Buffett's Chinese green cars come to pass

In October, the Examiner reported that Warren Buffett had purchased 10 per cent stake in China-based battery and electric car manufacturer BYD. Little did anyone know that China's Ministry of Finance will spend up to 20 billion yuan ($2.92 billion US) over four years to support the manufacture and consumption of alternative-energy vehicles.

Guangdong-based BYD will be the first mainland car maker to launch a plug-in hybrid, the F3DM, in Shenzhen next month. BYD founder and Chairman Wang Chuanfu said in an interview at the North American International Auto Show in Detroit earlier this year that the FDM3 may be priced $6,000 higher than their gasoline-powered cars. The company's F3 model is priced at 59,800 yuan ($8,254 US), about half the price of Korean Hyundai Motor's Accent.

BYD began making cars in 2003 after taking over Qinchuan Automobile Company. They built their 100,000th vehicle four years later, making it the first Chinese car maker to reach this tally so quickly, according to the company's Web site.

Wang Baoan, a Ministry of Finance official, said at a Chongqing vehicle conference that the government will subsidize car makers and implement tax concessions to customers who buy an environmentally friendly vehicle. He explained that public transportation, taxis and postal cars will be replaced with alternative energy vehicles and Chongqing will be the first city in the trial.

Chinese car owners pay a 10 per cent consumption tax plus a 17 per cent value-added tax when they buy a vehicle. Mainland media reported in May that the government was discussing the possibility of cutting the VAT from 17 per cent in the second half to reduce the cost of buying hybrid or diesel cars.

BYD's Wang Chuanfu made a big splash at the Detroit Auto Show when he took an auto journalist for a drive around the auditorium. The original idea was that the chairman would drive the car back and forth a few feet for the cameras. Instead, as the translator cooly explains the merits of this clearly workable prototype, the chairman pointed the BYD F6DM Dual Mode Ferrous Battery Hybrid down the show isles as though he was out for a Sunday drive in Shenzhen.

BYD's FDM6 looks really nice and should arrive in the US by mid-year 2009. In the mean time, Warren Buffett is going to help launch China's green auto revolution.