Manufacturing

New-energy vehicle and battery manufacturer BYD Automobile Co said yesterday that it has won approval to produce the e6, its first pure electric car, in the country.

A BYD official said the e6 accelerated the auto maker's new-energy vehicle strategy and will help domestic car makers compete against international rivals.

China-based BYD, backed by billionaire Warren Buffet, will launch the plug-in e6 sedan in China in the first half of this year for about 300,000 yuan ($43,988), mainly supplying government, public services and taxi fleets. BYD also plans to sell the e6 in the United States at the end of this year with a price tag of about $40,000.

With government support, hybrid and electric vehicles are becoming an industry trend as consumers seek ways to reduce emissions to protect the environment. Demand for such vehicles has prompted car makers to increase investment and speed up engineering in the field.

Geely Plans 12 new models - while buying Volvo and rolling out electric vehicles

Zhejiang Geely Holding Group Co Ltd, which is close to finalizing a deal to buy Swedish luxury car brand Volvo from Ford Motor Co, plans to roll out a dozen new own-brand models this year.

Zhao Fuquan, vice-president of research and development at the privately owned carmaker, said the company will offer 12 all-new and upgraded products in 2010, including its first sports-utility vehicle (SUV) and first large-sized sedan.

The new models will have an engine capacity ranging from 1.0 to 2.8 liters, Zhao said.

Geely, with its headquarters in Hangzhou, capital city of coastal Zhejiang province, will also put its purely electric-powered and plug-in hybrid cars into small-volume commercial production this year, he added.

Liu Jinliang, the group's vice-president for sales and marketing, said Geely aims to sell 400,000 cars this year, up from 330,000 units in 2009. Its sales surged by 48 percent last year from 2008.

China is well on its way to becoming the high-speed railway capital of the world, with 33,000 km of these railways currently under construction and about 70 projects slated to launch this year.

By the end of 2012, China's high-speed railway is expected to account for half of the world's total length.

Currently, 2.1 trillion yuan ($300 billion) worth of rail construction projects are under way.

In the next three years, 26,000 km of new lines, including 9,200 km of high-speed lines, will be put into operation to ease the pressure on the country's overburdened rail network, said Liu Zhijun, Minister of Railways.

China's dominance in the high-speed railway market is remarkable, said Yang Hao, professor in railway transport with Beijing Jiaotong University.

"No matter the length of high-speed railways, or the operation speed of our high-speed trains, China now dwarfs other countries," Yang said.

Though many of the advanced technologies used in high-speed railways were imported from France, Japan and Germany, "China has learned them fast, and China also has its advantage in industrial integration", he said.

By 2013, 800 bullet trains will be churned out to zip through the cities at a speed of at least 250 km/h, the minister said. Also, a new-generation high-speed train, which insiders said is built to run up to 380 km/h on the future Beijing-Shanghai high-speed link, is also expected to roll off the production line and complete comprehensive tests this year, he said.

The country should also clinch more deals in the global railway market this year, the minister said yesterday.

This is the first time the goal is put into the minister's annual work report, which reviews achievements in the past year and sets new goals for next year.

The Big Trend

In a symbolic shift of power, China overtook the U.S. in 2009 to become the world's largest auto market. For the first time, the number of locally made vehicles China produced outnumbered America's--and sales did too. As its consumers buy cars, aided by incentives from Beijing, China's flush manufacturers are vying to snatch up bits and pieces of ailing foreign automakers. Though just one deal was inked in 2009, 2010 will be the year that once-provincial companies exercise their newly acquired clout and make their mark in overseas markets.

The Unconventional Wisdom

It's not just the trillions of yuan in stimulus money the government is doling out that is driving the enormous uptick in China's car sales. Some of those incentives are geared toward rural residents whose purchases of refrigerators and air conditioners are also being incentivized. And a Cash for Clunkers-type tax rebate stokes interest in small, fuel-efficient models. But how to explain sales of luxury brands, like BMW, Audi and Mercedes-Benz, which are also on the rise in China? Farmers can't afford those, and buyers aren't getting kickbacks. The demand is real and unlikely to wane in the near future.

The Misplaced Assumption

As much as Chinese buyers crave the status an internationally recognized luxury brand confers, domestic automakers will also do well in 2010. That's because fakes don't stop at Coach wallets and Longchamp bags. It's not uncommon for Chinese to buy a Chinese model--because it's cheap but sports a shape similar to a foreign car--and then affix a new ornament to the hood or logo to the bumper for the neighbors' benefit. Cash-rich urbanites will want a real Rolls Royce; aspiring billionaires will make do with a locally made lookalike.

The Watch List

BYD. American billionaire Warren Buffet sent this automaker's stock soaring in the spring after buying a 9.9% stake, propelling its founder Wang Chuanfu to the top of Forbes China's list of the mainland's richest people. Cars are just the latest initiative for Wang, who started off making rechargeable batteries and handset components. While BYD's e6 electric car hasn't yet been approved for sale in China, let alone abroad, Buffett's vote of confidence can't be underestimated.

Geely Automobile. As the 10th-largest carmaker in China by both sales and production, Geely seems like small potatoes compared with rivals BYD, Chery and the joint ventures. But the Hangzhou-based company has made headlines this year, becoming the preferred bidder for Ford's Volvo unit. Expect it to lead other Chinese firms in the aggressive pursuit of foreign acquisitions, which will come cheap as U.S. and European auto markets continue to lag.

Up-and-coming markets. China's eastern coast, dotted with metropolises like Beijing, Shanghai and Guangzhou, boasts the greatest concentration of wealth. But first-time car buyers are also emerging from the country's vast interior. Take BMW: Of over 100 dealerships in China, it has some in the coal-and-steel center of Taiyuan and the far-flung northwestern outpost of Urumqi. Keep an eye out for an inland boom.

The Bold Prediction

China's passenger car sales will hit 12 million in 2010. (Sales were below 5 million in 2006 and totaled almost 10 million in 2009.) In this nation of 1.3 billion, where there are months-long waiting lists for cars and people can afford to make down payments with cash, cars are just one more conspicuous, concrete symbol of China's rise.