Last Updated May 28, 2010 3:27 PM EDT
For hungry U.S. carmakers eyeing a Chinese market in many ways dictated from the top, contacts are everything, and that helps explain some of the current handshakes.
This week, both the California-based Coda EV maker and the Indiana-based EnerDel lithium-ion battery manufacturer announced new Chinese deals. EnerDel announced a joint venture to produce battery packs, starting this year, with the electric vehicle division of Wanxiang, the biggest "Tier One" auto parts producer in China.
Effectively, this positions EnerDel's battery systems to be a player in China, initially in public transportation. Wanxiang's customers include Yutong, the world's second largest bus maker. Charles Gassenheimer, CEO of EnerDel parent company Ener1 (HEV), said in an interview that the Chinese government has mandated that a million electric buses be on the road by 2020, and that EnerDel can leverage its connections to grab a chunk of that business from Yutong and others.
The EnerDel news sent the Ener1 stock up 12 percent, largely on the the company's potential for greater access to Chinese markets. Wanxiang's electric vehicle division is also supplying the 2010 Shanghai World Expo, and the Asia Games (to be held in Guangzhou later this year).
"The Chinese market is already taking off, it's exploding," Gassenheimer said. "The Department of Energy expects China to have 500 million cars on the road by 2030, and an increasing number of those will be electric. They'll be the number one EV market in the world next year, and nobody will be able to catch up. The focus is now on public transportation, but it will move to a mix of electrics and hybrids for passenger cars."
A voluntary program for Chinese cities urging them to each put 1,000 EVs on the road has expanded from 10 municipalities to 36. "They'll be way beyond U.S. unit volumes in the near future," Gassenheimer said.
If it can get a federal Department of Energy loan, Coda is hoping to build a battery factory in Ohio, using technology developed in partnership with China's Lishen Power Battery. Their joint venture, called Lio ("oil" spelled backwards) Energy Systems will operate the Ohio plant â€" supposedly a million square feet â€" if the DOE loan comes through. But that's no sure thing.
The Coda deal is unusual because its one of the few that will result in Chinese technology finding a manufacturing base in the U.S. Far more common is the transfer of U.S. technology to Chinese factories. In an interview, Kevin Czinger, president and CEO of Coda, said he's confident that Lio battery systems he developed with Lishen are competitive with the best in the world.
A big test of Chinese technology on U.S. roads will come if BYD ("Build Your Dreams") succeeds in marketing its E6 battery car here, as it said it would do. The few Americans who have driven the E6 say it may be a bit rough for U.S. consumers.
Photo: Jim Motavalli