Page last updated at 12:37 GMT, Saturday, 13 December 2008

Revving China's auto industry

By Peter Day
Global business correspondent, BBC News

A model poses by a F3DM electric vehicle at 2008 China High-tech Fair (October 2008) in Shenzhen
The BYD F3DM is a petrol-electric hybrid plug-in vehicle
Cars leave me cold, but not the BYD F3DM. I drove it the other day, and it really is remarkable.

In one way, it is a rather ordinary compact saloon car, though it did have exceptional acceleration when I put my foot down zooming round the factory grounds in Shenzhen, the vast new Chinese city just north of Hong Kong.

This is a plug-in electric car, hence the acceleration, but when the electric battery runs out after 80 miles (128km), the petrol engine switches in seamlessly.

"Oh, just like one of those new eco-friendly hybrid cars," you may think.

But the makers argue that hybrids are more gas-guzzler than battery driven, whereas this model tries to be half and half.

And the makers? Well they are called BYD, a Chinese company which has been in existence for a bare 13 years, and which only recently started making any kind of car at all.

Shenzhen skyline
Shenzhen has become a byword for China's manufacturing base

This new dual mode rechargeable car makes its launch appearance in China on 15 December, but BYD's Paul Lin let me have my test drive the other day.

And then when he showed me the company museum, he really set me thinking.

What is a business only 13 years old doing with a museum anyway?

Because the company has such enormous ambitions it wants to tell the world how far it has come and how much further it intends to go.

Rapid growth

Paul Lin showed me how BYD has evolved, starting with rechargeable batteries that soon became standard parts for one third of all the world's mobile phones, following the research speciality of the founder and chairman Wang Chuanfu.

And the modest battery making company grew and grew.

Wang Chuanfu soon saw that battery powered cars might be the future.

The size and scale of what BYD has already achieved is breathtaking, but that is nothing compared to its ambition

BYD knew a lot about batteries, and it was not daunted by the complexities of car-making either.

Six years ago, it bought two established Chinese car firms, and now BYD has seven huge plants with 130,000 employees.

The car I drove is made at the new headquarters factory - a giant one in Shenzhen, a city which was just a fishing town 30 years ago, with some 70,000 inhabitants.

Thanks to China's rush to modernise, Shenzhen is now part of the global manufacturing powerhouse in the Pearl River Delta, with an estimated population of 14m.

Wheel of modernisation

BYD's vast new factory did not exist 15 months ago, and they had to level several hills and fill in several lakes to create the site.

The workers mostly live in vast dormitories close by.

Like most of the Shenzhen workforce, they have migrated into the city from distant country places, moving from poverty in search of the fabled better life, spinning the great wheel of China's modernisation.

The size and scale of what BYD has already achieved is breathtaking, but that is nothing compared to its ambition.

Visitors view an engine developed by BYD Auto at 2008 China High-tech Fair (October 2008) in Shenzhen
The F3DM uses a petrol combustion engine to charge the car's battery
This company has already made public its aim to be the number one car firm in China by the year 2015, and then - deep breath - number one in the whole world in 2025.

Despite my scepticism, Paul Lin had no doubt about this. The current fate of the American car industry suggests there may be room at the top some time before that date.

But to Paul Lin and the company he is part of, this ambition is entirely natural.

Car making is less difficult than high technology, they argue, and many of the techniques they have learned in high tech can now be applied to the automobile.

Remarkable endorsement

I put my foot down and revved almost silently across the factory campus in my (sample) new car, and wondered about the future.

As an exporter, China is going to be badly hit by the global recession, but already the best factories are evolving up the technology chain in much the same way as BYD has transformed itself from a supplier of other people's mobile phone batteries into a car maker with its own name on the front.

Critics say this is a copycat car, but that is how the Japanese auto industry started.

And in September there was a remarkable endorsement of BYD when even as global stock markets were plunging, the canniest American investor of them all, Warren Buffet of Omaha, Nebraska, paid $230m (155m) for a 10% stake in the Chinese company.

Mr Buffett is a quite notorious investor for the long-term, not the quick buck, so he must recognise something in those initials BYD.

The company says they stand for "Build Your Dream", but they could mean absolutely anything.

From Our Own Correspondent was broadcast on Saturday, 13 December, 2008 at 1130 GMT on BBC Radio 4. Please check the programme schedules for World Service transmission times.

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