China's Hybrid Car Future

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We work closely with government entities in Beijing, including the Ministry of Finance, and they are seriously considering incentives to promote energy-efficient and environmentally friendly vehicles. It's coming.

With no incentives yet in place, and no volume production in place, couldn't it be quite a few years before the more advanced high-tech options start to roll out in China?

In other countries, yes. But in China, with its transition from a planned economy to a market economy, the government still plays a very significant role. We know that the National Development & Reform Commission, which is the government ministry that controls the plans for the industry, is setting more strict fuel economy standards—probably comparable to relatively high levels in Japan and Europe.

China is not only setting up standards, they are working to establish technology pathways to get there. They are evaluating a wide collection of technologies, including hybrid, biofuels, and fuel cells. If it's adopted by industry, it will drive industry to meeting those targets.

What changes will we see in the typical Chinese car in a five-year time frame?

China has a lot of markets to consider as models, including Europe, with lots of diesel applications. China is looking at diesel, although the challenge will be the quality of the diesel fuel, which is not there today. Alternative fuels, ethanol, methanol, biofuels, coal-to-liquid. The Chinese strategy is to look at all the possibilities in the mid- and long-term. I personally feel that hybrids will get a lot of attention in the near-term. Limited application of biofuel, depending on the availability in certain regions that have more resources for ethanol production. Even methanol. There are also many coal-rich regions in China. They are trying very hard to put coal in cars. You have to find an acceptable means to do so.

So in the next five years, we'll see more and more hybrids. And we'll see some level of fuel cells.

Is there more of a hydrogen infrastructure than in other parts of the world?

We believe that China will not be behind other parts of the world on adoption of hydrogen. It does have an advantage because it has less of a tradition of petrol infrastructure But that doesn't mean that it's easy. There's the cost of the hydrogen and the availability of hydrogen.

What impact could the growth of the Chinese market have on other international markets?

China is looking at leapfrogging the world in terms of technology to make the entire auto industry more sustainable. There are 1.3 billion people. If the market expands to world average level of car ownership, 10% or 11%, that's 100 million people driving cars. China cannot do business as usual. The world doesn't have the energy to support that. At the same time, we don't believe that the solution is to not have Chinese people drive cars. That's not the right solution either. We are optimistic.

Ultimately, if we can drive a car with electricity, supplied with energy from hydro, nuclear, and renewable sources—and if battery technology can improve enough—that brings a different outlook to the auto market. The batteries can be charged by various sources, such as an engine used as a generator, or a fuel-cell stack, or charged off a wall plug. It's going to take a lot of collective effort. Maybe not in the next five years, but we'll find a solution.

Click here to read an interview with EnerDel's CEO Ulrik Grape covering his company's push to build better lithium-ion batteries.