A dozen chinese companies are developing electric vehicles for mass production

Gov. Arnold Schwarzenegger join Los Angeles Mayor Antonio Villaraigosa to announce that Chinese electric car company BYD will locate its North American headquarters in downtown Los Angeles.

BYD, a company in which America’s best-known investor, Warren Buffett, holds a stake, has been promoting the future potential to combine solar photovoltaic systems with home-battery storage of the generated electricity and the use of electric vehicles.

BYD will open in Los Angeles in late 2010 and plans to enter the U.S. electric car market about the same time, shipping its electric vehicles through the Port of Los Angeles.

The biggest buzz at this year’s Auto China show surrounds the rapidly advancing plans of Chinese car firms to mass-produce affordable electric vehicles for domestic and international markets.

All of China’s leading compact car producers are showing futuristic electric cars alongside hybrids and fuel-efficient conventional vehicles.

Geely Auto, one of China’s fastest growing compact car makers, has unveiled two electric vehicles at Auto China and promoted one of the most eye-catching concept vehicles, the Intelligent Geely, or IG.

Electric cars will write "a whole new chapter in the history of Geely’s development," said Zhao Fuquan, the company’s vice-president.

Geely’s IG transmission systems allow a choice of electric, hybrid or petrol engines in an identical model. Solar panels on the roof and bonnet of the IG can also power the vehicle for up to six hours, Zhao said.

At least a dozen Chinese companies are developing electric vehicles for mass production, several of them in cooperation with multinational auto firms.

Another emerging compact car maker, Lifan Group, based in the south-western city of Chongqing, has created several hybrid and electric vehicles under a slogan that could be aimed at its biggest potential rival: "electric cars are not a dream."

That rival is BYD Group, short for Build Your Dreams, a recent player which previously specialized in lithium ion batteries for mobile phones and electric vehicles.

"This is not an opportunity, but a necessity," BYD spokesman Paul Lin said of China’s development of electric vehicles.

"We think the electric vehicle market in China will be very big and the most developed in the world," Lin said.

BYD is promoting its E6 electric car, which it says uses a battery with a range of about 300-kilometres that can fully charge in two hours.

BYD, seen as a global market leader in battery technology, also plans to cooperate with DaimlerChrysler to make Mercedes-Benz-branded electric cars.

"They (BYD) developed from batteries to cars. We came from cars to batteries," Ulrich Walker, the chairman of Daimler North-east Asia, told reporters.

German auto giant Volkswagen AG has launched a "China electric vehicle strategy" to produce electric cars in China by 2013 or 2014.

"As China becomes Volkswagen’s most important market around the world, achievement in the electric vehicle segment in China is key to the success of our global electric vehicle strategic vision," said Martin Winterkorn, Volkswagen’s chief executive officer.

Japan’s Nissan Motor Corp plans to start selling its 160-kilometre-range Leaf electric car in China next year and is to produce the cars in the central city of Wuhan, with Renault SA and Chinese partners.

But the price of electric and hybrid vehicles, especially the battery packs, remains a barrier to mass consumption in China, as in other countries.

"The biggest problem is that the batteries are so expensive, that the technology is so expensive," Walker said.

Geely’s popular Panda compact car retails for around 45,000 yuan (6,600 dollars), Zhao said, a price that currently looks impossible for producers of electric cars to match.

Chinese producer Chang’an Motors, based in Chongqing, expects to market a Benni-I mid-market model in late 2011, but company president Xu Liuping warned that it could cost at least 100,000 yuan more than the equivalent petrol-driven model.

According to state media, BYD’s E6 model could cost around 250,000 yuan while an S18 compact electric car made by Chinese budget car maker Chery Automobile could sell for as little as 70,000 yuan.

Transmission technology and the building of battery-charging stations or exchange stations are other problems.

The Chinese government plans trials of charging stations in at least four cities this year, but the current cost of each station is about 3 million yuan (440,000 dollars), according to the China Car Times.

Beijing also plans to introduce a fleet of 500 electric taxis later this year, with a network of dedicated battery-charging stations.

Local governments in at least 10 major cities are supporting plans to develop electric vehicles by regional car makers, many of which are state-controlled or have state enterprises as major shareholders.

The car makers anticipate a major fillip from a government stimulus package this year. Under the package, electric cars produced in China by both domestic and multinational firms will qualify for subsidies of up to 60,000 yuan per vehicle, the official China Daily reported in early April.

"If the government decision is made, things can go very fast," Lin said of the planned government support for electric cars.

The race to find the first mass-market best-seller can only add to the fierce competition in what is still regarded as the nation with the biggest untapped potential for car ownership.

US auto market analyst JD Power predicts "hyper-competition" in China over the next five years. In a report last week, it forecast production of 19.6 million passenger cars in China in 2015 but sales of only 13.5 million, compared with 8.7 million last year.

"Today, speed is everything," Zhao said. "It’s not how big you are, it’s how fast your are."

China already has state-of-the-art battery technology and the world’s fourth-largest reserves of lithium. Global and Chinese automakers are displaying nearly 100 electric cars and concepts at the Auto China 2010.

Like their counterparts in the United States, Europe and Japan, Chinese politicians and auto executives are concerned about air pollution and the effects of CO2 and other greenhouse gases.

But in interviews and at conferences in Beijing, they cited an even more pressing concern: energy security. China already relies on imports for more than half of its oil needs, and its appetite for fuel is expected to keep rising.

According to forecasters at Northville-based CSM Worldwide, Chinese vehicle production is expected to increase from 11 million in 2009 to 13 million this year and 19 million in 2016. Growth estimates vary widely, but many industry forecasters now anticipate annual Chinese vehicle sales to reach 20 million or more by 2020.

"It’s not just a question of carbon dioxide but energy safety," said Henry Li, general manager of BYD Automobile Co.’s auto export trade division. "That’s why we need electric vehicles."