Chinese hybrid car is charging into weak market

Reporting from Shenzhen, China — With the Big Three automakers tottering and China's once go-go car market in reverse, this might seem a bad time for a relative unknown to be launching a new vehicle. Then again, BYD Co. isn't rolling out any ordinary car.

On Monday, the upstart company best known for making cellphone batteries will begin selling its F3DM -- China's first mass-produced hybrid electric vehicle. The car is expected to retail for around $20,000 in China and make its way to U.S. shores in 2011.

"For a long time, China's auto technology was undeveloped," BYD founder and President Wang Chuanfu, 42, said in an interview Friday at its hexagonal headquarters here. "But our [electric car] technology marks the first time we're standing as a leader on the world stage."

Whether that assessment is overblown -- Toyota, Honda and General Motors may certainly think so -- people familiar with Wang said they wouldn't underestimate him. Since starting the company in 1995, Wang has built BYD, short for Build Your Dream, into the world's leading producer of rechargeable batteries for mobile phones and laptops, among other products.

Combining its auto and hand-set parts businesses, BYD generated about $3 billion in revenue last year, a 64% increase from 2006, according to a filing with the Hong Kong stock exchange, where the company is listed.

Among those betting on BYD is Warren E. Buffett, who in September bought a 9.9% stake for $230 million. The billioniare investor apparently was impressed with BYD's green technology and Wang's record as a manager.

Wang said Buffett's investment would be of particular help as BYD prepares to enter the U.S. market in 2011 with its electric vehicles. GM plans to introduce its electric car, the Chevrolet Volt, in 2010.

Analysts don't doubt Wang's resolve or his company's technical capabilities; Wang is a metallurgical chemist by training, and BYD spent several years developing the ferrous battery technology for the car, giving it a quicker recharge time and price advantage over the lithium-ion battery used in Toyota's Prius.

But a better battery won't ensure marketplace success. And BYD doesn't have the experience in design, engineering, manufacturing and marketing of its world-class competitors.

"I have faith in [BYD's] technology," said Michael Dunne, the Shanghai-based managing director of J.D. Power in China. "What needs to be confirmed is whether they can build reliable, high-quality cars. That's their challenge."