20%-30%
Maximum Electric Power Rate BSG*
10%-20%
20%-30%
0.4
2.8
3.2
3.2
3.6
4.2
4.2
4.5
30%-40%
30%-100%
>40%
5.0
Pure EV
100%
6.0
Fuel Cell
100%
25.0
*Belt Starter Generator Note: Plug-in hybrid are covered in the maximum electric power rate over 30% Copyright © 2009 IHS Global Insight. All Rights Reserved.
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Cost is Too High for Consumers
BYD F3 1.6AT
BYD F3DM
Consider the following… Purchase Price: 68,000 RMB Combined Fuel Consumption: 12L/100Km
Purchase Price: 149,800 RMB Government Subsidy: 50,000 RMB Electricity Consumption: 16KWh/100Km
Adjusted Price Difference: 31,800 RMB Copyright © 2009 IHS Global Insight. All Rights Reserved.
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And Payback Period is Too Long, But if…
Thousands rmb
Initial Outlay + Fuel (Electricity) Cost
Assume 15,000 Km/year, 10% annual increase of gasoline price and 2% rise of electricity price
150 140
Less sensitive to charge timing leads to more flexibility
130 120 110 100 90 80
Economy of scale achieved if 200K units reached. The cost to the government will be 10 billion RMB.
70 60
1
2
3
4
5
6
Year 1.6AT+Fuel Cost
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DM+Peakhour Charging
DM+Offhour Charging
Cost Reduced DM+Peakhour Charging
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And Cheap Oil Has Dried Up Meanwhile, Competition is on for Fuel Efficiency WTI Oil Price (Annual Averages)
120
100
Gasoline Retail Price (Annual Averages)
14
Short term volatility and long term return to high oil price and pressure for Fuel Economy
12 10 8
Tipping Point? 60
6
rmb/litre
US$/barrel
80
40 4 20
2 0
19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19
0
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GLOBAL AUTOMOTIVE CONFERENCE
Hybrids and EVs Will Have a Significant Role to Play in China All Hybrid and Electric Passenger Car Sales 14.0%
12.0%
China has an opportunity to leapfrog in Plug-in Hybrid and EVs.
10.0%
8.0%
6.0%
4.0%
2.0%
0.0% 2005
2006
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2007
2008
2009
2010
2011
2012
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2014
2015
GLOBAL AUTOMOTIVE CONFERENCE
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!!!
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Thank You! Tianshu Xin Director, Global Powertrain Forecasting
[email protected]