China builds a green dream machine

The Asian country is known more for its pollution than environmental credentials – but a hybrid carmaker is winning the global eco-race

Helena Iveson
The Guardian, Thursday 26 February 2009

The Chinese government supports the production of hybrid cars such as those built at the BYD plant in Xi’an.

China's horrific air pollution is hardly a state secret, causing about 656,000 deaths annually, according to the World Health Organisation. But what is more of a surprise is the arrival of a new, local car manufacturer with breathtaking ambitions, supported by a government seeking to become a world leader when it comes to green technology.
BYD Auto – short for Build Your Dreams – was only founded in 2003, yet it has pulled off a global coup by mass-­producing the world's first plug-in, petrol-­electric hybrid, the nifty-looking BYD F3DM (byd.com). Under the bonnet, the car is more of a purely electric car than any similar hybrids on the road today, and has made its debut at least a year ahead of similar models from the US and Japan.
This year's model
The car, which does not need a specialised electric charging station and can be charged using a normal household supply, is now on sale in China, where it costs just under 150,000 yuan (£15,000), a similar price to a mid-range petrol-powered sedan and a bit more than half the 250,000 yuan it costs to buy a Toyota Prius. BYD has come from nowhere to sell 24,107 vehicles in January alone, an increase of nearly 80% from the previous year, and aims to sell 400,000 models in China this year.
BYD aims to tap into the world's fastest-growing auto market as China's emerging middle class – now estimated to number between 100 million and 150 million people – swap their bicycles for four wheels. While the economic crisis has sent vehicle sales tumbling around the world, Beijing alone is still adding more than 1,500 new cars to its gridlock every day. "The use of alternative types of cars could really make a contribution to the reduction of pollution in large Chinese cities," says Karl-Thomas Neumann, chairman of the carparts manufacturer Continental.
A survey by Continental shows that Chinese consumers are much more interested in hybrids than their European counterparts, with 53.7% of those surveyed happy to buy a hybrid and 73.4% who would consider an electric car – decidedly more green than the UK's respective 30.2% and 37.1%. Chinese drivers are more open to hybrids as "more than 90% drive in urban centres and travel less than 60 miles a day", says Paul Lin, BYD Auto's marketing manager. Hybrids come into their own in cities because of their limited range and top speeds. In queues, the car's electric engine shuts down before restarting when the car moves again.
While the auto company is a newcomer, its parent company, BYD – which itself has only been around since 1995 – is the world's biggest supplier of rechargeable batteries, giving them a huge jumpstart when it comes to the production of hybrid and electric cars. And the company has audacious ambitions – it aims to be China's No 1 car firm by 2015, and world No 1 in 2025. BYD vehicles will be launched in Europe – provisionally Denmark, because of its friendly tax policies towards green technology – in 2011.
"We respect our competitors abroad," says Lin, "but we are aiming to show that we can not only compete on the world stage, but dominate."
Environmentalists and Chinese commuters frustrated at the rising price of fuel aren't the only ones with their fingers crossed that the car takes off. The US investment guru Warren Buffet has bought a 10% stake in the firm for $232m.
In China, electricity is cheap, though this is produced by burning coal. The company decided to avoid building expensive charging stations. "Most Chinese live in apartments and don't have their own garages, so instead, drivers unplug the battery and charge it in their homes overnight," says Lin. The car has a range of 62 miles on a fully charged battery, and once the battery runs out, the car switches into hybrid mode. Lin claims the batteries will not degrade until they have been fully charged 2,000 times, which should take seven years, and even then, the battery's capacity only drops to 80%.
Communist revolution
Of course, one company alone won't change China's dirty habits, let alone those of the world, says Bradley Berman, editor of Hybridcars.com. "BYD deserves credit for producing plug-in hybrids. But to make a real dent in auto pollution, these plug-in cars will need to scale up to hundreds of thousands per year. So, it's not who's first with the first models. Environmental and economic success will come with high-volume production sustained over many years," he says.
An analyst with IHS Global Insight Auto, Duan Chengwu, says China's advances in green technology have come about because of backing from its most dominant power source – its Communist government. "The government firmly supports these companies producing hybrids and electric cars," says Duan. Measures to stimulate the ailing car industry include the halving of sales tax on certain cars, subsidies for owners of high-emission vehicles who exchange them for more fuel-efficient vehicles and a 10bn yuan fund to promote new technology. Thirteen cities, including Beijing and Shanghai, offer subsidies to hybrid buyers.
While combating pollution problems is one incentive, the Chinese government has another reason to push green technology: pride. "The government wants to leapfrog western countries and become a global leader in the field," Duan says. "The country is years behind its competitors in the auto industry as a whole, but when it comes to green technology, everyone is starting from scratch. In this scenario, China has a great opportunity."
Four wheels good
The most famous hybrid car of choice is still the Toyota Prius, the first mass-produced model. The car is essentially petrol-fuelled but has an electric engine that propels the car at low speeds and assists the main engine when accelerating. First launched in Japan in 1997 before going worldwide in 2001, more than 1m Prius hybrids have been sold. There will be a plug-in version of the Prius for fleet customers by the end of the year, and the company also recently announced they will produce a commuter battery-electric vehicle by 2012.
General Motors won't be joining the electric car fray until 2011, when it says it will launch the Chevy Volt in the US. The car will have a lithium-ion battery with a petrol-powered engine that drives a generator to provide electricity when you drive beyond its 40-mile battery range. The Volt is expected to cost around $40,000 (£27,500).
Here in the UK, the independent car company Lightning wins the award for the most stylish option – their swish-looking fully electric Lightning model looks like something an eco-friendly James Bond would drive, and should be available from late 2010. The catch? An estimated asking price of £120,000.