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China's Plucky Plug-In Hybrid


BYD's car hits the stage at the Detroit auto show—but will it really be ready to roll this summer?

In recent years, China's upstart carmakers have flocked to major auto expos with low-priced offerings aimed at global markets. This year's Detroit auto show, which opens on Jan. 13, will be little different. But this time around, one company, BYD Auto, won't just show the usual compacts and subcompacts. BYD plans to exhibit a plug-in hybrid, the F6DM (for "dual mode"), that it says will hit the market in China this summer. Although the car won't reach the U.S. for years, if ever, it would be the first plug-in to be commercially available—allowing BYD to steal a march on General Motors (GM), which is expecting to launch the Chevrolet Volt in 2010.

The question is whether BYD, which has been in the car business for just five years, can manage what it's promising. Claims made at auto shows should be greeted with a healthy dose of skepticism, and when it comes to something as advanced as a plug-in hybrid, myriad problems could crop up. Plug-ins are similar to Toyota's (TM) popular Prius, with a small gasoline engine as well as an electric motor, but can also be recharged by plugging into a standard outlet. This offers far greater fuel economy but requires more sophisticated batteries. "Anyone can show a demonstration vehicle," says Menahem Anderman, president of Total Battery Consulting, which advises carmakers on electrics. "You need at least three or four years of testing before you can go into production."

BYD swears it can deliver. Its parent is a top maker of batteries for cell phones and MP3 players. BYD has been developing hybrids and electric cars for four years and has a system that strings together about 100 small batteries into one pack. On the test track, BYD says, the F6DM can travel 60 miles on electric power before the gasoline engine must kick in to recharge, whereas GM says the Volt can go only about 40 miles before it needs the engine. The F6DM's battery can be fully recharged after plugging into an outlet for nine hours, BYD says, compared with six hours for the Volt.

EUROPEAN DESIGNERS

BYD's goal is ambitious, but the young carmaker shouldn't be discounted. Chairman Wang Chuanfu is a respected industrialist who has built a leading player in lithium-ion cells, the storage system of choice for tomorrow's autos. Last year, BYD sold 89,000 small and midsize cars (with conventional engines) through November, up 63% over the same period in 2006. And Wang has tapped European designers to style his cars, giving BYD a fashionable image at home.

Still, the plug-in hybrid will present a host of challenges. Cell-phone batteries are simple compared with those required for more demanding machines such as laptops—something BYD doesn't supply—and making the leap to cars will be even tougher. GM, for instance, says the complex technology might delay the launch of the Volt, which it introduced at the Detroit show last year. And don't expect BYD or any of its Chinese rivals to start selling cars in the U.S. anytime soon. The quality isn't there, says Michael Dunne, president of consultancy Automotive Resources Asia, and the Chinese don't have the dealer networks they'd need to succeed in the U.S. They may make a big splash at the Detroit show, Dunne says, but doing real business stateside "is at least four years away."

LINKS

Heavy Metal in Detroit

Green will surely be a big theme at this year's Detroit auto show, with lots of hybrid, fuel-cell, and flex-fuel vehicles on display. But the industry still loves heavy metal. As Autoblog reports, Hummer (GM) plans a concept with a 3.6-liter engine; Cadillac has the CTS-V, a sedan with a 550-horsepower V-8; and Lincoln will offer a crossover called the MKT. Hyundai, meanwhile, is going upscale with the 3.8-liter Genesis sedan, and Ford (F) will have a revamped Explorer SUV.

Business Exchange related topics:

Hybrid Cars

China Innovation

Global Auto Industry

Welch is BusinessWeek's Detroit bureau chief.

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