Suppliers Join China’s Clean-Air, Fuel-Economy Push

BEIJING – With public discontent about air quality growing, Beijing has become more aggressive about enforcing pollution regulations.  That has boosted business for suppliers with technology that helps automakers comply with the laws.

Two regulations loom large for car companies in China: Stiffening fuel-economy standards and tougher emissions-control requirements.

“The biggest challenge for automakers is the new fuel-consumption regulation,” says David Xu, executive vice president-Bosch China.

Government fuel-economy rules require that passenger cars in China achieve 34 mpg (6.9 L/100 km) by 2015 and 47 mpg (5.0 L/100 km) by 2020.

Bosch’s common-rail diesel fuel-injection system currently is driving business gains in China, along with gasoline direct-injection and turbocharging systems. Total sales in the country grew 28% last year, and the supplier expects revenues to surge 20%, Xu says.

Though its use now is limited, Bosch hopes mild-hybrid technology will expand in China.  The government isn’t incentivizing the technology, but Bosch and other suppliers are counting on that to change. Without hybridization, meeting the 2020 fuel-economy standard will be “big trouble,” says Xu.

Bosch is promoting its 48V mild-hybrid system that includes a start-stop function, a booster for restarting the car and regenerative braking. It can improve fuel economy up to 15%, Xu says. Bosch is targeting additional cost of less than $1,000 per car. “If it is too expensive it is not going to work,” he says.

Bosch also sees a market in China for its air-hybrid system, which is purely mechanical rather than electrical. It can improve fuel economy up to 30%, Xu claims.

Stricter emissions standards also are helping suppliers’ business. China’s standards are based on Europe’s system. Euro 4 emissions standards took effect in July 2013 in China. Tougher Euro 5 standards become the law on Jan. 1, 2018.

Engine downsizing has been the biggest response to the emissions mandate.

“Almost every OEM is going to 3- and 4-cyl. engines,” says Peter Rankl, vice president- powertrain, China and Korea at Continental Automotive in Shanghai.

To make those smaller engines both cleaner and more fun to drive, automakers are adding technology such as gasoline direct injection and turbocharging.

Continental supplies injector pumps and electronics for GDI systems. Next year, it will begin locally producing injector pumps, Rankl says. Domestic OEMs also are installing increasing numbers of automatic transmissions and Continental supports them with transmission controls.

Continental anticipates a massive sales increase. “Our experience is we are doubling our sales within the next four or five years,” Rankl says.

That kind of sales growth accompanies an unprecedented convergence of government and public interest in decreasing pollution, which has put more pressure on automakers to comply.  In the past, the OEMs successfully lobbied for extensions. “A lot of times we do not find that alignment,” says Tom Tan, president of BorgWarner China.

BorgWarner’s China business is surging, especially its turbocharger sales. It is building a plant in the Eastern China city of Taicang that will boost its turbocharger production capacity 50%.

Tan predicts up to half of all cars with 1.0L to 1.4L engines will be turbocharged by 2020, up from about 25% three years ago. “Almost every major Chinese OEM is installing it,” he says.

BorgWarner figures China will account for up to $760 million in new sales from 2013 to 2015.

Cost is important to China’s price-sensitive consumers, so BorgWarner also is introducing exhaust-gas recirculation to the market. “It is definitely cheaper than turbocharging,” says Tan.

EGR has been used mainly with diesel engines, but in China BorgWarner will promote “cooled” EGR for gasoline, he says. It cools the exhausted gas before recirculation, improving fuel economy up to 11%, BorgWarner claims. The amount of improvement depends on the engine configuration and other technologies in place, such as GDI or turbocharging.

Only about 1% of cars in China are equipped with EGR, but BorgWarner sees it taking off in the next five to 10 years, Tan says, noting it could join turbocharging as a growing trend.

“I am always optimistic about the China market.”