Hunan Corun New Energy Co., a supplier of batteries and powertrains for Toyota Motor Corp.'s Chinese-made hybrids, expects a sixfold jump in the number of vehicles it will equip next year.

 

Automakers are racing to meet China's deadline for reducing fuel consumption.

 

Four Chinese companies -- including Anhui Jianghuai Automobile Co., Haima Automobile Group Co. and Chongqing Changan Automobile Co. -- have agreed to buy hybrid powertrains for as many as 30,000 vehicles in 2017, Corun Chairman Zhong Faping said in an interview.

 

Corun likely swung to a profit last year as demand for its battery components rose from customers such as Toyota, he said.

 

China has excluded conventional hybrids such as the Toyota Prius from the subsidies doled out to buyers of electric cars and plug-in hybrids.

 

But automakers are introducing conventional hybrids anyway to meet China's tougher fuel economy standards. The government requires automakers to lower the average fuel consumption of their vehicles to 5 liters per 100 kilometers (47 mpg) by 2020, down from the current 6.9 liters per 100 kilometers (34 mpg).

 

Government 'carrots'

"We didn't really enjoy any carrots the government offers to the industry," Zhong said last week in Beijing, where he was attending the annual meeting of the National People's Congress. "But it's the stick the government has been waving that has helped us."

 

Zhong, who founded Corun in 1998 after quitting his job as a researcher at the Chinese Academy of Sciences, said he has been proposing to the government to put hybrids on an equal footing with plug-in hybrids and pure electric cars for the past 14 years in his role as a member of the National People's Congress.

 

While the government has yet to respond to the calls, Tianjin and Guangzhou have become the first cities to let buyers of new hybrids enter lotteries usually restricted to plug-in cars. That has given Toyota an opportunity to woo buyers for its locally produced Corolla and Levin hybrids.

 

'Missing piece'

"China's NEV subsidy policies are actively promoting battery electric vehicles and plug-in hybrid electric vehicles," said Zheng Hu, a Beijing-based analyst at Bloomberg New Energy Finance, referring to new-energy vehicles. Supporting conventional hybrids is the "missing piece" of the policy, he said.

 

Corun this year won a contract to supply Geely Automobile Holdings with 5,000 of its hybrid systems, which it says can cut fuel consumption by more than 35 percent.

 

Zhong estimates Corun posted a profit of at least 5 million yuan ($771,000) last year. Earnings for 2015 haven't been announced. The company gets more than half its revenue making battery components and posted operating losses in each of the three years through 2014.

 

"The most difficult time is behind us," he said. "This year and next year will be the turning point for our company."