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BYD to mass produce electric car!

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BYD displays prototype electric vehicle at Beijing motor show

Xi'an, Shaanxi-based BYD Automobile, a manufacturer of cars and car batteries, has premiered its F3e model at the Beijing motor show.

According to its maker, the F3e produces zero pollution and zero noise.
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BYD to release more electric car models in 2009

December 29, 2008
In an interview with Automotive News China, the president of BYD (Build Your Dreams), Wang Chuanfu, said that in addition to the recent Chinese release of the F3DM — the world's first plug-in hybrid production car — he expects his company to release two more electric car models in 2009.

The F3DM, which does not look like a three wheeled motorcycle or a minivan shrunk quarter size as you may have come to expect, and instead looks like a normal sedan, will be buttressed in 2009 by the release in China of the F6DM sedan, and an entirely electric van, the E6, capable of seating seven.

American government regulations are what will keep all of those cars from hitting the US market right away, according to Chuanfu. Even so, he thinks that BYD will be able to release cars in the US and Europe by 2011. Regardless of the delay in getting the vehicles stateside, the new releases in China mean that the company will have three electric vehicles on the road in 2009, while no other major automaker has managed to produce even one.

The F3DM sedan can be plugged into a regular outlet at home. Astonishingly, according to BYD, the sixty-mile range battery that powers the F3DM can be charged to half capacity in just ten minutes at a specialized charging station. DM stands for dual mode, which means the car can run purely as an electric vehicle (which it does for the first sixty miles), and then shift to a gasoline engine for greater range.

But will the company soon suffer from the financial strains that are affecting the rest of the car industry? Not according to Mr. Chuanfu. He says of Warren Buffett's recent $230 million investment in BYD, "The money is enough for us to spend for awhile."
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My money's on China to produce world-changing electric car

April 25, 2009


Avner Mandelman is president and chief investment officer of Giraffe Capital Corp. and the author of The Sleuth Investor.

Once in a while an invention comes along that changes the world: Gunpowder. Printing press. Steam engine. Telegraph. Telephone. Model T Ford. Television. Computers - first mainframes, then PCs. The Internet. And now - maybe - the electric car.

I'm not talking hybrids here. I am talking a pure electric that runs on batteries, travels 200 kilometres on one charge, drives fast, consumes electricity equivalent to the cost of a gasoline engine getting 240 mpg, needs a one-hour charge for each travel hour - yet costs less than $25,000 and can be fixed by the local electrician and bicycle repairman.

Such a car, if it existed, would change the world: There'd be less pollution, less noise, less power wielded by evil madmen selling oil, less wars, less global warming, more capital for good uses ... Or am I off base? If I am, Warren Buffett is off, too. Last fall, he plunked down $230-million (U.S.) for 10 per cent of BYD, a Chinese private company making pure electrics. Some are soon to be tested in a regular corporate fleet in Portland, Ore., allegedly before being marketed and sold in North America.

Why did Mr. Buffett do it? Yes, BYD Auto's founder and chief, Wang Chuanfu, is dynamic, but the world-changing potential of the electric car is more so. And why China - are there no cheap electrics in the West? Not really. The Canadian Zenn car costs too much for the little it does; the Volt is made by the UAW (enough said); and the American Tesla has made big claims but has mostly taken deposits. Yes, you could order a Tesla today; it would cost you $100,000, run smoothly and fast, and could be charged off your home socket. But of the $100,000 price tag, $60,000 covers the battery - which lasts only three to four years, and the company makes fewer than a hundred Teslas a year. So not only is it not cheap, it's also not available.

The Tesla's problems reflect the three common problems of most Western electric cars: the need for a cheap battery that lasts; the need to produce lots of cars; and the need for a big company to back it all up. Let's take these in order.

To make an inexpensive battery ($10,000, say), you need really cheap lithium deposits, billions of dollars for a huge production line of Model T-like proportions, and super know-how. In all these the West is deficient. Yes, lithium is everywhere, but the cheapest deposits are in Australia (small), Chile (okay), and Tibet - best and large, and controlled by China (one reason Tibet will likely never be free). As for billions of dollars needed for a production line, China is among the world leaders in batteries. (BYD is also the world's biggest maker of cellphone batteries.)

As to know-how: A dirty little tech secret is that the West is a relative slouch in chemistry; few bright students study it since environmentalists gave it a bad name. In China, though, many bright people study chemistry, so most innovative batteries today are Chinese-made. One day we might see a big production line of lithium batteries close to Tibet, to power all those BYD electric cars. (Incidentally, could electric motor production be why China has been buying copper massively?)

Now, for the final reason why pure electrics can't be produced in the West. Aside from the labour-cost disparity, no big company in the West really wants to do it. China doesn't have a major stake in traditional car manufacturing, but the Japanese, South Koreans, Americans and Canadians have lots of jobs and pensions (and car dealerships) tied to existing cars, so politically things can't change quickly. (Witness Detroit and Windsor.) In particular, car companies have little interest in pure electrics. This isn't a question of a conspiracy, but of commerce. If they made a really inexpensive electric car, it would drive down the value of all their used (gasoline) cars, and would dissuade buyers of new (gasoline) cars. The Chinese don't mind wrecking the old automotive system - matter of fact, the Chinese government is 100 per cent behind the pure-electric effort. So a $20,000 to $25,000 Chinese pure electric car is likely to be sold here in three to five years, in my opinion.

And Warren Buffett will make a heap of money on it.

What would the world look like then? First off, over time, oil could become somewhat less of a factor in civilian economies. Since there would be alternatives, its competitive price would hinge on marginal cost of production. Yes, in war times oil price will zoom, but afterward electrics would put a cap on it. (FYI, oil's marginal production cost is $20 [U.S.] to $25 a barrel on average - half its current price.)

As well, the environment would look very different, with less pollution as nuclear power makes electricity smog-less. The electric grid would have to be expanded, but not immediately, because the North American grid is not fully used at night (when most cars would be charged). And yes, planes would still need petroleum, as would the machines of war, and the petrochemical industry (that's polyester for you). But cars could use electricity, so repair and spare parts would be a smaller business (aside from battery handling - lithium can be tricky stuff), so more of the manufacturing base could move offshore. And the car you'd be driving 10 years hence would likely be Chinese, with BYD nearly as big as Toyota.

Am I off base? I don't think so. As BYD's Mr. Wang said: I cannot compete with Toyota in cars whose engines have 1,500 moving parts. But my electric engines have only 45 moving parts. There I can compete.

What are the investment implications? Stocks to do with the electrical grid, nuclear power, or car electronics, yes. Investment in oil producing dictatorships, no. And closer to home: With cheap and reliable electric cars, could large suburban houses be good investments yet again?
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