China's BYD to Bring Plug-in Hybrid, Electric Cars to U.S. in 2011

Due to low labor costs in China and low U.S. import taxes for electric vehicles, the electric car, F3DM, will be able to be sold for less than $20,000.

China's BYD Auto announced plans on Jan. 12 to enter the U.S. market in 2011 with a range of electric and plug-in hybrid vehicles. It would likely be the first Chinese automaker to enter the highly-competitive U.S. market and beat many established automakers in offering an extended-range electric vehicle to U.S. consumers.

General Motors, Chrysler and Nissan are expected to be the first to introduce electric cars in small quantities to the U.S. in 2010. Toyota expects to introduce a plug-in hybrid at the end of this year and a two-seater electric car in 2012. Ford plans to introduce a small electric car in 2011 and a plug-in hybrid in 2012.

Chairman Wang Chua-Fu said BYD will soon start developing a sales and distribution network in the U.S. "Our goal is to introduce BYD electric vehicles here in 2011 and set up our manufacturing facilities in U.S. when it is appropriate," Wang said as he unveiled the vehicles at the Detroit auto show.

The lineup will include the F3DM, the world's first mass-produced plug-in hybrid sedan, which went on sale in China last year, and the battery-powered e6, a mid-size five-passenger crossover vehicle with a range of up to 250 miles on a single charge.

Wang was joined by David Sokol, chairman of MidAmerican Energy Holdings, the energy wing of Warren Buffett's Berkshire Hathaway, which last fall acquired a 10% stake in BYD Auto's parent company, BYD Company Ltd.

"For the electric-vehicle market to mature, the underlying charging infrastructure and technologies must mature at least simultaneously, if not first," Sokol said. "We are working with BYD on developing charging technologies and infrastructure that would help promote plug-in hybrid and all-electric vehicles."

Established in 1995 thanks to a loan from Wang's family, BYD has clawed its way to becoming the second largest maker of lithium-ion batteries in the world, and got into building cars in 2003.

Due to low labor costs in China and low U.S. import taxes for electric vehicles, the F3DM will be able to be sold for less than $20,000 in the U.S. -- significantly lower than planned Japanese and U.S. models.

Some say lingering bad feelings about Chinese consumer goods following the discovery of lead in Chinese-made toys and traces of melanin in Chinese milk last year may turn many U.S. buyers off its entry into the U.S. auto market.

But competitors and analysts are not taking BYD's ambitions lightly. "There will be a lot of interest in big cities like New York and Los Angeles, and the fact that Warren Buffett invested in this company is reassuring," said analyst Jessica Caldwell of Edmunds.com. "The price is right, and some may find it fashionable, but sales are likely to be small, at least at the start."

"We dismiss any competition at our peril," said John Mendel, vice president of Automotive Operations for American Honda. "While there may be some initial stumbles, and some barriers to entry in terms of quality and standards, they will eventually get it right. So will India. So will other entrants to the market."

David Zuchowski, Hyundai vice president of sales, was a bit more skeptical. "My personal gut feeling is its (entry into the U.S. market) is still three to five years away," he said. "I think it may be India before China. The economy and the collapse of credit markets will prevent anything from happening in the next 12 months."

Copyright Agence France-Presse, 2009

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