Chairman of IAT: Electric Vehicle is the Most Suitable Product to Promote in China

Source: Author: Date:2009-10-27 Read:1929

Netease Auto Reported during Guangzhou Auto Show on Nov. 25.

As the owner of the largest domestic automobile design company, Xuan Qiwu, the Founder and Chairman of IAT Technology, and Chen Qunyi, Design Director, told Netease Auto at the Guangzhou Auto Show that the age of the wealth group is rapidly turning younger, which makes major OEMs and design companies to reform accordingly. 

By changing the design style of beltline and frontal area to make products more dynamic in order to gain the favor of consumers. IAT will also follow this trend and make changes. In addition, Xuan also has a new plan, which is to inject $20 million venture capital he just received into the development of electric vehicle parts.

According to Xuan, electric vehicles have excellent energy-saving and environmental protection capabilities. Meanwhile, China has the most suitable market conditions for promoting electric vehicles. Now, the government has already started to act. The market for EVs is gradually growing.

What’s important is the development capability of the most critical components of electric vehicles in China is still nascent. IAT tries to provide technical solutions for domestic car makers to develop electric vehicles by integrating IAT’s technical capabilities and knowhow. With IAT’s Japanese culture root, the company can help those manufactures who have been unable to enter the Japanese electric vehicle industry and supply chain for upgrading the EV products technology.

Interview

China is the most suitable market to promote electric vehicles.

NetEase Auto: IAT has just received a large fund injection from an international venture capital fund?

Xuan: Our company has just completed the second series of financing, the investors include a famous Japanese commercial company, a Korean company and a Chinese venture capital. A total of $20 million was funded to IAT. We are going to use the funds for the development of new energy vehicles.

NetEase Auto: New energy is a booming industry, and it also contains greater risks. Why is IAT so determined?

Xuan: Before setting up each JC company, we will do a research report to find out whether the investment is feasible, how many years it will take for ROIC, the salability of the product, etc. We have also conducted sufficient research in this area.

Beijing has decided to produce 500 sets of pure electric vehicles for taxi trial operation by the end of next year. The Ministry of Science and Technology is also pushing a pilot program called “1,000 new energy vehicles in 10 cities”. This is the call from the government. Furthermore, the market demand can also be founded in various tourist spots. As you know, the most important thing is that our national characteristics determine that China is the most suitable country to promote electric vehicles.

NetEase Auto: Why is that?

Xuan: First, China's petrochemical colossuses are all state-owned enterprises. Even if electric cars resist their interests, the state will step in to coordinate.

Second, the government can support the construction of electric vehicle infrastructure by issuance of administrative order.

Third, China has one of the largest car consumer groups, and at least 2/3 of this group are first-time car buyers. They have more flexible mindset and can easily accept the differences between EVs and ICE cars. This is the reason why many countries have failed to promote electric vehicles, because their consumers are used to traditional types.

Limited domestic electric vehicle parts development capability

NetEase Auto: IAT is currently doing electronic components business for new energy vehicles, which is the hottest field in China now.

Xuan: I think electric vehicles are the inevitable trend in China in the future. However, we still have a big gap in the three key components such as battery, motor and control system.

First of all, let’s talk about the battery. Our Chinese small batch pilot production capacity is very strong, but mass production is relatively weak. China's battery manufacturing weak point is in the mass production technology. They can make a few dozen sets a day or even a few hundreds of it. They can do well on this quantity level. But the quality assurance capability turns frail in the mass production.

Regarding the motor, the standard electric system of traditional cars is 12V while electric cars contain both 12V and 340V standards. Higher voltage can offer greater power to motor performance, and some electric cars even need the voltage to be 640V or more. On the other hand, the higher the voltage, the greater the damage to the electronic components. Therefore, the control balance is still a challenging task for us.

Finally, the vehicle control system. Now the control systems of all domestic EV brands are provided by Delphi and UAES. If we concentrate on this section, there are opportunities for us to catch up.

NetEase Auto: The control system is equivalent to a Windows operating system. Like how a computer runs hardwares, it stably controls the internal motor, battery and other components of the car.

Xuan: This is it. We want to combine overseas resources and domestic R&D experience over the years to develop the electric vehicle control unit.

Integrating international resources to provide solutions for the domestic new energy vehicle industry

Netease Auto: Can you explain in detail what piece of electronic components IAT is doing now? What does it do? And any unique technology IAT possesses now that is better than most Chinese domestic manufacturers?

Xuan: In the new energy industry, we are not completely independent because it costs at least tens of billions of RMB to develop a real serial battery, control system, etc. What we are good at is integrating international resources.

NetEase Auto: According my knowledge, Japanese new energy industry started very early, and there are many companies have high technical strength. But in the end, only Toyota, Nissan, Honda, Mitsubishi and other such manufacturers have the strength to manufacture. What could cause a large number of companies with technology find nowhere to exert their expertise?

Xuan: This is completely true. In Japan, the development of new energy vehicles is a cooperation between various large consortia (Japan belongs to the consortium economy, each large consortium owns many enterprises, forming a group of affiliated relationships, cooperating with each other in order to obtain synergy. For example, Toyota, Toshiba, Sony, Panasonic, Sanyo, NEC, etc. are all part of the Mitsui Consortium). So many manufacturers in the automotive industry are involved in the development.

Many of the companies’ pre-development results are not part of consortia and these achievements do not end up in the new energy vehicle manufacturing systems of Toyota, Nissan, Honda etc. They have the technology, but they have no place to use it, and they also struggle in survival for making profit.

With its deep connections in Japan, IAT can integrate the technologies of these companies and do its best for the development of China's new energy vehicle industry. Therefore, we can help Chinese part suppliers do the same and quickly catch up to the world level.

NetEase Auto: Can you explain in detail how this model works?

Xuan: Many Chinese OEMs want to make new energy vehicles as soon as possible, but domestic battery & motor manufacturers have limited capacity in development.

For example, if a car maker needs a motor that meets their technical standards, we just have a matching motor company partner in Japan to make parts that fit the requested technical standards, and then install it on its product and test, validate and improve it step by step.

This company has a history of more than 30 years and mainly makes railway motors, which are the motors used on the Shinkansen in Japan. It ranks among the top five in the world's motor industry. The requirement of motors by Shinkansen is to run at least one million kilometers without failure, while cars basically require more than 100,000 kilometers without failure.

We can introduce this company into the country and set up a joint venture with IAT, the car company and the motor company to develop and manufacture motors that meet the technical standards of the car company. We can also establish a factory next to the car company's factory. In this way, the car company can buy products from the joint venture company very cheaply, integrate them, and perform well on the vehicle control. This provides a complete set of solutions to car manufacturers.

Joint venture approach does not jeopardize self-developed technologies

NetEase Auto: On the other hand, which is also the industry's concern, we hope that the introduction of technology is only the first step. We want to grow our ability to develop independently in the future. How does IAT consider this aspect?

Xuan: IAT will guide the company to convince Japanese companies to deploy technology development in China, and then convince Chinese companies to understand the Japanese companies culture. We can keep everyone operating harmoniously from the perspective of a joint venture. Each Japanese company that we want to cooperate with, we require it to put 3/4 of the R&D in China. 

The joint venture company has the intellectual property rights of the technology developed in China. From there, on the Chinese side, IAT and the motor manufacturers to control the intellectual property rights, to ensure that the technology remains in the joint venture company, to waft away our concerns.

Younger wealth groups lead to car design of youth

NetEase Auto: As an automotive design company, what are IAT's views on the design of Chinese cars as presented at the Guangzhou Auto Show?

Chen: The car design is not entirely artistic, but related to the industrial evolution. In another word, the essence of industrial design is to help companies improve their productivity and facilitate their products to gain an advantage in business competition. Therefore, for automotive design, we should help Chinese automakers to improve their competitiveness in the international and domestic markets, which is what our design companies should do.

We focus on several aspects to do this well. First of all, we have the insights of the latest international fashions, and we keep in mind that the cars we develop for our customers have a five-year life cycle after they are launched in the next two or three years. In other words, within eight years, the product will not obsolete, or even surpass the trend then.

Secondly, and more importantly, is to meet the characteristics of the Chinese market. Because we all know that there are different views on beauty. There is no unified standard. The products that sell well in Italy may not necessarily sell well in China, because the Chinese people have their own special preferences. So we have to understand the special needs of the Chinese market.

Thirdly, to understand some DNA of each company's products, the characteristics of each company is different. We help Chinese companies to formulate and design together with internal engineering team, and constantly upgrade from primary level to intermediate and advanced.

NetEase Auto: How do you act to ensure this?

Chen: We learn the international trend through two aspects: one is to go to overseas auto shows to feel the conception of foreign design companies and car manufacturers' design language; On the other hand, we have more than 60 experts from Japan and Korea in house. We can discuss and exchange their understanding of cars with our designers to ensure that IAT has the most high-end and harbinger design ideas.

NetEase Auto: Can you analyze the current trends in the world of automotive design with professional insight?

Chen: There are several trends. The first one is that the wealth group age is getting younger. Previously the world's billionaires and millionaires are over 40 years old, but now they are much richer in their twenties. In order to adapt to this situation, car companies, including Ferrari, are now starting to do some very fashionable beltline and other dynamic design.

Secondly, it is especially obvious in China, like ten years ago, everyone shares the similar mindset. You wanted what I just bought. But now the mentality has changed. They want their cars to be different from others. This pursuit of personalization has influenced and shaped a new concept of consumption in China. We also studied the show cars and we feel that this trend is becoming obvious.

Thirdly, the design of cars used to be saturate and smooth. Now, people want them to be more upright, straight and diamond-feeling.

Netease Auto: BMW is like this.

Chen: Yes. This change in BMW models has not only transformed the design of BMW, but also changed the trend of the world. You can see this resembled evolution in Audi and Japanese brands as well.

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