China's Mixed Alliance Lost: Technical Difficulties Difficult to Break Collaborators' Bedding Dreams

The development of the "Chinese Hybrid Alliance" formed by the alliance between Keli Yuan (8.170, 0.02, 0.25%), Geely, Chang'an and Yunnei Power (4.260, 0.01, 0.24%) did not have a smooth imagination. It is expected that Difficulty will soon come.

In February 2016, Sifang announced in Beijing that it will increase its investment in the company's China Hybrid Systems Co., Ltd. (CHS “ChinaHybridSystem”) to promote the development of the hybrid system in China. Because Geely and Chang'an, the two leading independent companies, are rarely joined together, the industry sees it as the "Chinese Mixed Alliance" (hereinafter referred to as the "Alliance"), and evaluates it as "can be mixed with Japanese and BYD (48.510, 0.02, 0.04%). Dual-mode hybrid phase counterbalance." However, more than a year has passed, and models equipped with the CHS hybrid system have repeatedly been postponed to market, and may even face "difficulty."

In the alliance, Geely Emgrand HEV was the earliest model equipped with a CHS hybrid system. It had been rumored to be listed as early as 2015, but since then it has repeatedly “jumped” and there is no clear time-to-market. “Dili PHEV may be listed in September this year, and Emgrand HEV has not yet determined the time to market.” On August 1, a person from the Geely Holding Group explicitly told the Economic Observer. As for why the model’s time to market was delayed, the person responded by saying “I don’t know the specific situation.”

In terms of Changan Automobile (14.240, 0.00, 0.00%), even the development of models related to the CHS system has not yet begun. According to report, Changan’s currently launched hybrid models, the Yat moving blue version and the future CS75PHEV, CS35PHEV and several other plug-in hybrid models, have not adopted the CHS hybrid system. In mid-July, a hybrid R&D expert inside Changan Automobile declined an interview with reporters on the grounds that the matter was more sensitive. However, it is still frank that "multi-party cooperation has made it difficult to achieve technology integration."

But on the other hand, China's hybrid market is being madly occupied by foreign capital. For more than a year, the joint venture hybrid models represented by "Toyota Shuangqin" and Honda "Ruih Mix" have been launched. What on earth happened? An insider from a new energy auto company in Shenzhen told the reporter that in the core technology, the breakthrough has not been imagined to be so smooth: “Geely is mainly solving the problem of deep matching and calibration between the engine and the motor. This is the CHS hybrid system. The key to future success."

However, for the inside of the alliance, the failure to enter the market has caused the cost to rise and the burden on the company to be extremely high. According to the announcement issued by Keliyuan, the company is still in a loss state. One of the main reasons for this is that the hybrid power system is in an expansion phase of investment, and no benefit has yet been achieved. The announcement also shows that it currently has 15,000 sets of production capacity at the Shanghai base in production, and another 300,000 sets of bases in Foshan, Guangdong, will be completed by the end of this year, how will these expanding production capacity be digested?

In an interview with reporters, several experts mentioned that hybrid technology has not really reached the stage of explosion in China. Ke Liyuan Chairman Zhong Faping also publicized the advanced nature of the hybrid system on several public occasions. However, as of today, hybrid power has not been ranked as a “new energy vehicle” compared to pure electric and plug-in hybrids. Among them, the high prices make it very difficult to promote.

“We expect it will still be after 2020 (it will develop on a large scale), because now the country does not subsidize hybrid power, the cost is still high.” Liu Bo, vice president of Changan Automobile, said in an interview. Under such circumstances, what kind of ways will the "Chinese Hybrid Alliance" be? And in the future, will they be able to jump out of the domestic destiny of “Alliance”?

Unbreakable technical difficulties

Geely does not currently have a timetable for the Emgrand HEV. Instead, it plans to launch the Royal PHEV. According to the information provided by Geely, the imperial PHEV also uses the CHS hybrid system, which is powered by a twin-motor with a 1.5-liter engine, but the battery pack is not a nickel-metal hydride battery but a Sanyuan lithium battery. "No one wants a bunch of problems after the launch of the model. Geely has not been rushed out for security and stability considerations." A technical expert who knows the CHS system thinks, "But without using a nickel metal hydride battery, it shows CHS. Internal differences have arisen about how the system is promoted."

As the first model equipped with the CHS hybrid system, Dorsett HEV has actually started testing. It completed the calibration work before mass production in 2015, and in the past year in the public transport field in Chongqing and other places. . According to Geely and Keli’s public statements, the emperor HEV will be introduced to the market in 2016, but it has not been seen so far.

"Reliability and other issues can be solved by this alliance. Even if the efficiency is lower than Toyota's THS system, it is not a big problem. The most fundamental is the cost, otherwise the hybrid system will be on the market long ago. Geely was at the auto show two years ago. The emperor's hybrid version was exhibited, but it was not afraid to go public," said a technical analyst. Toyota's current product launch in China basically achieved a price difference of less than 10,000 units between the hybrid version and the fuel car version. But for Chinese companies, there is still a long way to go to achieve this cost.

First, Japanese companies that have pioneered the successful development of hybrid technologies, particularly Toyota, have also enjoyed considerable technical barriers while fully enjoying the rich bonuses of hybrid vehicles, preventing other car manufacturers from entering. In particular, the Chinese car companies that started late and have weak technical capabilities are not optimistic about how to break through this technical barrier. This directly affected our country’s choice of technology in the development of the automobile. Miao Wei, Minister of Industry and Information Technology, once said that Chinese auto companies should avoid this “technology trap”.

"Japanese companies reported to the International Organization for Standardization to change Japan's hybrid power standard into an international standard, which also affected us. The traditional hybrid power system, represented by Toyota, has already designed a number of technical traps. We must not touch it." On the website of the State Intellectual Property Office, using "hybrid" as a key word, more than three hundred Toyota invention patents can be found. Toyota passed layers of patents, making it impossible for other auto companies to deliver technical licensing fees to Toyota once similar inventions were adopted.

Despite this, many local Chinese companies are still investing in real money to try to break the monopoly. The "Chinese Hybrid Alliance" was born under this background. "This system does not have any special innovations. It is only by bypassing Toyota's patent that it has achieved a structure and working model that is very close to Toyota's THS system, and it also helps to circumvent one's technical weaknesses." The person said.

But the technology still has its own inevitable deficiencies. "Their existing technical capabilities can only be achieved to some extent. His system is very complicated and there are also a pile of drawbacks. For example, the engine is the first pit (non-Atkinson (Circulation engine), the thermal management of the same side of the dual motor is the second pit, the engine is not completely driven by the third pit, the pure electric mode single motor driving power is the fourth pit.” An automotive engineer told reporters Pointed out.

Cooperation will inevitably lead to "same dreams"

Compared with technical issues, the coordination of several companies is the biggest issue. “We delivered the system according to the contract, but the specific model for the listing of vehicles was announced by Geely.” On August 2, a person from the Office of Director of the Bureau of Economic Affairs Ke Liyuan told the Economic Observer reporter. The reporter did not respond to the reporter's question on why the imperial PHEV did not use nickel-metal hydride batteries.

In fact, for a long time, CHS has been mainly promoted by Geely and Keliyuan, which is related to the background of the establishment of CHS. According to statistics, CHS was established in October 2014 and is a joint venture company established by Geely Holding Group and Hunan Keliyuan New Energy Co., Ltd. In the cooperation model between the two, Geely has come up with its own mature hybrid system and technology patents that have accumulated over a long period of time, and Keli has come up with its mature nickel-hydrogen power battery and BMS technology for Toyota. And joint venture to build the CHS deep hybrid powertrain system project.

Until February 2016, Geely, Keliyuan, Changan, and Yunnei were jointly announced in Beijing that they would increase their capital to join CHS. The "Chinese Hybrid Alliance" was officially born. According to the Quartet's capital increase agreement at the time, Keliyuan had a cash of RMB 200 million, and Changan Automobile had a total of RMB 200 million in technology and cash (including a technical contribution of RMB 80 million to RMB 1 million. In principle, it also supported the technology involved in this investment. Relevant technical personnel dispatched or transferred to CHS company. Yunnei Power invested RMB 60 million in cash and the three parties invested RMB 460 million in total to increase CHS. Geely Automobile (including Huapu) reserves the right to increase capital, but the amount of capital increase is not more than 200 million yuan, and the specific capital increase method and amount are specified in the capital increase and share expansion agreement. Since then, the parties’ shares have been honored one after another.

But this alliance is not a close alliance, but more technical and financial cooperation. “Actually, as early as in 2009, Geely’s Maple developed a hybrid system and applied for a patent early. The joint venture with Keliyuan was a later event. It is said that Geely’s technology has always played a role in it. Geely provided the engine and Motors, Keli is far more than batteries and transmissions." The insider of the Shenzhen New Energy Enterprise said.

According to Ke Liyuan, apart from Geely, Changan, and Yunnei, there are at least seven partners of CHS, and related news shows that FAW Haima and Jianghuai also intend to participate. However, judging from the current situation, several partners of CHS are still not "positive".

It is worth noting that the establishment of the alliance took place in 2015 when Toyota implemented localization of its dual-engine hybrid system assembly in Changshu, and Honda indicated that it will introduce its own technology with a strong "contingency with foreign technology". Inside. However, the reality is that Toyota, Honda, GM, BMW, Hyundai, Ford and other companies have launched mixed models in the past two years, and our hybrid alliance has not come up with new products in the true sense.

The leading role of weight

Why is Geely to take the lead in introducing PHEVs instead of HEVs for vehicles equipped with a CHS system? The reason is not difficult to understand, plug-in hybrid vehicles can enjoy new energy subsidies, and HEV models are difficult to promote. Liu Bo, vice president of Changan Automobile, told the Economic Observer reporter that the real development of the hybrid may be after 2020.

However, the strategic choice of CHS partners undoubtedly puts pressure on the core of the league. Keliyuan, which is a major player in hybrids, is facing an increasing financial burden. The company's financial statements for the first quarter of 2017 showed that operating income from January to March was 403 million yuan, down 6.99% year-on-year; net profit attributable to shareholders of listed companies was -328.412 million yuan, an increase of 5.69% year-on-year. In 2016, its operating income was 1.70 billion yuan, an increase of 51.15% year-on-year; net profit attributable to shareholders of listed companies was -21.12 billion yuan, a year-on-year drop of 2935.11%.

Keli Yuan will reach an annual production capacity of over 300,000 sets of hybrid power systems by the end of this year. However, Chang'an and Geely's hybrid models are both "difficult to produce," leaving CHS's gradually expanding production capacity at risk of vacancies. Under all kinds of pressures, Keli began to conduct a "gamble", that is, to determine the nickel-hydrogen hybrid system will become the mainstream.

After the acquisition of the Shonan Plant in Japan as Toyota's nickel-metal hydride battery supplier in 2011, Keli has always focused on strengthening the promotion of nickel-metal hydride batteries, which is quite unique compared with the situation that domestic lithium batteries occupy the mainstream of new energy vehicles. In June, on Keliyuan’s investor interaction platform, some investors asked “when the mix could not be subject to policy discrimination,” and Keliyuan replied that “the company is actively promoting”.

Contrary to the inexperienced development in the field of passenger vehicles, Keli has been operating frequently in the diesel engine field and has reached strategic agreements with Fugong Power, CRRC Times and Yunnei Power. For example, in June of this year, CHS and Yunnei again deepened their cooperation and announced that they will jointly invest 600 million yuan to establish a joint venture to produce a 300/000 diesel/gas deep hybrid transmission assembly with an annual output of 300,000 sets.

“Ke Li Yuan actually bet on the national new energy vehicle subsidies and the average fuel consumption limit of 5.0L in 2020, when the hybrid system will show more than pure electric and plug-in hybrid better competitive. In other words, whether the hybrid system can be put into place will take some time,” said the Shenzhen New Energy Enterprise analyst.