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China brands should bet on 48-volt systems -- not EVs
Yang Jian | 2016/6/10

SHANGHAI -- Electric vehicle sales in China are soaring, but an EV lineup won't be enough to meet the country's increasingly tough fuel economy standards.

This may come as a bit of a surprise to Beijing, which offers generous subsidies for locally built electric cars and plug-in hybrids. The central government hopes domestic automakers will leapfrog foreign rivals with EV technology.

But now Chinese automakers are embracing 48-volt electrical systems developed by foreign suppliers such as Continental AG, Delphi Automotive, Valeo SA and Robert Bosch GmbH.

Forty-eight volt systems allow automakers to introduce fuel-saving technologies such as stop-start systems, regenerative brakes, and e-turbochargers.

Chinese automakers have been reluctant to confirm their plans for 48-volt systems. But the suppliers have been more forthcoming.

At a news briefing this week, Valeo China President Edouard de Pirey said his company will start producing 48-volt systems in China in the first quarter of next year.

The company says its system -- which includes an e-supercharger and a starter generator -- can improve fuel economy by more than 20 percent.

De Pirey says Valeo's primary customers in China will be domestic automakers who will use the system in B- and C-segment cars.

Forty-eight volt systems will help Chinese automakers to narrow the technology gap with their global rivals.

Over their long histories, foreign automakers have developed a wide range of fuel-saving technologies. But Chinese carmakers are young, so they don't have experience with fuel-saving technologies such as turbochargers or direct injection.

Second, 48-volt systems allow automakers to upgrade existing powertrains at a moderate cost, rather than develop new -- and costly -- hybrid engines.

Cost is a major issue for Chinese automakers, which must keep prices low for cost-conscious customers. Even their self-styled premium models are typically priced below 120,000 yuan ($18,000).

Suppliers are reluctant to disclose the cost of 48-volt systems, but estimates range from $1,000 to $1,200.

Delphi CEO Kevin Clark provided a clue to the technology's cost-effectiveness when he was interviewed by Automotive News China in April during the Beijing auto show.

"With this technology, you can get 70 percent of the benefits of a full electric vehicle at 30 percent of the total cost," Clark said.

Valeo and Delphi are optimistic about their market prospects in China.

IHS Automotive predicts that 48-volt systems will be introduced in China in 2019. The technology will get a boost in 2020, when China requires automakers to cut fleet average fuel consumption to 5 liters per 100 kilometers (47 mpg) from 6 liters (39 mpg) now.

Coincidentally, Beijing will end subsidies for EVs and plug-in hybrids that same year.

And the pressure on automakers will continue to intensify in 2025, when they must reduce fuel consumption to 4 liters per 100 kilometers (58.8 mpg).

By 2022, IHS expects production of vehicles with 48-volt systems vehicles in China likely will surpass combined output of EVs, plug-in hybrids and fuel cell powered vehicles.

To be sure, EVs and fuel cells will carve out a significant niche. But these technologies require Chinese automakers to make a sizable bet on a distant -- and uncertain -- future.

By contrast, 48-volt systems are a practical technology that Chinese automakers can adopt right now.

Pictured: Yang Jian is managing editor of Automotive News China.

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