labels: Automotive, News reports (automotive)
Buffett-backed BYD introduces first hybrid car in China news
16 December 2008

Even as automakers worldwide cut down on production in the face of declining demand, Warren Buffet-backed Chinese company BYD, which stands for Build Your Dream, beat Japanese and US automakers to release the first plug-in hybrid car in China.

If it fulfills its promises, the cheaper car may have a good chance against Toyota Motor's Prius in the urban Chinese market and has  come at a time when China has been encouraging automakers to develop alternative-energy vehicles, thereby curbing its oil imports as well as cutting carbon emissions. (View picture gallery)

Once again billionaire investor Buffett has shown his business acumen by investing in BYD in late September in a departure from his traditional stance of avoiding high-technology companies. (See: Warren Buffett moves into electric car market with $231 million investment in Chinese firm BYD)

The strategy seems to have paid off with shares of the company surging the most in two months in Hong Kong trading after saying the new model and government tax breaks for small cars would help it almost double vehicle sales next year. China is encouraging automakers to develop alternative-energy vehicles to curb oil imports and to help local companies challenge GM and Toyota, the world's biggest hybrid-car maker, overseas.

BYD's F3DM model operates in either full electric or gas-electric modes, and contains an electric battery that can be charged at a regular plug or at a recharging station. It can travel up to 100 kilometres solely on battery power, and contains a back-up gas engine, BYD said on Monday.  (See: ITM Power runs Ford Focus 40km on home-charged hydrogen)

He further added that the new car's total range of gasoline and electricity could reach 500 km per charge, which could make it possible to travel short distance powered by electricity and long distance powered by gasoline.

Drivers alternate between the two power modes by flipping a switch: the electric mode is optimal for city driving, as gas engines are more wasteful under constant acceleration and deceleration, and the gas-electric mode is more appropriate for travel on highways and outside of cities.

The battery takes up to seven hours to charge with a regular plug, and up to 15 minutes to be 80 per cent charged at a special recharging station. The automaker expects to boost total sales to 350,000 cars next year from an expected 180,000 this year, founder and Chairman Wang Chuanfu told reporters in Shenzhen yesterday. Various state-run companies, such as China Construction Bank, and local governments, such as Shenzhen, reportedly have already placed orders.

''The development of electric-powered vehicles is the best way for the Chinese auto industry to surpass other leading countries,'' Wang said at an unveiling ceremony. BYD currently sells gasoline models such as the F3, F6 and F8. It plans to add at least five new models next year.

GM announced ambitious plans to bring the concept electric hybrid car Chevrolet Volt to the consumer by 2010 (See: General Motors to electrify car market in 2010 with the Chevrolet Volt)

Honda Motor plans to launch the five doors, five passenger hatchback, and compact hybrid-only car in April 2009 in North America. (See: Honda to launch low-cost hybrid only car in April 2009)

The Japanese automaker Toyota is developing a small plug-in hybrids all-electric car for sale early in the 2010. Other big automakers, such as Tata Motors, Nissan and Mitsubishi, have also announced plans for electric vehicles. And many smaller companies are also developing electric cars or light trucks companies such as Bay Area-based Tesla Motors, California. It seems that most major car makers will have plugs-in cars launched between 2010 and 2012.

Today the top-selling hybrid vehicle in China are Toyota's Prius which charges automatically when gas-powered engine energy starts discarding and switches to the electric battery. However, in BDY's F3DM there is a switch to shift from electricity to gas which has to be done manually. So technically Pirus has the advantage in design but F3DM has 100 km for each charge of electricity with a total range of gasoline and electricity of 500 km per charge.

BDY's ''F3DM'' priced at 1,49,800 yuan ($22,000) is much lower and affordable than that of Toyota's Prius , which costs from 2,59,800 yuan. The only dampening factor world over is that lack of charging station network facility which will hamper the sales of these cars. In order to encourage eco-friendly cars the Chinese government may give subsidy under its emissions-curbing programme.

Hong Kong listed BYD Company Limited established in 1995, has two main industrial clusters, IT industry and auto industry. It has seven production bases with branches and offices in America, Europe, Japan, South Korea, India, Taiwan, Hong Kong and other regions.

IT products include rechargeable battery, LCD/LCM, plastic casing, keypad, FPC, camera lens, charger with many customers including Nokia, Motorola, Samsung and is ranked No.1 in the world for Nickel-battery, cell phone used Li- battery and keypad.

In 2003, BYD officially entered auto business by purchasing the Tsinchuan Automobile Company Limited. It has bases in four main industry areas in Shenzhen, Shanghai, Xi'an and Beijing, Its main car models include F3, F3-R, F6, F8, DM EV.

BDY's push to develop the unique dual engine hybrid car caught the attention of Warren Buffett , who amidst the US financial crisis bought a 9.9-per cent stake in BYD for HK$1.8 billion through his MidAmerican Energy Holdings, a unit of Warren Buffett's Berkshire Hathaway, in September.

Chairman Wang Chuanfu said that Buffett's investment helps us enhance our brand image. He added that it's a long-term investment and it will help our growth in the long run.

The company, also China's biggest maker of rechargeable batteries, rose 16 per cent to HK$13.32 at the close in Hong Kong. It has fallen 1.9 per cent this year compared with a 46 per cent plunge for the benchmark Hang Seng Index.

One of the world's biggest producers of rechargeable batteries for cell phones and laptops by sales, BYD moved into the auto market five years ago. Toyota, General Motors and Nissan Motor are reportedly likely to start selling a plug-in or electric car in China after 2009.

BYD plans to launch this model in the US and European markets in 2011. The car has received good response from various state-run companies - the Shenzhen Municipal Government and China Construction Bank who are reported to have already placed orders.

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Buffett-backed BYD introduces first hybrid car in China