The Emerging East is Anything Intelligent’s ongoing series on China’s fast-paced technology development.
The Obama Administration announced a record $2.4 billion in grants to electric car and battery companies last week. The funding aims to propel an American hybrid and electric car industry that lags behind foreign competitors. With fuel-efficient cars seen as the new frontier for automakers, the world’s largest auto market needs to move swiftly if it hopes to keep jobs and facilities at home.
The Electric Car Industry
The success of electric cars depends heavily on battery technology. It must be small and light enough to fit in a car, powerful enough to drive a motor, and durable enough to hold charge through many cycles. Several automobile designs implement these lithium-ion batteries:
- Current hybrid electric vehicles compensate for a weaker battery by coupling gasoline and electric motors. This design allows the battery to recharge with kinetic energy from the gasoline engine. With an electric backup, the gas motor can also shut off when the car is not moving.
- New plug-in hybrids also have two motors, with the gasoline engine acting as a range extender. With a charged battery, the electric motor can independently drive the car.
- Electric cars require perfected battery technology, running only on electricity with no gasoline backup.
The eventual transition from electric-gasoline hybrids to completely electric cars opens opportunities for companies to break into the auto industry. Brian Wynne, president of the Electric Drive Transportation Association, told the New York Times that the industry’s “choke point is the availability of automobile-grade batteries.” This choke point is where the up-and-coming Chinese company BYD has entered the field.
BYD: “Build Your Dreams”
BYD, whose letters stand for its Chinese name, got its start in 1995 as a rechargeable battery manufacturer for various electronic devices. In 2003, it broke into the automobile industry with little experience in the complexities of automaking. Last fall, however, its car F3 became the bestselling sedan in China — the world’s second-largest auto market. Now buoyed by Warren Buffet’s 10%, $230 million investment in the company, BYD is making bigger splashes with its “dual-mode” F3DM.
F3DM is a plug-in hybrid, just like the upcoming Toyota Prius and Chevy Volt. But while the plug-in Prius is slated for release in 2012 and Volt in 2010, the F3DM is already for sale in China and may expand to western markets by 2011. The car travels 62 miles on a single charge and costs only $22,000 . By comparison, the Volt travels 40 miles and will cost as much as $40,000. The Prius is expected to travel 16 miles on battery and cost $48,000.
BYD also unveiled the e6 at the 2009 Detroit Auto Show, an all-electric car similar to the Tesla Roadster and Nissan Leaf. The California-based Tesla Motors leads the pack: its high-performance, 220-mile range Roadster is already in production. However, the sports car is priced at a lofty $101,000, although a more affordable, $50,000 Model S sedan is planned for 2012 availability. Nissan plans to release the Leaf in 2010 with a price tag above $40,000 and a range of about 100 miles. Meanwhile, BYD plans to begin production of its e6 late this year for Chinese markets. Its competitors will be watching closely: BYD has not released a price estimate but does claim the e6 can travel a staggering 249 miles on one charge.
How does a 2003 auto startup balloon into a 130,000 employee, electric car pioneer? BYD founder and CEO Wang Chuangfu has combined his battery expertise with a keen entrepreneurial vision. He has capitalized on China’s improving universities by drawing young, sharp engineers to BYD complexes. He has expanded labor-intensive facilities throughout China to take advantage of the country’s relatively cheap workers. And most importantly, he has developed an iron-phosphate technology which he claims trumps traditional lithium-ion batteries.
Looking Abroad
BYD plans to enter western markets in the next few years with both the F3DM and e6. While its cars may not match the performance, aesthetics, and features of its competitors, its low costs and impressive batteries should threaten its competitors. Given BYD’s startling rise in the auto industry, established Japanese and American carmakers should be prepared for BYD’s global ambitions.
Elu1299 studies environmental science and public policy at Harvard University.
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