CHINESE carmakers, while developing all-battery cars and plug-in hybrids, are looking at full hybrids as their Plan B for meeting China’s stringent fuel-consumption targets.

Full hybrids are a step back from plug-in hybrids. They have electric power generated in a system led by an internal combustion engine and, therefore, require no external charging. This version of greener technology has long been sidelined by the Chinese government for not being progressive enough. Only Toyota has enthusiastically embraced it.

China Hybrid System, the first Chinese company to specialize in the full-hybrid realm, has welcomed initiatives from domestic carmakers trying to navigate this middle-lane solution, faced by the toughest emissions standards in the world.

In 2014, Geely and Chinese battery maker Corun formed the venture to develop hybrid systems. Last month, it signed a framework agreement with Chang’an, and powertrain maker Yunnei Power for capital investment, and earlier this month, it announced that its hybrid systems will be featured on 10 car models from nine carmakers in China in the near future.

One of the first is Geely’s Emgrand EC7 hybrid version, whose fuel consumption level has been brought down to 4.9 liters per 100 kilometers, according to China Hybrid System. That represents a fuel savings of 35 percent. The Chinese government is mandating efficiency levels of 5 liters per 100 kilometers by 2020, 27 percent down from the requirement of 6.9 liters per 100 kilometers for last year.

Li Shufu, founder and chairman of Geely, said his company will look at a range of options on green mobility, including plug-in hybrids and all-battery cars, while developing and promoting full hybrids. He considers the latter to be a more economical way to cut energy consumption because full hybrids don’t require the expensive construction of charging infrastructure.

That echoes a belief long held by Toyota, which was the first to develop full hybrids that rely on gasoline as a primary energy source and electricity generated in the powertain as the secondary source.

Sales of hybrids surpassed 8 million units worldwide last August for Toyota, which launched Prius as the first of its kind in 1997. That seems to validate the idea that consumers are quite receptive to green cars if they don’t require a too dramatic change in their daily habits.

Filling up a tank takes only a few minutes while charging an electric car can be hours of wait. And that may come on top of frustrating searches for charging facilities, which are now scarce public resources.

Now, domestic Chinese carmakers are eager to parlay full hybrids’ user-friendliness as a lever for green vehicle market development.

The Chinese government has started to scale back subsidies for plug-in hybrids and all-battery vehicles, letting consumers gradually take back the driver’s seat in deciding the market worthiness of green cars. As subsidies subside, the true cost of going green becomes more obvious and could damp consumer interest. If so, the situation threatens to blow a hole in carmakers’ plans to meet the country’s stringent efficiency standards.

“Full hybrids can help Chinese carmakers meet the fuel consumption target in the short term, and break the stranglehold that Toyota holds in this particular field,” said auto analyst Zhang Zhiyong.

Market acceptance

For latecomers, the priority now is to pursue volume in order to bring down costs, increase market acceptance and stake their positions in the industry. China Hybrid System said the way forward is to form industrial alliances.

“China Hybrid System will provide open hybrid solutions to all carmakers,” said Zhong Shuping, chairman of Corun. “Its strategy from day one was to include carmakers as well as auto-parts makers in devising a nationwide technology platform.”

China Hybrid System has unveiled three hybrid systems that match different internal combustion engines in sizes ranging from 1.5 liters to 8 liters. They can be used in everything from small sedans to buses, and can serve both full hybrids and plug-in hybrids.

Commercial vehicle maker Dongfeng Nanchong, which Geely recently acquired and agreed to inject with 7 billion yuan (US$1.1 billion) for new energy development, will utilize hybrid systems from China Hybrid System.

Last month, China Hybrid System broke ground on its first manufacturing base in Changsha, Hunan Province, where Corun is based. The aim is to achieve the capability to make 300,000 hybrid-system packages in initial stages of operation in 2017. Eventually, the factory will raise the production scale to 1 million hybrid powertrains each year.

“If China Hybrid System can make its technologies open to all carmakers, then China’s auto industry will have its own full hybrid technologies,” said Li.

It’s a long, uphill battle to be fought without assistance from the Chinese government, which has not wavered in its opposition to hybrids as the best way forward. Despite the downsizing of subsidies, officially endorsed new energy cars like all-electric models still enjoy exemptions from traffic and vehicle purchase restrictions.

The bigger rival for Chinese developers of full hybrid vehicles is still Toyota. After 10 years of developing its hybrid strategy for China, the Japanese carmaker started full hybrid system localization last year and managed to make full hybrid cars as cost-attractive as conventional models. Chinese carmakers can hardly catch up with it in the short term all by themselves.

“Toyota has dominated the full hybrid industry for quite a long time, with quite a number of patents,” said Zeng Zhilin, research director at LMC Automotive. “The Chinese can’t circumvent that pitfall. Even Toyota, with its current sales volume, hasn’t found its full hybrid business strongly profitable, given the massive research and development costs over the years.”

Zeng said he expects China’s hybrid alliance will eventually side with plug-in hybrids, an officially favored middle lane solution.

China Hybrid System claims it has developed full hybrid systems in a way different from Toyota, but it didn’t elaborate on details. It is worth noting that Corun, which acquired Panasonic’s plant in Hunan Province in 2011, plays a critical role in supplying batteries for Toyota’s hybrid localization in China. Together with batteries, the electric motor and the electronic control unit are the top three critical components for a full hybrid.

Feng Qingfeng, director of Geely’s research institute, said the big vision of his company is to make full hybrid products that are affordable for consumers.

Ren Yong, head of Chang’an New Energy Automobile, also acknowledged that price is the biggest obstacle for the development of full hybrids.

The same problem afflicts most emerging alternative-energy cars, whose economies of scale pale in comparison with the level of conventional vehicles after more than 100 years of industrialization.

“The development of hybrids and all-battery vehicles should not be advanced at the expense of neglecting each other,” said Ren.

That’s probably the safest comment any senior executives of Chinese carmakers could make for now.