China's 10 Biggest Automakers Link Up to Develop Electric Cars

BYD Auto may be the poster child for electric vehicles in China, and it has provided Warren Buffett’s investment firm, Berkshire Hathaway, with a nice billion-dollar profit (on paper) over the last 10 months — but the China-based car and battery maker isn’t lending its expertise in electric car technology to a new EV R&D effort among Chinese automakers. The country’s largest car companies (by sales) have just formed a group called T10 Electric Vehicles to jointly research and develop powertrains and components for plug-ins, according to reports this morning from Green Car Congress and Gasgoo.

The collaboration is meant in part to help cut R&D costs for the group, which includes Beijing Auto, Brilliance Auto, Changan Auto, Chery Auto, Dongfeng Auto, FAW Group, Guangzhou Auto, Jianghuai Auto, SAIC Motor and Sinotruk Group. If the partnership proves successful, it could mean heightened competition for BYD.

Of course, there’s plenty of heat on the company already. As we’ve written before, plug-ins are slated to hit the Chinese market in earnest over the next few years, with BYD’s first all-electric model, the E6, set to launch this year, and Chery Auto aiming to sell three electric and two hybrid-electric models by next year. Nissan, which has a joint venture with Dongfeng, plans to start selling electric cars in China by 2012, and the Renault-Nissan Alliance announced earlier this year that it expects to roll out electric cars (and charging infrastructure) as part of a pilot project in central China’s Wuhan by 2011. Late last month, SAIC Motor announced plans to invest 3 billion yuan ($439 million) over the next three years to develop “new-energy sedans,” including hybrid and plug-in hybrid vehicles, as well as parts for the vehicles.

Supply may end up jumping ahead of demand for plug-ins in coming years, even though the Chinese government has thrown significant weight behind electric vehicles, J.D. Power and Associates analyst Mike Omotoso told us in April, after Chery unveiled its ambitious plans for hybrid and electric vehicles in next year’s lineup. “I don’t think there’s a market for five electric vehicles in such a short period of time,” Omotoso said. “The price of gas needs to go up significantly before there’s more demand for electric vehicles, whether in China, here, or anyone else.”

At the same time, however, moving early and fast could boost Chinese automakers’ chances of dominating the EV segment of the country’s potentially $220 billion car market, and grabbing a foothold in foreign markets. Either way, joining forces to cut costs, accelerate R&D, and share risk could be a boon for the new partners as they compete in an increasingly crowded field of plug-in vehicle makers.

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