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China's Wide-Eyed Dream of Building U.S. Electric Vehicles


China's Wide-Eyed Dream of Building U.S. Electric Vehicles:th American International Auto Show on January 12, 2010 at Cobo Center in Detroit. (Photograph by Stan Honda/AFP/Getty Images)
The Chinese BYD E6 electric car is displayed during the the second press preview day at the 2010 North American International Auto Show on January 12, 2010 at Cobo Center in Detroit. (Photograph by Stan Honda/AFP/Getty Images) digg_url = 'http://digg.com/autos/The_Rise_of_the_Chinese_Auto_Industry';A China invasion 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. 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. 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 VOLVO XC90 or VOLVO 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. A year ago at the NAIAS, management at Chinese automakers BYD and Brilliance both declared their starts 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.—now beaten to the punch by Geely and Sichuan—in reaching U.S. consumers. 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. 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." 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. 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—about the price of an early 1990's-era Toyota Corolla.


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