BYD Adds Plug-In as China Gets Edge on Toyota, GM
By Tian Ying
Dec. 15 (Bloomberg) -- BYD Co., the Chinese automaker backed by Warren Buffett, started selling the world’s first mass-produced plug-in hybrid, gaining an edge on Toyota Motor Corp. and General Motors Corp. in electric-powered vehicles.
The F3 DM can run for 100 kilometers (62 miles) using only batteries, Shenzhen-based BYD said in a statement today. Toyota plans to begin testing plug-ins, which can be recharged from household powerpoints, late next year, it said in August. GM aims to start selling the Volt plug-in in late 2010.
BYD surged 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 is making progress in the right direction,” said Yale Zhang, director at CSM Asia. “Still, a lack of fast recharging facilities and other infrastructure is handicapping BYD’s efforts.”
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 today.
“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.
The company, also China’s biggest maker of rechargeable batteries, rose 16 percent to HK$13.32 at the close in Hong Kong. It has fallen 1.9 percent this year compared with a 46 percent plunge for the benchmark Hang Seng Index.
Rechargeable Batteries
The F3 DM’s batteries can be fully recharged from a power point in as little as seven hours and 50 percent powered via a quick charge at a specialist station in 10 minutes, BYD said. The car also has a gasoline engine as a back-up power source.
The car costs from 149,800 yuan ($22,000), said Xia Zhibing, BYD’s sales head. That compares with Toyota’s Prius, which costs from 259,800 yuan. The high price of hybrids and the lack of charging stations have damped demand in China. The Prius, the bestselling hybrid in China, racked up 748 sales nationwide in the first ten months of the year.
Still, GM started selling a Buick LacCrosse Eco-Hybrid in July and Nissan Motor Co., Japan’s third-largest automaker, intends to begin offering electric cars in China by 2012.
China Support
The Chinese government plans to support domestic automakers’ research into alternative-energy vehicles in a bid to have 60,000 on the roads of 10 cities by 2012. BYD has signed a deal for “financial cooperation” with Export-Import Bank of China, it said without elaboration.
The government may subsidize hybrid cars to cut costs for consumers, Wang said. The State Council is also set to consider a plan to scrap a sales tax on vehicles with engines of less than 1.6 liters, he added.
“It would be a very big push for car sales,” if the sales tax plan is approved, Wang said. The government has also altered fuel taxes and is mulling ways to encourage people to buy cars on credit to help revive vehicle sales, which have fallen for three out of the last four months.
BYD will initially target the F3 DM at government agencies and corporate customers, Wang said. The Shenzhen local government and China Construction Bank today signed deals to buy a total of 50 cars.
Regulatory Steps
U.S. sales of the F3 DM will likely start in 2011, Wang said. They may begin earlier if the company can complete the necessary regulatory steps more quickly than expected, he added.
Buffett’s MidAmerican Energy Holdings Co. in September bought 9.9 percent of BYD for HK$1.8 billion ($232 million). The stake sale may help the automaker boost its profile overseas and also reassure potential customers, Wang said.
“Buffett’s investment helps us enhance our brand image,” he added. “It’s a long-term investment and it will help our growth in the long run.”
BYD is working with MidAmerican to develop batteries that store power generated from wind and power sources, Wang said. The products may be commercialized in one to two years, he said.
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