New BYD hybrid gets jump in China's EV wars

After five years of toiling in the alternative energy trenches, Biyadi (BYD) is set to introduce its new model, the F3DM plug-in hybrid car. With this launch, BYD will reach the hybrid market, will indeed originate it, two to three years earlier in China than the overseas auto giants. For the first time, a Chinese automaker is leading in auto technology and China's electric car market may become the new battlefield of global car producers.

The Ministry of Industry and Information Technology recently added the F3DM into its new car catalog, and will allow its sale in 14 cities in China. BYD announced it will hit the market on December 15.

Wang Jianjun, assistant to general manager of BYD, said the price had not been finally decided upon, but the rumored 15,000 yuan was certainly too low. But, Wang said, the F3DM is very advanced in technology and will be highly competitive with any rivals in costs, since the company has stuck to a vertically integrated production chain.

He said the company hopes the central government will support the new car model through taxation, usage, and in other ways, just as European countries and the US have done with some of their own models. Wang said that every battery costs about 50,000 yuan before mass production, but that the price will drop to about 30,000 yuan when the production volume reaches 100,000.

Despite its leading position and the hope of favorable government policies, for BYD, there's still a long way to go. Price and consumer demand are the biggest obstacles for acceptance of the F3DM.

In the traditional auto area, BYD can always follow the leading companies in their market approach, but as the new leader in the new Chinese electric car market, BYD will need to define and explore the market on its own. 

BYD has followed leading companies after entering the auto industry with its and its successful F3 and F0 series in the small and medium car area with high quality and low price. In the medium and high class auto market, which is not price sensitive, its F6 series has faced greater obstacles. 　　

Fierce Competition On New Energy Car

BYD General Manager Xia Zhibing has spoken several times over the past five years of the company's detailed plans for production of a completely electric car. It has, in fact, been manufacturing traditional cars to finance such a vehicle. Along side of this, BYD has also become the world's leading battery producer.

But at least for the moment, the electric car is still in the lab, with difficulties to overcome for mass production. The hybrid car is a transitional model before the new energy vehicle can be widely produced. Toyota's Prius hybrid, going on 11 years old next month, faced serious doubts when it was first launched on the market, but it has now been accepted by the US mainstream and occupies 50% share of the US alternative energy car market.

Despite of the influence of the financial crisis and market decline, the auto giants have poured money into the development of the new energy cars in order to gain a favorable position in what is sure to be a competitive market after the crisis.

Electricity is becoming more and more important among development channels for new energy automobiles. According to a recent McKinsey research report, the electric car is the best new energy development. A.T. Kearney, a global management consulting firm, declared in the research report released during Guangzhou Auto Show that electric cars will be mainstream on the market by 2020 due to high oil price and supportive policies.

Toyota will move its focus back to an all-electric car this year. Toyota declared in August that it was developing a new type of small electric car, and would be put into production in 2010. A Prius hybrid car with rechargeable battery, originally to be launched in 2010, will be on the market in 2009.

GM's withdrawal from the new energy car area in 1999 ceded to Toyota leadership in this area. However, due to the current crisis, GM's development of its own electric car, the VOLT, is crucial for the company's future. In June this year GM's board approved the mass production of VOLT. The car is scheduled to be launched on the US market in 2010 and the Chinese market in 2011. BYD's F3DM, on the market next month, has at least a two-year lead on it.

No wonder Warren Buffett bought into BYD.