Two Chinese automakers showed up at the Detroit Show – with very different stories to tell. One promises a revolution, the other is playing safe. Mark Bursa assesses the US prospects for BYD and Brilliance.
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It was interesting to read in the Editor’s blog that one of the main reasons the Chinese take their cars to foreign motor shows is the fact that it plays well back at home. Chinese media gives good coverage of these international missions – and certainly the Cobo Hall was crawling with Chinese TV crews.
It certainly explains some of the rather grandiose presentations of the past couple of years. Changfeng Motor took a large stand in both 2007 and 2008, on which was displayed a range of cars that were patently unsuitable for export, including the “two Reliant Robins spliced together” Rhombus concept. But for a relatively small automaker, the exposure in China would have been excellent.
Likewise Geely made an elaborate presentation about an electronic tyre blowout safety system that Chairman Li Shufu grandly called “our gift to mankind”. Or rather, Bosch’s gift to mankind, as it seemed to be little more than an ABS/ESP system to confused Westerners at the press conference. But Chinese media would have reported Li’s words verbatim – so Chinese viewers would see Geely as a maker of innovative, safe cars.
And what of this year’s pair of Chinese exhibitors? BYD and Brilliance found themselves promoted to the main hall at Detroit – previously Chinese exhibitors had been consigned to the Cobo’s dingy basement, or stuck out in the lobby. But the withdrawal of several notable automakers – such as Nissan, Mitsubishi and Rolls-Royce – meant there was space upstairs this time.
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By GlobalDataBYD was here last year; Brilliance was a Detroit debutant. But of all the Chinese car companies, these two are probably closest to having a genuine global message. Brilliance has geared itself more heavily to export than any of the other Chinese automakers; it has started sales in Europe and sells large numbers of cars elsewhere in the world.
BYD, meanwhile, has a genuine story to tell – drawing on its core expertise as a battery-maker, BYD revealed a potentially game-changing technology which it claims will allow it to introduce battery-electric cars with a range of up to 250 miles – around three times the best guesses of any western automaker.
It calls this ‘new’ battery technology Ferrous. BYD vice-president Micheal Austin says it is similar to current Lithium-Ion technology, but is designed for more heavy-duty use. While Li-Ion batteries power most mobile phones and laptops, Ferrous batteries can be found in power tools, for example, where more ‘grunt’ is needed to power an electric motor. On paper, this should make them ideal for automotive use. “It will put an end to ‘recharge anxiety’ – you won’t be worrying that you’re about to run out of charge,” Austin says.
What’s more, this is not a ‘jam tomorrow’ technology – in fact BYD started selling cars with the Ferrous batteries last month. The F3DM, a plug-in hybrid compact sedan, went on sale in China in December, making it the first mass-produced plug-in hybrid vehicle in the world. A larger sedan with the same system, the F6DM, will follow this year. A full-electric Ferrous battery-powered five-seater MPV, the E6, was on show, and something like it will go on sale in China in 2010.
The system has plenty of other advantages too. In addition to usable range, the batteries can be recharged to 50% of capacity in just 10 minutes, adds Austin, and they’re very durable. BYD estimates the battery packs are good for up to 2,000 charge cycles, or potentially 10 years of use. And in addition, Ferrous batteries are more easily recyclable than other battery types. It looks too good to be true.
Certainly that’s what rival EV makers think. Elon Musk, the entrepreneur behind the Tesla electric sports car, believes BYD’s claimed performance is “physically not possible” unless the Chinese company has a “secret ingredient” that BYD is keeping to itself.
Wolfgang Ziebart, a former BMW director who works as a consultant for hybrid-maker Fisker, said he was suspicious of the claims. “It would be a good thing if it happened but history suggests we should be cautious and look for continuous progress. I wouldn’t expect a revolution.”
So what are these Ferrous batteries? It seems they use a lithium iron phosphate (LiFePO4) formulation, which means they use a superoxidised iron cathode, rather than Manganese or Cobalt, as found in Li-Ion batteries. Because iron is much cheaper than Cobalt or Manganese, the batteries are much cheaper to make, though each cell cannot hold as much energy. So the battery packs tend to be bigger and heavier.
The BYD E6 has a 600kg Ferrous battery pack, compared to the Tesla Roadster’s Cobalt-cathode Li-Ion power pack, which weighs 400kg and gives a similar claimed range of 244 miles. The difference is that the Tesla Roadster is basically a retooled Lotus Elise, so it weighs just 1,220kg –the best part of a tonne less than the BYD E6 MPV, which weighs 2,020kg.
However, this suggests that the power differential between the Ferrous battery and the state-of-the-art Li-Ion technology used by Tesla is not that dissimilar – if we assume the Tesla Roadster and the BYD E6 have the same range, BYD needs a 50% bigger battery pack to get the same result from a car that weighs 68% more. Maybe BYD’s revolution is more of an evolution, which supports the view of Fisker’s Ziebart, and suggests that the only “secret ingredient” is more batteries!
If its performance falls short of the claims, BYD’s credibility will be damaged. And until we get a chance to test the cars, the doubts will remain. However, BYD chairman Wang Chaufu wants to start exports to the US in two years or so. “We will start to develop sales and distribution networks in North America. Our goal is to introduce BYD electric vehicles in the US in 2011 and set up our manufacturing facilities in the US when it is appropriate.”
We’ve heard this sort of line before. But there is enough going on at BYD for it to be plausible. The company has senior executives – like Micheal Austin – who are well-versed in overseas markets. The company understands the strength of its environmental play in the West – more so than in China, where tree-hugging is probably illegal. Its cars look vaguely Honda-ish, but most aren’t pirate copies. On the debit side, the designs are deadly dull, and build quality looked less than stellar. But the company is quick to stress that the cars on show aren’t the cars it’ll export. The F0 minicar, formerly called the F1, would attract the attention of Toyota’s lawyers – it’s a bootleg Aygo.
Of course, there is another motive – and that’s the possibility of selling the technology without having to sell the cars. BYD’s core business is providing batteries for mobile phones made by the likes of Nokia and Motorola, or laptops made by many of the leading computer brands. This generates excellent revenue while obviating the need to market or sell to the public. In the electronics sector, BYD is effectively a Tier 1 supplier, and BYD has suggested it’s open to offers from automakers.
If its automotive batteries really are that superior, why doesn’t GM source from BYD rather than from LG Chem? In fact GM announced its battery partnership with the Korean supplier at the show – and GM executives at the Show seemed genuinely surprised at the BYD claims. Which just shows how little attention they’d been paying – BYD talked openly about the Ferrous batteries 12 months ago, at the 2008 Show. We reported it then:
EMERGING MARKETS ANALYSIS: BYD’s bid to become the breakthrough Chinese automaker
The Big Three might not have noticed BYD, but leading American billionaire investor Warren Buffett certainly has been paying attention. His MidAmerican Energy Holdings company has spent $230m on a 10% stake in BYD, and MidAmerican chairman David Sokol has a seat on the BYD board. Sokol was at the BYD press conference – he said his company’s interest in BYD’s technology extended beyond automotive uses.
“BYD has technologies that are effective in changing the carbon world,” said Sokol. “They have impressed us.” Buffett is as shrewd as they come – and eco-friendly power projects are big potential businesses for him. In 2007, he cancelled plans to build six coal-fired power stations in the US because of the environmental damage they would inflict, and instead MidAmerican Energy Holdings is focused on alternative energy. Sokol said the high-capacity, fast charging Ferrous batteries could have any uses here, for example as storage devices for electricity generated through solar or wind power.
Does Buffett see BYD’s future away from the car industry? Unlikely. The consensus is that the time has finally come for electric cars – and using BYD as both automaker and battery supplier could be a highly profitable venture for Mr Buffett.
If BYD is potentially a serious player, what of Brilliance? It seems to be taking a different – and much more cautious – approach in the US to Europe. This side of the Atlantic, it hired local managers and tried to set up sales networks, but has fallen foul of crash testing regulations. Around 700 F6 sedans were sold in Germany in 2008, through single-vehicle type approval.
Wider sales will come with newer models. At Detroit it showed a Giugiaro-styled compact hatch called the FRV – the same car that was shown at the 2008 Geneva Show as the BS2 – and Brilliance claims this would gain four stars in Euro NCAP crash testing. Brilliance also says its self-developed 1.6 and 1.8 gasoline engines meet Euro 4 standards.
In fact the FRV car looks good –as does the M3 coupe, known as BS3 in Europe – perhaps someone has told Brilliance what “BS” stands for in the English-speaking world! Actually, if you combined the BYD powertrain with the Brilliance designs, you’d have a pretty decent package.
But executives would not commit to a US launch schedule. Vice-president He Guohua said: “The North American International Auto Show is an excellent platform for us to measure ourselves against international standards,” he said. “It is one of the five largest auto shows in the world, so we must come here.”
And we must make sure Chinese TV shows that we are here, he didn’t add.
Mark ‘Coolbear’ Bursa
