China's Hybrid Car Future

GM's general manager in Beijing on why an affordable hybrid car could happen in China a lot sooner than people think

Editor's Note: This interview series about the future of the car is produced in collaboration with Auto FutureTech Summit 2008, a gathering of leading auto industry executives to discuss critical environmental and energy issues. Auto FutureTech will take place in Vancouver, B.C., Mar. 12-14, 2008.

To understand the future direction of automotive technology, you must look at the world's biggest auto market, the U.S.—but not for long. In the next decade, China will probably surpass the U.S. to become the largest car market in the world.

Bradley Berman, editor of HybridCars, spoke with Dr. David Chen, general manager of General Motors' (GM) Beijing operations, to discuss how China might leapfrog the world in rolling out a new generation of automotive technologies. Dr. Chen is responsible for corporate affairs and advanced technology management, and has been working with GM in China since 1994.

Given the astounding rate of growth in the Chinese auto market, how do you understand what Chinese car customers want?

When General Motors came to China, we thought this market would be different, that it would be focused on low cost. But the consumer base is so broad that it covers all the varieties. There are certainly people who are cost-conscious, and there's a low-cost market predominantly played by Chinese automakers. But there is the high-end segment as well. I would not stereotypically rank China only as a low-cost market. With a country of 1.3 billion people, anything could happen.

With that kind of diversity in the marketplace, how do you develop a technology strategy, especially toward advanced technologies?

We're taking a multi-prong approach on technology to address fuel economy, the environment, emissions, and safety. We are investing in technology on ICEs, internal combustion engines. There are many of these technologies that can be used on ICEs to make room for another 10% to 15% improvement in fuel economy. We also apply bridge technologies, such as hybrid and alternative fuels. The reason I say it's a bridge is because many of those technologies still consume fossil fuels, but they consume less. The challenge with those bridging technologies, particularly with hybrids, is the cost.

Shanghai General Motors, our joint venture in China, just announced that this year they are going to roll out the first hybrid in volume production of Buick Lacrosse in China; it's a Buick Lacrosse hybrid. The attractiveness of this is that the technology is very affordable. However, it achieves over 15% improvement in fuel economy, taking the vehicle approximately from 24 mpg to 28 mpg. I personally believe, given the driving stop-and-go conditions in bigger cities in China, some of the hybrid concepts could work very well.

So it's a lower-cost mild form of hybrid, but wouldn't even that extra cost be prohibitive in terms of reaching any significant level of production in China?

This entry-level introduction will make it easier to reach mass-level market. With 15% fuel economy improvement and with an affordable cost, we are looking at a positive market response. Just beware: To date, there's no volume production of hybrids in China. Several hundred, not more than 1,000 hybrids sold through import channels in China.

What kind of incentives are being offered for hybrids in China?

There are no incentives yet, but the government is seriously considering them to both the manufacturer and the consumer through the consumption tax and the purchase tax. Today, the Chinese consumer pays 10% purchase tax, and they may get a break on the purchase tax if they buy a hybrid vehicle. And there will be a certain level of rebate on the consumption tax levied on the manufacturer.