GM making EV in China with prototype out at year-end

General Motors has started making an electric version of its popular Chevrolet New Sail in China and will roll out prototypes before year-end, making it the first foreign automaker to build electric cars in the world's biggest auto market.

GM, the top foreign automaker in China, is well-positioned to get a head-start over its rivals in the country's fledgling green vehicle business, which analysts say could be the next hotly contested sector.

"Shanghai GM has started making the electric New Sail and a prototype will be available at the year-end," a source with knowledge of the matter told Reuters on Thursday.

It will initially roll out a small number of electric New Sail cars to test the market, said the source.

A GM China spokeswoman confirmed the plan, saying it's part of Shanghai GM's green vehicle campaign.

Shanghai GM is the Detroit automaker's car venture with top Chinese auto group SAIC Motor Corp, which makes Chevrolet, Buick and Cadillac models.

In June, Beijing unveiled a pilot scheme to hand out subsidies to buyers of fuel-efficient cars in five Chinese cities as it moves to cut emissions in the world's most populous country, which is also the world's largest producer of greenhouse gases.

But the handouts, which favor electric vehicles and plug-in hybrids, only cover locally made green models, reflecting Beijing's resolve to promote domestic brands, such as Warren Buffett-backed BYD.

Buyers for BYD's F3DM plug-in hybrid, for instance, could enjoy a roughly 30 percent discount to its price tag of 169,800 yuan ($24,870).

That puts GM's Chevy Volt, which it will roll out in China in late 2011, and Nissan Motor's Leaf at a significant disadvantage and makes the models too expensive for many Chinese buyers.

But the locally made electric New Sail would be eligible for the subsidies, which could run as high as 60,000 yuan per car, giving the Detroit automaker an edge over its rivals, industry observers say.

GREEN DRIVE

GM's Shanghai venture also plans to launch the hybrid version of its popular Buick New Regal in 2011 as part of its ongoing green auto initiative.

Other foreign automakers are also getting ready to join the green car race.

Nissan, which runs an auto venture with Dongfeng Motor Group, had earlier signed a deal with the municipal government of Wuhan to jointly promote its Leaf in the central Chinese city.

Toyota Motor also added a Camry Hybrid to its China-made green auto line-up, which also includes the Prius.

Volkswagen AG, Ford Motor, among others are also working harder than ever to improve the efficiency of their models.