In China, fuel-cell technology is a matter of policy

July 18, 2006

by Christine Tierney, Detroit Free Press

Developing economies seeking to establish domestic car industries tend to focus on job creation first and worry about air pollution and other environmental issues later. That’s how the wealthiest countries also approached car-making at the outset a century ago.

But China appears to be an exception to that pattern. Its auto industry is just getting started, but Chinese authorities are already going for the best and newest fuel-saving technologies. That may benefit everyone by accelerating their development and commercialization.

When Chinese President Hu Jintao traveled to North America last September, he stopped in Vancouver to tour Ballard Power Systems’ (Nasdaq: BLDP) research and manufacturing facilities.

Potential is important

Ballard, part-owned by DaimlerChrysler AG and Ford Motor Co., makes fuel cells that transform hydrogen into electricity to power cars.

Ballard CEO John Sheridan visited Beijing two months later, and the company signed a preliminary agreement this month to supply Shanghai Fuel Cell Vehicle Powertrain Co. fuel cells for 100 test vehicles.

The Chinese partner is 30 percent owned by Shanghai Automotive Industry Corp., China’s largest carmaker and a venture partner of General Motors Corp., which is also keen on fuel-cell technology.

Ballard hasn’t disclosed the terms of the deal but says they’re minor. “What’s important is the strategic potential,” Sheridan said in an interview.

The Shanghai government hopes to have 1,000 fuel-cell vehicles on the road in 2009.

That may not sound like much, but it’s more than twice the number of fuel-cell vehicles on the road in the world today. By 2012, it wants 10,000 fuel-cell vehicles on the road.

“Those are pretty big numbers,” Sheridan said. “If they follow through, they’re plotting a course that’ll help on volumes and could result in earlier commercialization.”

Industry struggles in U.S.

Several years ago, DaimlerChrysler was predicting that it would be selling fuel-cell cars to fleet customers by 2004.

But the industry is still struggling with two big hurdles — the dearth of hydrogen refueling stations and the high cost of making fuel-cell cars. People now expect it will be another decade before fuel-cell cars come on the market in significant numbers.

Most major automakers now sell a few dozen fuel-cell buses, vans and other vehicles to cities, counties and fleet operators.

“In pushing aggressively for large-scale deployment, China is unique in that respect,” Sheridan said.

China’s strategy is driven by a fear of developing a dependence on oil imports and growing pollution in huge cities such as Beijing and Shanghai.

Because China’s economy is centrally planned, the authorities might be able to move faster to build a hydrogen refueling infrastructure. Elsewhere, such projects hinge on whether energy companies think they can generate a decent return on their investment. In China, it’s a matter of policy.

You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com

Source: Detroit Free Press

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