Editorial: Volt Syndrome Strikes In China

Edward Niedermeyer
by Edward Niedermeyer

A few weeks of vacation from the blogosphere’s non-stop news cycle can leave a blogger feeling a bit behind the times. Two weeks is an eternity in internet time, but stepping away from the barrage of news, spin, hype and hysteria is good for the sense of perspective. Especially if the down time is spent exploring countries on the local typical family vehicle, complete with two wheels, four speeds and about 100ccs of thundering power. Beyond the sheer novelty of seeing entire families commuting on a moped (“Daddy, Nguyen isn’t staying on his side of the pillion seat”), travel in the developing world shows how insulated America is from the transportation realities of the rest of the world. If the $1,000 entry to the world of moped ownership is a major (if attainable) hurdle for workaday Vietnamese, even sub-$10K vehicles face what a GM sales release might call “a challenging sales environment.” Try to explain the “green premium” for hybrids and plug-in vehicles to an auto-aspirational third-worlder, and watch as the idea of paying more for less room and power draws only puzzled bemusement. Hair shirts, it appears, are strictly a fad for the western and wealthy. Case in point: the world’s first plug-in hybrid, the Chinese BYD F3DM.

BYD’s Corolla-aping PHEV raised more than a few eyebrows (many skeptical) when specs and concepts first appeared. Warren Buffet’s hefty investment into the cell phone battery maker quieted the skeptics and gave green-hued futurists a license to thrill. A 60-mile plug-in range, a multiple-mode hybrid system and a price tag under $25K had American hypermilers factoring in local tax credits and greengasming at the fantasy of it all. But in the world’s new largest market for automobiles, even $20K is a huge amount of money. And it turns out that one society’s eco-fantasy is another society’s overpriced, overly-complex answer to a question nobody has asked.

Xinhua reports (yes, nearly a week ago) that BYD’s F3DM has utterly failed to attract Chinese consumers; the firm has sold only 80 models since it went on sale in December. Apparently 20 of those were bought by the city of Shenzhen (think China’s Detroit) with the rest going to the local branch of China Construction Branch. In fact, BYD never even attempted to target private consumers with the model, despite the fact that an F3DM costs 30-40 percent less than a Toyota Prius (which only sold about 3,500 units in China between 2006 and 2008). Even the government isn’t rushing to put its citizens in the alleged volks-hybrid, offering a $7K hybrid subsidy to fleet buyers only.

Even with government help bringing the F3DM’s price under $20K, fleet sales aren’t as strong as BYD had hoped. Shenzen’s plan to buy more for the city’s taxi fleet is on hold as even BYD officials admit that the price needs to come down. BYD’s CEO Wang Chuanfu says that increasing production volume could help bring the F3DM’s price to a more-realistic $15K, but without institutions stepping up to prime the sales pump, the promise of a sub-$10K PHEV (after government subsidies)—and mass market sales—remain out of reach.

And even though the F3DM isn’t dependent on a charging-station infrastructure, price isn’t the only concern keeping buyers away. BYD faces an image challenge having never made anything more car-like than a laptop battery just a few years ago, and even its much-vaunted battery technology seems to struggle to meet on-paper performance numbers. According to Xinhua (hardly bomb-throwers when it comes to Chinese businesses), the 60-mile electric range is only attainable driving at a steady 30 mph. And recharging from a home wall socket takes nine hours.

But these tradeoffs and the correlating plug-in efficiency rewards only have meaning in the context of price, and here the lesson for Chevy’s Volt are plain to see. GM’s $40K profitless wonder defies fiscal logic on a comparable scale, offering only the most image-conscious greenies a value proposition worth even including. Like the F3DM, the Volt’s target audience (if not consumer) is the government, and the same increased volume-decreased price mirage lingers on the horizon. But unlike China (BYD expects its sales to double for the second year in a row, hitting 400,000 units), America’s demand for automobiles is in double-digit decline. And that includes demand for the much cheaper hybrids that are already available in the marketplace.

But we don’t have theorize about private PHEV sales levels for much longer. Shenzhen rolled out hybrid subsidies for private consumers this month which would cut the price of an F3DM in half, to about $10K. This coincides with a BYD plan to launch “a mass marketing excercise to promote the car to private buyers.” But if the car-crazed, yet pragmatic Chinese do start buying the F3DM, it will be at half the original MSRP, a feat that GM can’t hope to pull off with its Volt. Unless they just slap in powertrains from BYD, which is hedging its consumer-market gamble by offering to license technology to Western firms. In any case, BYD’s consumer sales push will give us some idea of private PHEV demand (and its required stimulus) by the time the Volt launches. Sales trends are easier to follow when they start at 80 units per quarter.

Join the conversation
2 of 9 comments
  • Sutski Sutski on Apr 21, 2009

    @Aqua225 "If oil was to be suddenly shut off to this nation, we’d quickly crash into the abyss of bygone empires". Shhhhhhhhhh....don't tell anyone.... .....and for an excellent interview with Dr. Colin Campbell, the most prominent current advocate of the Peak Oil scenario... http://europe.theoildrum.com/node/5315

  • DearS DearS on Aug 16, 2010

    Saw a lot of F3s in the Dominican recently, I was surprised they were so common. A lot of F3 taxis so close to our shores, in a poorer country they seem to make good sense right now. Also saw Chinese bikes and pickups.

  • Kenneth Ironic story here...My father's first Hyundai/Kia car was an 86 Hyundai Excel, we drove it from Oklahoma to California and back the first year he had owned it; it was so under powered that every hill on the interstate (and every other road) was done in second gear, he put 300,000 miles on it before he sold it. It wasn't fast, it wasn't fancy but it got the job done and never left him on the side of the road.He owns a 2020 Kia Soul now...My first Hyundai which I recently bought is a 2014 Hyundai Equus Signature which I picked up in Phoenix and drove back to Oklahoma, it is everything that the Excel isn't and so much more.
  • Analoggrotto Another step in towards total adoption of Tesla vehicles for the ENTIRE american public by 2025. Anyone who refuses to admit that TESLA is the best will be deported from our galaxy, our future and our universe.
  • Dukeisduke This makes me think of the gimmicky ads for some retail electricity providers here in Texas, specifically TXU Electric and Reliant - "free nights", "free weekends", etc.
  • BEPLA Just say no to driving around in circles for hours turning left the entire way and calling it a "sport"
  • BEPLA I can make a guess why this car is in the junkyard:A severe lack of maintenance, causing catastrophic system failure - most likely the engine locked up from a lack of oil changes.