{"id":170549,"date":"2010-01-12T14:10:00","date_gmt":"2010-01-12T19:10:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-9074364060631162918"},"modified":"2010-01-12T14:21:13","modified_gmt":"2010-01-12T19:21:13","slug":"popular-mechanics-chinas-wide-eyed-dream-of-building-u-s-electric-vehicles","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/170549","title":{"rendered":"POPULAR MECHANICS: China’s Wide-Eyed Dream of Building U.S. Electric Vehicles"},"content":{"rendered":"

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The Chinese BYD E6 electric car is displayed during the the second press preview day at the 2010 North American International<\/p>\n


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<\/strong>A China invasion<\/strong> of the U.S. auto industry has been anticipated with fear and loathing for a decade. If companies enter the U.S. with impossibly cheap cars, the worries go, they could grab the attention and imagination of car buyers, especially the next generation of car buyer who have a more global view of culture and brands than their parents and grandparents. Havoc would then be wreaked upon Detroit and the established Japanese imports.<\/span>
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Of course, it is clear that the U.S. auto industry did not need Chinese imports to run it off the road. The casino environment of Wall Street, an over-fed housing market, a collapse in the credit markets and management inertia in Detroit took care of that. And as the industry picks itself off the pavement in 2010, the Chinese will be here, though not in the way we have been led to believe.<\/p>\n

As the North American International Auto Show is in full-swing, Chinese automaker Geely is in the midst of closing its deal to acquire Volvo from Ford Motor Co. In the wake of this acquisition, every Volvo owner and buyer dropping off their XC90 or S80 at the dealer for service will soon be doing business with the Chinese in the U.S., even if China-built Volvos are still years off. And Hummer owners will henceforth be doing business with Sichuan Tengzhong Heavy Industrial Machinery Co., which is the new owner of the former GM SUV brand.<\/p>\n

A year ago at the NAIAS<\/a>, management at Chinese automakers BYD and Brilliance both declared their starts<\/a> in the U.S. market would be made on clean sheets of paper: no entry by acquisition despite the availability at that time of Saturn and Saab. And they have stayed true to their words, though they also seem no closer to selling cars in the U.S.\u2014now beaten to the punch by Geely and Sichuan\u2014in reaching U.S. consumers.<\/p>\n

Still, it is BYD that continues to raise the most interest and is the only Chinese automaker with a press briefing at the auto show this week. The intrigue with BYD has been stirred by a $230 million investment in 2008 from Warren Buffet’s Berkshire Hathaway, giving the Chinese battery-maker-turned-car-company an aura of credibility most other Chinese automakers lack.<\/p>\n

BYD says it will be ready to launch electric vehicles in the U.S. by the end of 2010, albeit in small numbers, and likely through a pilot leasing plan in California. The company, though, may have created more skepticism than anticipation at the NAIAS when its executives said they had no dealers signed up yet, and they had only just begun the process of getting safety and engineering clearances from the Department of Transportation for its cars. “We are preparing our applications and are confident of getting approvals,” says Henry Li, general manager of BYD’s export division. “We recently completed all approvals from the Chinese government, and our design and engineering was done with the U.S. market very much in mind.”<\/p>\n

If BYD’s plans don’t yet throw fear into the hearts of Ford, GM and Toyota, it is because there seems to be an almost willful and collective lack of understanding by Chinese management about the complexity of selling vehicles in the U.S. “The two hardest things for a new car company to get right are meeting all the Federal safety and emissions regulations, and putting together a credible and quality distribution network, and the Chinese managements don’t seem prepared to tackle either one properly on their own,” says industry consultant Jim Hall of 2953 Analytics, Birmingham, MI.<\/p>\n

Though BYD’s aspirations revolve around electric and hybrid vehicles for North America, in China, selling gas-powered vehicles is currently the main driver for growth. BYD’s F3 compact car was the best-selling model in China in August, outpacing perennial leaders like the Hyundai Elantra and the Buick Excelle. Of the 450,000 cars BYD sold in 2009, only a few hundred were electrics. The top seller is the F3, priced at $9,500\u2014about the price of an early 1990’s-era Toyota Corolla<\/nobr><\/a>.<\/p>\n

<\/span>At last year’s Shanghai auto show,<\/strong> BYD showed the e6, a multi-purpose vehicle capable of seating five which purports to go 205 miles on a single charge. It also <\/span>promises to have a top speed of 100 mph and accelerate from 0-60 in eight seconds. BYD sold a few hundred to Chinese institutions in late 2009 after government certification was granted. It is important to remember, though, that China’s safety and emissions standards are nothing compared with the U.S.’s standards.<\/p>\n

Indeed, one of the reasons Geely is acquiring Volvo is that it has a mostly exclusive dealer network in the U.S. and Europe, as well as an impeccable safety engineering track record that Geely is hoping to leverage to make its own China-built vehicles competitive worldwide. Eventually, the company will likely move to build Volvos in China or the U.S., or both, because Volvo sales are perennially disadvantaged in the U.S. when the dollar is weak.<\/p>\n

Expectations around BYD still remain higher than around Geely and Tengzhong because of its rapid growth and technological prowess. The company’s shares gained 700 percent in the past year based in part on the company’s growth as a potential battery supplier to other automakers as well as its supply of batteries to mobile phone makers like Nokia and Motorola.<\/p>\n

Founded in 1995 by Wang Chuanfu as a pure battery company, BYD acquired a tiny, bankrupt carmaker in North Central China to wade into the auto industry and eventually become a vertically integrated maker of electric<\/nobr><\/a> and hybrid vehicles. Chuanfu’s business model is Honda, which started out as and remains a world-class engine company that eventually developed its own products\u2014cars, motorcycle, scooters and agricultural equipment that run off the company’s engines. BYD exports its vehicles to Africa, South America and the Middle East where engineering standards are as non-existent as they are in China.<\/p>\n

The engine power control unit of the new BYD E6 electric vehicle<\/nobr><\/a> on display at the 2010 Detroit International Auto Show. (Photograph by Bill Pugliano\/Getty Images) <\/div>\n

Industry and marketing consultants caution BYD and other Chinese automakers about being too secretive, or, conversely, promising too much to soon. “There is a huge cultural divide between Chinese companies and the U.S. marketplace,” says independent marketing consultant Dennis Keene who has worked with Chinese companies on export strategies. “In the auto sector, we have seen several companies enter into dubious contracts with fringe distribution operators, and the results have been litigation, loss of credibility and lack of any progress,” says Keene. Chery Automobile had some kind of agreement with Yugo America founder Malcolm Bricklin that broke down and is in litigation. And Nanjing Automotive started building MG sports cars in England, and had plans to build them in the U.S. as well. “I keep waiting for these companies to make serious business moves with serious people and serious products instead of playing games,” says Keene.<\/p>\n

Chinese car companies stand largely where they were last year when they were predicting U.S. entry. Their gas powered vehicles aren’t competitive yet with even entry-level vehicles from Detroit, Japan and Korea. And so far its electric technology faces the same affordability issue as every other company (BYD’s all-electric e6 multi-activity vehicle costs about $40,000, while Chevy plans to sell the Volt<\/a> for less than that.) For the forseeable future, parking home-grown Chinese vehicles in U.S. garages in any numbers that would concern Detroit remains as likely as affordable fuel-cell vehicles.
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