Changan Automobile finds Shangri-La
The Chinese state-owned automobile manufacturer Changan Automobile (Changan Automobile (Group) Co., Ltd.) has announced that it will not sell any more traditional fuel vehicles by 2025.
On 19th of October 2017, Changan Automobile released the Changan Automobile New Energy Strategy, which it called the Shangri-La Plan at the China International Energy and New Energy Auto Exhibition (China EV100 forum 2017). The plan, split into four areas, broke down how the company planned to invest into the future of the brand.
Changan Automobile is one of four big Chinese automobile manufactures and in 2016 sold more than 3 million cars. The accouchement means that by 2025 Changan Automobile will sell only plug-in hybrid electric vehicles (PHEV) and pure battery electric vehicles (EV).
Changan Automobile President Zhu Huarong introduced the four parts of the Shangri-La Plan.
The first part of the plan is investing 100 billion yuan ($15 billion) into four areas of new energy vehicles. Firstly, new energy products will receive 40 billion yuan ($6 billion). Secondly, the development of a new proprietary energy platform will receive 10 billion yuan ($1.5 billion). Thirdly, an investment into batteries of 30 billion yuan ($4.5 billion). And fourthly, a charging facilities and service investment of 20 billion yuan ($3 billion).
The second part of the plan outlines its research development of PHEV and EV vehicles for the past 16 years and restates its aim for Changan Automobile to have world-leading new energy research and development capabilities.
The third part of the plan is a commitment to partnerships to create a new energy ecosystem. Changan Automobile is already in series of partnerships with leading global automakers such as Ford, PSA, Mazda, and Suzuki to manufacture traditional fuel vehicles. It is now aiming to nurture a new energy ecosystem by creating a new energy industry investment fund platform. It is cooperating with the Bosch Group’s “automotive components” business, Baidu (a search engine company making self-driving cars), NIO (an EV startup based in China), Didi chuxing (an app-based ride-hailing company), CALT (a major lithium-ion battery cell producer, battery management system producer, and battery pack company), and other partners to create the new energy ecosystem needed to more quickly develop battery technology, smart car technology, charging infrastructure, and environmentally friendly cars.
The fourth part, called “Ultimate experience,” introduced that Changan Automobile will release 3 new EV-dedicated platforms on top of the three electric cars and one PHEV it is already offering. By 2025, the company will introduce 21 pure electric vehicles and 12 plug-in hybrids and end the sale of plug-less vehicles. Additionally, part of the ultimate experience is that the new energy vehicles will be getting level 3 and level 4 autonomous driving technology and “5 minute charging.”
Changan Automobile has been researching electric vehicles since 2001 and has a range of electric cars in China. These include:
The CS15EV, an SUV that is supposed to have 350 km (217 miles) of range at 60 km/h.
The EADO EV, a sedan with a 200 km (124 mile) range.
The Benni EV, a compact car with a 210 km (130 miles) of range and half an hour charge time using a fast charger.
Changan Automobiles is having success with its new energy products already, Chairman Zhang Baolin said: “From January to September this year, Changan had new energy car sales of 35,000, an increase of 150%.”
Changan Automobile new energy vehicle strategy seems radical to traditional automotive experts, but the cleantech audience might see it as hedging its bets, as its aim is to sell electric vehicles along with plug-in hybrids — but the key question is if a traditional automaker selling 3 million cars can in 8 years grow its business and transition to fully new energy vehicles? So, what are the hurdles it will face.
Large companies have traditionally had a hard time changing. Additionally, being state owned might impact positively and negatively its willingness and ability to change.
Lithium-ion batteries have to be produced, and without significant investment into production of batteries, car companies might face a shortfall in supply. Investments like the Tesla Gigafactory are needed, with 3 million plus cars to electrify, that is significant investment. Additionally, cars are complex machines and require many components — the production of new energy vehicles is going to shift industrial investment and put strains on supply chain of key components.
Chinese cities are concrete forests. Residential towers are the norm of city life. So, inner city charging is a requirement. The current leader in deployment of charging in China is the state-owned State Grid corporation of China, but the investment will have to increase to keep the infrastructure in line with deployments.
Fast charging for intercity travel is another problem. While the state grid company has invested in the Chinese-standard fast charging system, the speed and size might need to be revised up, as it currently takes about one hour and a half to charge a car to 200 km of range, which is good but needs to get towards Tesla Supercharger levels to be convenient for most consumers.
While challenging, I see nothing impossible to overcome. Good leadership and hard work will help China to reach Shangri-La.