Manufacturing News

How China's dirty air is reshaping global car design

A few years ago, California became a global leader with tough emissions rules to clean up urban smog. Now, as China struggles with its air pollution crisis, Beijing increasingly influences the technology that Detroit, Europe and Japan sell around the world.

For global automakers, China is the new California.

In response to Chinese incentives to spur electrified-vehicle sales in China, automakers are beefing up their lineups of electric vehicles and plug-in hybrids.

General Motors plans to make a plug-in hybrid version of every Cadillac model. Ford Motor Co. has budgeted $4.5 billion (29.4 billion yuan) to develop 13 EVs and plug-in hybrids by 2020, and China is a big reason for both automakers.

Mercedes-Benz is selling five plug-in hybrids in China, two of which also sell in the United States. Similarly, BMW AG is engineering plug-in hybrids that it sells worldwide to meet China's electric-drive mandates.

"Originally we started with California rules, so the starting point for us was clearly the United States," said Klaus Froehlich, BMW's global head of product development. "Now, China is a key market. It is very important and the regulations are quite difficult."

Decisions made in Beijing already are affecting cars that people drive in Dallas and Los Angeles. That's because automakers tend to design new models to sell in multiple regions -- and China is the world's largest auto market.

GM engineered its new Chevrolet Bolt electric car for global sales, including in China. Even though the company has so far announced plans only for the United States, "we did plan for more than just the U.S.," Pam Fletcher, GM's chief engineer for electric vehicles, said in an interview at the Consumer Electronics Show in Las Vegas, where GM unveiled the Bolt. "The Chinese government is very interested in EVs."

Global tweak
Even gasoline engines are getting a global tweak to meet Chinese fuel efficiency standards: Cadillac designed the most powerful engine in its CT6 sedan, a twin-turbo 3-liter, to avoid stiff Chinese taxes on any engine bigger than 3 liters.

"China does influence how we execute the strategy," said Johan de Nysschen, president of Cadillac. "And China will continue to feature in an ever more prominent role."

While China wants to boost sales and become a key destination for global automakers to sell new models, it also wants cleaner air. So it now requires that government-owned companies' fleets consist of at least 30 percent plug-in hybrids or electric cars.

If they don't comply, they risk losing important subsidies for utilities such as electricity and water. The subsidies can be the difference between profit and loss, said Michael Dunne, president of Hong Kong-based consulting company Dunne Automotive.

"Chinese politicians are very concerned about public criticism of air quality," Dunne said. "They are attacking this from every angle and they are just getting started."

With 132,400 EVs and plug-in hybrids delivered through November, China already has sold more electrified vehicles than the U.S. for the first time ever, according to data compiled by Bloomberg. Sales of these models fell 17 percent to 102,600 in the United States last year, according to researcher Autodata Corp. -- even as the industry reported record overall sales.

Sales of EVs in China probably will continue climbing as the central government offers incentives of more than 52,500 yuan for EVs and 30,200 yuan for plug-in hybrids to encourage people to buy so-called new-energy vehicles, which include fuel cells, plug-in hybrids and electric cars. Local governments often match those incentives.

The city of Shanghai already offers 85,400 yuan for the cost of a license plate for plug-in hybrids and EVs, and buyers of those vehicles can avoid a long waiting list to get one, said Hui He, senior policy analyst with the International Council on Clean Transportation, an environmental research and analysis organization in Washington.

Incentive program
Cadillac's future plug-ins will allow the company to take advantage of the incentive program, de Nysschen said. Models including the CT6 plug-in are developed for China and the U.S. GM also plans a Buick version of the Chevrolet Volt plug-in hybrid for China, said a person familiar with the matter.

Not only will more plug-in hybrids and EVs soon be plying Chinese highways and byways, they also will go farther on a single charge. Under China's new regulations, government-controlled companies and agencies won't get subsidies for their plug-in hybrids unless the cars can travel 50 kilometers (about 31 miles) before the gasoline engine kicks in. The Volt already can go 80 kilometers just in electric-drive mode.

"There will be a lot of electric vehicles sold in China," said Kevin Layden director of electric powertrain engineering for Ford, which will sell its C-Max plug-in hybrid in China next year. "They seem to not only give incentives for electric vehicles, but they are locking out anything that doesn't get high fuel economy."

BMW is getting ready for ever-stiffer regulations. The German automaker will have six plug-in hybrids and an electric car on the market in China by year end, and its plug-in hybrids will soon be capable of going 60 kilometers on a single charge. What's more, it's designing the cars with extra space to accommodate larger batteries so they'll be ready for more stringent requirements expected in a few years.

China is becoming so important for electrified vehicles that BMW plans to get battery-cell and electric-drive technology from its suppliers there, Froehlich said.

The country already sells far more electric-car models than the U.S., with 30 available now. That will rise to 80 by 2020, though many of them will come from China's small domestic producers, according to IHS Automotive. The United States has just a handful of models now; 44 will be available in 2020.

Still, electric cars have been a tough sell in China because of the lack of charging stations. That soon may change: The government is considering a program to spend 105 billion yuan on stations that could handle 5 million EVs by 2020, Bloomberg has reported. That kind of investment could help stimulate EV sales the way plug-in hybrid sales have been spurred, Dunne said.

He said, "The Chinese government will do whatever is possible to make people feel comfortable with EVs."

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