BYD offers plug-in hybrid to individual buyers

By this time next week, China's BYD will become the first automaker to offer a mass-produced plug-in hybrid to individual buyers. That sounds like a major milestone, but the realities of such an event tell a different story. Despite fears that BYD and other Chinese carmakers will quickly dominate the emerging global market for plug-in cars, the introduction of advanced battery-powered vehicles in China will likely occur at a slower than expected pace.

The key question is if US sales of plug-in hybrids and electric cars will follow the Chinese narrative: media buzz, fleet sales, big government subsidies, and then a long tough battle to sell cars with big price premiums. The Chevy Volt plug-in hybrid and all-electric Nissan Leaf will begin rolling out to limited US markets late this year.

The F3DM, a plug-in hybrid promising about 60 miles of all-electric range and selling for around $22,000, was first offered to fleet buyers in late 2008. Yet, the company only managed to sell about 100 cars to government institutions. On the other hand, the gas-powered F3 compact car, China's best-selling model in 2009, sells for about $14,000. Sales of the gas-powered F3 helped BYD triple its net income last year to more than a half-billion dollars. Last year, BYD sold 450,000 gasoline-engine cars in China, more than doubling its 2008 sales and becoming the sixth biggest Chinese automaker.

Li Yizhong, minister of Information and Industrial Technology, said that the ministry was discussing direct consumer subsidies—at least several thousand dollars— for alternative vehicles like the F3DM. Meanwhile, the government is already providing aggressive tax cuts and Cash-For-Clunkers-style subsidies for gas-powered cars with small engines.

What Will It Take?

Shenzhen, where BYD is based, will be the first of 13 cities to put the F3DM on sale. BYD is not reluctant to set high goals—it plans to sell 24,000 plug-in hybrids in 2012 and 100,000 by 2015. At the national level, China is even more ambitious. It wants to see 500,000 hybrid and electric cars starting next year. The government plans to provide US $1.4 billion in funding to promote plug-in technologies over the next three years.

These are very big goals that will be difficult to reach. But it appears that BYD and the Chinese government will be diligent in pursuing their green car goals—even if target dates fall years behind.

Other global automakers don't intend to be left out. Earlier this month, BYD announced an agreement with German luxury-carmaker Daimler to develop and sells electric cars in China. This follows last year's announcement about a similar agreement with Volkswagen.