Alternative vehicles showcased in China

SHANGHAI - One experimental clean-energy car runs on natural gas. Another uses ethanol distilled from corn. A third has a zero-emissions electric motor powered by a hydrogen fuel cell.

These alternative vehicles were created not by a global automaker but by China's small but ambitious car companies, which displayed them Sunday alongside gasoline-powered sedans and sport utility vehicles at the start of the Shanghai Auto Show.

At a time when they are still trying to establish themselves in international markets, Chinese automakers are already investing in such avant-garde research in a bid to win a foothold in the next generation of technology.

"This is the tide of the industry. If you don't go with the tide, the industry will pass you by," said Qin Lihong, a vice president of China's biggest domestic automaker, Chery Auto Co., in an interview ahead of the show's opening.

China's leaders are encouraging the development as part of efforts to cut pollution and rising dependence on imported oil and to make this country a creator of profitable technologies.

Chinese manufacturers are getting help from foreign automakers in joint ventures and from research alliances with Chinese universities and government laboratories.

Beijing has made cleaner cars a policy priority, targeting the field as one of 11 priority areas in a 15-year technology development plan issued in February 2006. It promised grants and tax breaks to support industry efforts.

The campaign embodies one of Beijing's strategies in technology development: Pick new areas with no entrenched competitors so China can make breakthroughs without huge costs.

While foreign automakers have a lead in conventional technology, "in new energy we're starting from almost the same line," said Chen Hong, the president of Shanghai Automotive Industries Corp.

"So we believe we can catch up with other auto companies and make great progress in developing new energy vehicles," Chen said.

China's leaders are pressing its auto, steel, manufacturing and other industries to improve energy efficiency and cut pollution.

They see China's rising reliance on imported oil as a strategic weakness.

China already is the world's No. 2 oil consumer after the United States and saw imports soar by 14.5 percent in 2006, driven by economic growth that has topped 10 percent for the past four years.

A boom in car sales has added to smog shrouding China's major cities, which are among the world's dirtiest. Vehicle sales jumped 25.1 percent last year to 7.2 million units, including 3.8 million passenger cars.

At the Shanghai show, both SAIC and Chery displayed experimental fuel-cell sedans, while they and a third Chinese automaker, Chang'an Automobile Group Co., also showed gasoline-electric hybrids.

SAIC said it will start selling its hybrid next year, while Qin said Chery's would go on the market in two to three years.

"The hybrid will be our focus," SAIC chairman Hu Maoyan said at a news conference. "The fuel cell will be our direction."

SAIC has spent 100 million yuan ($12 million) on fuel cell research, according to state media.

Chery had the widest array of alternative vehicles on display at the Shanghai show. They included models outfitted to run on bio-diesel made from vegetable oil or a "flexible fuel" choice of compressed natural gas or ethanol.

Foreign automakers also are playing a role in China's research.

General Motors Corp. has a joint-venture technology center with SAIC in Shanghai and operates three experimental fuel cell buses in the city. DaimlerChrysler AG has three of its own fuel cell buses running regular routes in Beijing in a research project with the technology ministry.

Foreign automakers including GM, Ford Motor Co., BMW AG and Honda Motor Co. displayed their own hybrids and experimental fuel cell cars at the Shanghai show.

Company officials said hydrogen fuel cells, which produce power with no exhaust, are the cleanest option. But they say it could be a decade or more before such technology is commercially feasible, due partly to the need to create a network of hydrogen filling stations.

Chinese authorities also are looking at other possible fuels such as natural gas and methane extracted from coal, said Mei-Wei Cheng, the president of Ford's China operations.

"This is not an easy decision, because every option has pros and cons," Cheng said. "The government is trying to find a solution as quickly as possible, but this is a difficult problem."