At the 2009 Auto Show in Shanghai (the heart of China’s automobile industry), executives from most of the world’s top auto companies appeared to showcase their newest products and keep an eye on the competition. Especially notable at this year’s event was that almost every major manufacturer, as well as several smaller companies, had a pure electric vehicle on display. The number of electric vehicles by Chinese companies? Eight. And perhaps the most notable of those companies is BYD (Build Your Dreams).
BYD Auto started out as a rechargeable-battery manufacturer. In the past couple of years it has tried to make a significant push into the electric vehicle market, even attracting attention from Warren Buffet who invested $230 million in the firm for a 9.8% stake. The company is in a unique position, being headquartered in one of the only countries whose car sales are still growing at impessive rates. So far in 2009, China has been the world’s largest automobile market with an annualized rate of 11 million units sold, surpassing the United States rate of 10 million units. To keep up with the trend, and make further inroads into the industry, BYD has employed 11,000 technicians and engineers to work on its battery technology. While the Big 3 in Detroit are cutting costs and looking for further bailouts, auto shows such as these probably serve as a reminder that “green” technology is one area that should not be trimmed.
Another force contributing to Chinese growth is the Chinese government. Large companies are eligible for $8,800 in subsidies for each electric vehicle they purchase. Additionally, Beijing has announced $1.5 billion in grants in order to stimulate research into plug-in and hybrid research. It is clear Beijing officials want to become leaders in this technology, and they have another lever at their disposal: gas prices. The price of gasoline is partially controlled by the Chinese government, and if they want to stimulate purchases of electric vehicles they may choose to raise these prices as one way to accomplish their goal.
While most industry watchers believe that, for the moment, Chinese battery technology is not as advanced as its global competitors, conditions might be ripe for a change. With several vehicle options already out on the road, combined with significant government incentives, and the stop-and-go traffic that makes battery engines most economical, the world’s largest automobile market might be the first to make the switch.
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