China Turning to Turbocharging, Multispeed Transmissions as EV Interest Wanes

Ward's Auto, May 2, 2013

by Alysha Webb

EVs face the same market hurdles in China as the U.S., so auto makers are turning to advanced-technology internal-combustion engines to meet emissions, fuel-economy and customer cost requirements.

Geely displays its line of “self-developed” engines at Shanghai auto show.

SHANGHAI – It’s no secret China has huge plans for developing its electric-vehicle market. So electrification must be the biggest powertrain trend under way here, right?

Think again.

EVs face the same hurdles in China as in the U.S., including high cost, short range and lack of infrastructure.

While Chinese auto makers all are developing some EVs, they aren’t rushing into the segment. But they do have to meet stiffening emissions and fuel economy standards, and consumer demands for cleaner air are growing as well.

As a result, local vehicle manufacturers are turning to familiar fuel-saving technologies for traditional powertrains, such as turbocharging and direct injection. While Chinese consumers may not be willing to pay more for EVs, they are willing to shell out extra renminbi for technology that will save fuel and improve their driving experience.

“Technologies which improve efficiency of gasoline-powered cars are being featured, since they provide a clear value proposition for today’s consumer,” says Bill Russo, president of Beijing-based Synergistics and a former vice president of Chrysler’s North East Asia operations.

BorgWarner sells turbochargers in China and has seen business double in the past three years. It expects sales to double again in the next three years.

The burst of business is being driven by toughening fuel-economy and emissions standards, as well as the fact that turbocharged vehicles are more fun to drive, BorgWarner China President Tom Tan says.

Turbocharging already is standard on many vehicles in the market. “It is no longer premium, only an option,” Tan says.

Some 80% of turbochargers over the next five years will be installed on engines displacing 1.4L-2.0L, the BorgWarner executive adds.

Government policy plays a hand in that trend. Engines displacing 2.0L or less are popular in China because taxes are much higher on larger powerplants.

“Regulations in China place the burden of fuel consumption on the consumer,” Russo notes.

Increased application of DI technology is following along with the turbocharging trend, executives say.

Ricardo China President Gary Tan says his customers, mainly local auto makers, are asking for downsized, turbocharged gasoline DI engines. Ricardo, a U.K.-based engineering consultancy, figures all gasoline-powered engines in China will include turbocharging and direct injection within 10 years.

China’s domestic auto makers like to be seen as technologically innovative. Several stands at the Shanghai auto show in April included a line of powertrains, such as Geely’s “self-developed” turbocharged direct injection engine mated with a 7-speed dual-clutch transmission.

Even these homegrown engines typically have been engineered with foreign help, however.

Bernstein Research, in a presentation at the CBU 2013 Global Automotive Symposium here just prior to the auto show’s opening, notes Geely’s engines include 29% Toyota technology and 15% Mitsubishi technology.

“In terms of their technical capability, (Chinese auto makers) are still way behind the major OEMs,” Ricardo’s Tan says.

The same is true for transmissions. Gary Tan says he has been asked by local auto makers to “find a transmission out there that we can do minimum change on and call our own.”

Gearboxes on domestic-brand vehicles generally top out at six speeds, he points out. But local auto makers are being pushed to add gears as foreign competitors such as BMW and Audi move to more sophisticated multispeed automatics.

Ricardo sees 9- and 10-speed transmissions proliferating on cars in China by 2020.

“More speeds is a trend that everybody will follow to increase comfort, but also to reduce fuel consumption and, therefore, emissions,” says William Wu, vice president-business development at Ricardo China.

A walk through some domestic auto makers’ displays at the Shanghai show suggests more exotic powertrains are growing in popularity. Guangzhou Auto showed a variable-valve engine/DCT transmission combination it labels DCVVT, for example

Dual-clutch is an emerging trend, industry insiders agree.

Some customers have a “keen interest” in DCTs and automated-manual transmissions, Gary Tan says, but “we haven’t landed any programs yet.” He believes domestic auto makers remain wary about whether the market will accept the more-expensive technologies.

But with foreign brands entering the low-end segments with feature-laden models, Chinese manufacturers will be forced to do the same, the Ricardo executive predicts.

“They felt in the past the low-end market was protected,” Gary Tan says. “It isn’t anymore.”

Italian supplier Magneti Marelli, a Fiat subsidiary, is betting on DCT growth in China, localizing production of the transmissions in the eastern city of Hangzhou.

The operation initially will supply its local partners, including Suzuki, and then sell to other auto makers, Magneti Marelli China Manager Jack Cheng says.

Automated-manual transmissions also have a bright future in China, Cheng says, noting Magneti Marelli will introduce its “robotized” automated manual here in November.

“They can improve fuel economy 15%,” he says of automated manuals. “It is a low-cost solution to a 9-speed (automatic) transmission.”

Meanwhile, subsidies thus far have failed to get Chinese consumers excited about buying battery-electric and hybrid-electric vehicles.

Beijing is expected to issue a new EV policy in the next few months with bigger subsidies for hybrids, including plug-in versions, which likely will take some of the focus away from EVs.

Chinese customers reportedly purchased only 11,375 EVs and plug-in hybrids last year. The country’s goal is to have 500,000 hybrids and EVs on the road by 2015 and 5 million by 2020.

But the expected shift in subsidies is heightening interest in broader electrification. Honda already sells its hybrid CR-Z, Insight and Fit models and reportedly plans to begin producing hybrid components in China in 2014.

Local auto maker BYD reportedly is considering ending production of vehicles powered strictly by gasoline engines in favor of a model portfolio entirely focused on hybrids, plug-in hybrids and EVs.

SAIC featured six electrified vehicles all in a line at its stand at the Shanghai show, ranging from a light hybrid to a fuel-cell vehicle. Only the light hybrid is on the market, and few have been sold.

Shanghai GM, SAIC’s joint venture with General Motors, recently launched production of the Springo EV.

“We will bring it out slowly,” says David Dunahay, interim executive director-electrification strategy at GM China.

Ricardo is landing considerable business in the microhybrid and full-hybrid sectors, Gary Tan says. “(But) our estimate of hybridization is not that high.”

Ricardo forecasts 3%-5% of the market will be hybrids in 2020. However, that is still quite a few cars, considering a WardsAuto/Automotive Compass forecast that calls for new-vehicle production in China to reach 28.8 million in 2019.