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plug into electric car market

China looking to plug into electric car market

Liu Jin/AFP/Getty ImageChina's strategy is to invest heavily inresearch while at the same time offering sizable consumer subsidiesto electric cars buyers.

SHANGHAI -- The car is a pretty ordinary looking sedan, which isnot an altogether bad thing for an electric car. The weird, boxy"green-look" of so many of the pioneer models had limitedappeal.

But it's the battery in BYD Auto's new E6 fully electric car, notthe design, that is currently causing the buzz in the decidedlydejected auto industry.

Instead of being made with lithium ion, which is expensive,increasingly hard to come by, environmentally unfriendly, andpotentially dangerous in a crash, BYD has devised a battery thatuses ferrous ion, which is cheap, plentiful and green. If it turnsout to be as functional as the Chinese company claims, it could bethe breakthrough needed to finally bring electric cars into themainstream.

Warren Buffett obviously thinks it is. The U.S. financier investedUS$230-million in BYD last year.

At the time, David Sokol, chairman of MidAmerican, a subsidiary ofBuffett's Berkshire Hathaway, called the BYD battery "a technologythat can really be a game changer" when it comes to reducingemission from automobiles.

The E6 can go 400 kilometres on a charge, but it's actuallydesigned for quick 10-minute, 50% charges, that will last 200 km.The problem is, an ordinary wall socket won't do the job, the E6needs a dedicated, high voltage charging station.

BYD is working on that with Chinese electrical companies, thegovernment and large fleet owners, like taxis companies, and hopingfor a breakthrough by the time it launches the E6 at the end of2009. Meanwhile, it is expending its promotional energy on its DM,dual mode electric-gas cars.

BYD -- they are actually the Pinyin initials for its Chinese name,but now the company says they also stand for its motto, Build YourDreams -- already boasts the bestselling gas-guzzling sedan in theChina market and is making inroads with the DM version of it thatis now in showrooms. The F3-DM goes 100 km on a single nine-hourcharge from a household socket and costs about US$22,000. It'scheaper, goes further and is available a year ahead of the expectedlaunch of its potential rival, the hybrid Chevy Volt that is slatedfor a 2010 debut.

So far, the F3-DM is only being marketed to fleet owners such asthe government, big companies and taxi firms, according to PaulLin, marketing manager for BYD's export division. The reason issimple and uniquely Chinese, he says. "In China people live indormitories [apartment buildings] instead of houses, so they don'thave garages. They don't have anywhere to plug their carsin."

He sees that as a "technical difficulty," however, that is bound tobe overcome or superseded soon, given the Beijing government'srecently announced plan to turn China into the world's largestmanufacturer of electric cars.

China's strategy is to invest heavily in research while at the same timeoffering sizable consumer subsidies to electric cars buyers. It isalready helping fleet owners who purchase dual-mode vehicles to thetune of US$8,800 per car, but soon individuals will be eligible forrebates, too.

"The fiscal subsidy gives voting rights to the consumers," ZhangShaochun, vice-minister of finance said at a conference early thismonth.

Plans for electric charging stations for both E6s and F3-DMs can'tbe too far behind.

In many ways, China is the perfect launch pad for the worldwidedrive to push electric cars into the mainstream. It doesn't yethave a fully developed infrastructure to support a nationwideaddiction to long-distance driving, so there is not a generationlusting for speed and fuel capacity in their automobiles, likethere is in North America. Instead, when a Chinese consumer finallyreaches the financial position to consider buying a car, he or shewill be looking for the best model for short city commutes ingridlocked traffic. That's the reality of life in places such asShanghai, Beijing and Chongqing.

Moreover, a potential Chinese car-buyer is likely to be fairlypollution-conscious. Traffic fumes are already a choking issue inmany Chinese cities and they are getting worse every day.

In an interview at the Shanghai Auto Show this week, Lin said BYDhopes to follow the fully electric E-6's China debut with aEuropean and North American launch in 2011. But, he also mentionedthat the company was looking at a range of options besides openingup its own assembly plants, distribution systems anddealerships.

"We have several choices. We will analyze and try to find the bestway to go. We are trying to find very good partners to enter themarket with," he said.

Mr. Lin and several other BYD employees have been test-driving theE6 since last December and, while obviously biased, he claims itfeels very much like an ordinary gas-fuelled car. "The accelerationfor the E6, the big car, is less than seven seconds. From one to 60km/h it's fast, even like the BMW," he boasts.

And it is very, very quiet, he says.

"Sometimes when you go to a shopping mall parking lot you can havea problem. People don't hear you coming so they don't notice you.You need to knock-knock (on the window) to get theirattention.

"At the company we joke sometimes that we should put a recorderinside our car that you could turn on and it would go: Vroom,vroom."

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