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Cablegate: China/Electric Vehicles: Participants at First Us-China

VZCZCXRO9537
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2865/01 2870951
ZNR UUUUU ZZH
R 140951Z OCT 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 6430
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 BEIJING 002865

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ENRG ELTN EIND SENV CH
SUBJECT: China/Electric Vehicles: Participants at First US-China
Forum Call for Joint Standards

This cable is Sensitive But Unclassified (SBU) and for official use
only. Not for transmission outside USG channels.

1. (SBU) Summary. During the inaugural meeting of the U.S.-China
Electric Vehicle (EV) Forum held in Beijing September 29, key
industry, government and academic leaders underscored the need for
greater cooperation on the development of electric vehicles,
particularly in the area of developing standards. Although the EV
industry is still in its infancy, participants agreed it was on the
brink of exciting advances, but questioned which EV technologies
would dominate. Department of Energy (DOE) Assistant Secretary
David Sandalow and Ministry of Science and Technology (MOST)
Minister Wan Gang identified concrete steps for cooperation in
research, standards, and demonstration projects. End Summary.

2. (SBU) The joint MOST and DOE-sponsored conference brought
together 142 participants, three times the expected turnout.
Government officials, auto industry leaders, non-governmental
organizations, advocacy groups, academics and representatives from
think tanks discussed current trends in electrification. Among the
organizations represented were the State Council's Development
Research Center (DRC), Tsinghua University, Berkeley University,
China Automotive Engineering Research Institute Co. Ltd., Chery
Automotive, Changan Auto, Tianjin Qingyuan, and Tianjin Lishen
Battery.

OPPORTUNITIES FOR COOPERATION
-----------------------------

3. (SBU) Minister of Science and Technology Wan Gang identified
four specific areas for U.S.-Sino cooperation: 1) establishing a
joint roadmap for data and best practice sharing; 2) working
together on technological support, R & D, and innovation; 3) setting
joint testing procedures and technical standards through coordinated
policy and legislation; 4) establishing joint demonstrations and
pilot projects, such as cities, megacities, and fleets.
Administrator of the National Energy Administration (NEA) Zhang
Guobao urged greater cooperation to reduce global CO2 emissions,
break oil dependence, and lower greenhouse gases (GHGs).

NEED FOR GLOBAL STANDARDS
-------------------------

4. (SBU) Minister Wan said both sides were interested in setting
concrete standards for EVs. Kevin Wales, President of GM China, and
others echoed this view. Henrik Fisker, CEO of Fisker Automotive,
pleaded for international standards starting with the United States
and China, "We need the governments of China and the United States
to get together to agree on the rules and regulations, then industry
can fall into line." Ric Fulep, Founder of A123Systems, called for
regulators in both countries "to understand how the battery will
react with the grid." White House Counselor for Energy and Climate
Change Jody Freeman, however, pointed out the United States had a
mix of potentially conflicting standards between the Department of
Transportation, EPA, and state regulators. Global standards, she
said, would not be easy to set.

NEW TECHNOLOGIES; NO SILVER BULLET
-----------------------------

5. (SBU) Freeman said the EV industry was at a critical juncture
and "on the brink of a technological revolution." Other
participants noted the wide-range of technological solutions for the
future growth of EVs. Wales outlined a spectrum of transitional
technologies from new engines and transmissions to a clean hydrogen
car solution. Fulep described examples of phosphate-lithium ion
battery advancements. One A123Systems battery, recently debuted in
Formula One races, was 15 times the power of a Toyota Prius.

6. (SBU) However, like the telecommunications technological
development timeframe, "you can't go from the USD 10,000 black and
white Apple desktop of the 1980s to the USD 150 iPod of 2009
overnight," cautioned Kevin Czinger, President and CEO of Coda
Automotives. Others echoed that changing infrastructure at home,
work, and transportation points in between would be a challenge, and
that scale-up would take a long time. However, China's State Grid
was eager to support EV development, as EV charging at non-peak
hours can achieve energy conservation and electricity usage
balancing. But before EVs become mainstream, researchers must
continue to reduce the high costs of batteries, increase usage
lifespan, and extend driving distance.

GRASS IS ALWAYS GREENER
-----------------------

7. (SBU) The World Resources Institute's Deborah Seligsohn said
both countries think the other side has more capacity to act:
American participants believed China had more aggressive policies,

BEIJING 00002865 002 OF 002


lower manufacturing costs, and better economies of scale in
implementation. Chinese counterparts viewed the United States as
having more money for R & D, better technologies, and a more
longstanding culture of and capacity for policy research.

EV INFRASTRUCTURE STILL IN INFANCY
-----------------------------

8. (SBU) Participants agreed current steps toward electrification
have been modest. During the Beijing 2008 Olympic Games, 13 cities
in China, including Beijing, Shanghai, and Chongqing, rolled out a
new energy vehicle demonstration project. The Dalian Davos Forum
chose 257 electric vehicles to provide services for the forum.
Additionally, the Shanghai Expo 2010 plans to showcase 1000 electric
vehicles for visitor transportation. Asked about the mileposts for
EV development globally, Kevin Czinger predicted that if 5000 units
are sold in California, the industry would be "off to the races."
The real signal will be when the EV penetrates the "hinterland,"
answered Brian Wynne, President of the Electric Drive Transportation
Association. Chery Auto's Li Feng commented: "The jury is still
out. The next three years will be key for the industry."

HUNTSMAN

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