Manufacturing News

JCI says China's fuel efficiency goals will boost battery demand

Johnson Controls Inc. says it will increase Chinese production of batteries for stop-start systems as carmakers seek to meet the country's tougher fuel efficiency standards.

About 40 percent of new vehicles will be equipped with stop-start systems by 2020, the year when China will require automakers to further lower the average fuel consumption, says Ray Shemanski, a Johnson Controls vice president overseeing aftermarket and power products.

Only 5 percent of vehicles sold now have such systems, which reduce fuel use by as much as 8 percent by using a lead-acid battery to power a car's electrical systems instead of the engine when the vehicle is idle, he said.

China requires automakers to lower fleet fuel consumption to 5 liters per 100 kilometers by 2020, down from the current 6.9 liters per 100 kilometers.

To meet the new standard, carmakers are developing electric vehicles and are adding fuel-saving features such as stop-start systems to conventional vehicles.

"It is a very simple first step that you could benefit from in terms of fuel economy and CO2 emissions," Shemanski said in an interview in Beijing on Thursday.

Shemanski also sees battery demand rising because vehicles are getting older in China. Two-thirds of automobiles would have been in use for more than four years as of 2020, the typical age at which to replace their batteries, he said.

Global automakers are installing more stop-start systems to meet increasingly stringent carbon emission and fuel efficiency standards worldwide, including in China, according to Steve Man, a Hong Kong-based analyst with Bloomberg Intelligence.

The number of vehicles sold with such systems may double by the end of the decade or as many as half of the passenger cars sold globally, he said.

Johnson Controls' "move into China makes perfect sense," said Man. "Not only that it's the largest auto market in the world, but the start-stop system is more applicable in China's stop-and-go traffic."

The company, based in Milwaukee, has 300 wholesale distributors in 150 Chinese cities. Johnson Controls will expand its sales network to cover all cities in the country over the next five years, Shemanski said, without providing details.

In August, Johnson Controls said it will spend $200 million (1.27 billion yuan) to build a new battery factory in the northeastern Chinese city of Shenyang.

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