BYD's cheap green cars to enter developed market

At a time when Western international car makers are exploring opportunities in emerging markets, a start-up China auto company, BYD Auto, is adopting a similar strategy to explore overseas markets as domestic demand is softening due to a slow-down in the home economy.

President Wang Chuanfu says BYD’s global strategy is to expand into Europe, the US, Russia, the Middle East and Latin America. BYD Auto is counting on its plug-in hybrid models, known as the Dual Mode (DM) series, to break into the European and US markets. Its F3DM, to be launched by the end of this year, is going to be the world’s cheapest hybrid automobile, starting at RMB 100, 000, around US $15,000.

Its fully electric E6 and plug-in hybrid electric F6DM will hit the market in Israel in 2009, well ahead of the appearance of GM’s Chevy Volt, which will only begin production in 2010. The BYD electric car was selected as the key project for bilateral commercial cooperation by the Israeli government and the Ministry of Commerce of China.

The company’s choice to launch its two new-energy models in Israel appears to be a smart one, supported as it is by that country’s embrace of the electric car revolution and its plans, through Project Better Place and the aid of tax incentives, to build a nation-wide electric service network by 2011.

Taking a further step, BYD has also selected a Dutch dealer as its sole importer for the Netherlands, Slovakia, the Czech Republic, Slovenia and Hungary, where sales of BYD automobiles will start around 2010. The company is determined to pass European crash safety and emission standards by 2009.

At the beginning of this year, BYD Auto showcased its plug-in hybrid electric vehicle technology at the North American International Auto Show. Its F6DM, a 1,800kg vehicle, with a top speed of 160 km per hour, is Euro IV compliant, and emits only 70 gram CO2 per km. Wang Chuanfu said that he hoped to have DM technology on sale in the North American market in three to five years.

Leveraging its own technology and production capacity for rechargeable batteries, BYD is pursuing its green vehicle R&D at a very low cost.

The company announced in its interim report for 2008 that, in the first half year, revenues totaled RMB 3.8 billion, an increase of 71% compared to the same period last year. Car sales volume amounted to 72,357 units, a year-on-year increase of 94%. The company plans to double its sales, setting its target for 2008 at 200,000 units, and 400,000 units for 2009.

This year, BYD plans to invest RMB 5 billion in purchasing property, building factories and upgrading production capacity in China. It is also in the process of setting up two CKD (Completely Knock Down) factories, one in Russia and another Egypt.

The company is vying to push its low-cost vehicles into world markets, as the Japanese did in the 70s and 80s. While the West often condemns China’s high CO2 emissions, BYD’s launch of green vehicles should be catch attention.