China's First Plug-In Hybrid Car Rolls Out

The infrastructure for running electric cars is not quite in place in China, but BYD Auto's plug-in has a lot to offer

By Frederik Balfour

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While U.S. automakers struggle to survive after the Senate rejected a bailout for Detroit, one company from China may be showing a way forward for the industry. On Dec. 15, BYD Auto got a jump on General Motors (GM), Toyota (TM), and Nissan (NSANY) by introducing in its home town of Shenzhen the first mass-produced plug-in hybrid, the F3 DM. BYD's new car, with a $22,000 price tag, can run for up to 60 miles on a battery charged from an ordinary electricity outlet.

Early this year there was plenty of skepticism in auto circles about BYD's ability to put together a car that would ever become truly roadworthy. The company unveiled its plug-in hybrid at the Detroit Auto Show in January, and few outsiders figured the Chinese upstart, which had only been in the auto business since 2003, had the know-how to produce a commercially viable plug-in.

One person who seems to believe in the car's viability is Warren Buffett. In September, Des Moines-based MidAmerican Energy, which is controlled by Berkshire Hathaway (BRKA), paid $231 million for a 9.9% stake in BYD Auto's parent company BYD with a view to helping BYD distribute its cars in the U.S. by 2011.

U.S.-China Collaboration

Others believe in China's potential in developing cars that are more environmentally friendly. The F3 DM's China launch comes just a few days after Washington and Beijing announced plans to work together on green car technology: China's Science & Technology Ministry signed an agreement with the U.S. Energy Dept. to collaborate on battery technology to power cars on Dec. 11.

Although it's not much to look at—the F3 DM is based on the same platform as the gas-powered F3 sedan by BYD that resembles the Toyota Camry—driving one is remarkable. On a recent test drive at BYD's sprawling Shenzhen campus, the car's acceleration was impressive, going from zero to 60 in a respectable 10.5 seconds. What makes the experience so novel is the absence of engine noise, which heightens one's awareness of the sounds of rushing air and tires on the road. The car's top speed is about 100 mph, and it is capable of running for 60 miles before the batteries need recharging, which occurs automatically when the gas engine kicks in.

But the car faces an uphill climb to gain acceptance in a highly competitive Chinese auto market with dozens of manufacturers. After years of red-hot growth, China's vehicle sales are in a slump, falling 17% in November vs. a year ago. And Toyota's Prius has had a lackluster reception in China, having sold just 748 cars in the first 10 months of this year.

BYD's plug-in faces other challenges. Its battery pack takes about seven hours to recharge fully using a traditional power source, but most car owners live in apartment buildings with parking lots that don't provide electricity. "Infrastructure is a problem. It's not like North America, where everybody has independent housing where you have a plug-in in your garage," says Yale Zhang, director of greater China at automobile forecaster CSM Worldwide in Shanghai.