China Closing GM’s Coffin

It's been nearly two years since I introduced Fool readers to General Motors' (NYSE: GM  ) last, best chance for salvation, the Chevy Volt. I asked, "Will anyone kill the gasoline car?"

Yes: China.

China?
As it turns out, the first car company to reach the market with an actual, workable electric car will not be based in Detroit, but in Shenzhen. BYD is the name, and it's got two objectives:

  • Attract investments from Berkshire Hathaway (NYSE: BRK.A  ) (NYSE: BRK.B  ) .
  • Build a plug-in hybrid a year before Toyota (NYSE: TM  ) brings its first attempt to market, and two years ahead of GM.

That's not even the bad news
GM may have a little bit of breathing room here, courtesy of BYD's cautious plan for rolling out the "F3DM." BYD has begun selling the vehicle in China, and it intends to bring the F3DM to the U.S. by 2011. That should give GM one year to begin gobbling up market share and shedding its reputation as a gas-guzzling SUV-hawker -- if Toyota doesn't beat it to the punch, and if Ford (NYSE: F  ) and Chrysler don't step up their game in the interim.

However, even if GM meets its own deadline for introducing the Volt, its offering could quickly be supplanted by BYD's, which appears to offer numerous advantages over the Volt. Whereas GM's electric car aims to travel 40 miles on battery power alone, and has an estimated selling cost of around $40,000, the F3DM is targeting 62 miles of engine-unassisted mileage, and a starting cost of $22,000.

Problems galore
It gets worse. For one thing, BYD hopes to push up its date of entry into the U.S. market, provided it can pass necessary inspections faster than expected. BYD also comes with a built-in cost advantage over GM, beyond the usual labor and benefits costs: materials. BYD, you see, is China's leading manufacturer of rechargeable batteries, competing in this market with Japan's Panasonic (NYSE: PC  ) and Sanyo, as well as national rival China BAK (Nasdaq: CBAK  ) . In contrast, GM is still buying its batteries abroad, and working with third-party suppliers to develop a new battery to power the Volt.

Foolish takeaway
If you're betting on the Volt to save GM, make sure to bet small.

Further Foolish fuel on electric cars:

Berkshire Hathaway is a Motley Fool Inside Value, a Stock Advisor pick, and a Motley Fool holding.

Fool contributor Rich Smith does not own shares of any company named above. The Fool's disclosure policy runs on a magnetic field-contained matter/antimatter drive.


Read/Post Comments (14) | Recommend This Article (29)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 19, 2008, at 9:40 PM, Milligram46 wrote:

    OK, so let me get this straight, because the author of this story needs some, errr, edumucation.

    The Volt goes 40 miles on the electric charge. The electric charge depleted, a 1.4L gasoline engine kicks in, charging the electricial system to run the elecric motors. It is an ICE hybrid system. This gives the Volt a range of about 375 miles and 102 MPG. In order to "recharge" I can park, and the the photovotaic roof build a charge, or wait for it, put gasoline in the tank and keep driving, at 102 MPG.

    Now the FD3M is PURE electric, and requires a 220 VAC recepitcal to charge overnight. I mean, everyone in America has a 220 VAC outlet on the outside of their house. On that overnight charge the vehicle has a 62 mile range and then - its dead. It needs to be charged, and your choices are, any near by 220 VAC outlet. So lets say you're a green weenie who lives in Los Angeles and you want to go to Palm Springs for the weekend, no such luck in your FD3M which is now dead in the middle of the desert with a depleted system.

    If that is somehow an, errr, advatage, I'd sure hate to see what your idea of a problem is. Without an ICE or other auxilary system, given no alternative system for charging, and certainly no way it would be deployed in the next 12 to 24 months on a wide scale corner to corner in this nation, this is a still born offering from the word go faced with the same issue the EV-1 faced, limited range giving it limited use.

    Even Honda turned its nose up at it.

    http://www.autobloggreen.com/2008/11/25/honda-president-pooh...

    And if this is such an answer, then why is the new Honda Insight hybrid coming out in the next model year a mild BAS hybrid? Given the price point of $22K and that its only useful environment is in urban canyons (and God help the driver stuck in bumper to bumper traffic eating that battery charge with heat, AC, radio, etc.) for $16K I can a very nice SMART, or for the same price a base Mini. Thanks - no thanks.

  • Report this Comment On December 20, 2008, at 12:48 AM, photoartguy wrote:

    Uhh, Milligram46 -- the car the article is talking about IS a plug-in hybrid -- just like the Chevy Volt.

    http://www.treehugger.com/files/2008/12/byd-f3dm-electric-pl...

    I say, forget the loans and let GM lie in the bed they've made when they dropped the ball by cancelling the EV-1 project. With some foresight, they could have been ahead of the game by now -- instead of playing "catch-up."

  • Report this Comment On December 20, 2008, at 12:20 PM, wrenchbender57 wrote:

    Hi Milligram, Converting 220v to 110v is not a big deal.

    A small transformer that could be carried in the car would do it. So, you could plug in almost anywhere and charge the batteries.

    Also the car has a small engine that can recharge the batteries while you drive. So, from what I see so far, you would not be stuck in the middle of nowhere.

    The issues will likely be how good are the batteries under real life conditions. And, will the vehicles meet crash tests by the government and quality concerns by the public ?

    Can this vehicle meet the same criteria that other manufacturers must meet to sell in this country and still offer a competitive price?

    Next, after they sell a few thousand will the buyers be satisfied with the cars? And where will the dealer support network be for warranty repairs and maintenance?

    Those concerns can be handled but only time will tell if they can meet all of these challenges.

    Also, for now they are competing with "low cost" gasoline. That will need to change for the average consumer to jump on board and buy these vehicles.

  • Report this Comment On December 20, 2008, at 3:14 PM, Patzj wrote:

    Does Milligram46 understand that the F3DM is a plug-in hybrid - with a 1 liter 50 kw gas engine, besides the 75 kw motor and 20 kwhr battery?

    With 60 miles per charge, per day, one could drive over 20,000 miles annually without gasoline. BYD also has high amp charging stations that can charge 50% in ten minutes, 80% in 15 minutes - as stated by numerous web sites and reviews.

  • Report this Comment On December 20, 2008, at 7:50 PM, 11x wrote:

    We all know China has lower labor costs and less environmental protection laws that allow them to compete on price of materials, but quality needs to be on par with US carmakers for me to justify it. When buying tools made in China at a fraction of the price of US tools (electrical tools,machines, even hand tools), the quality of the low cost Chinese tools are just not there. You tend to get what you pay for. Are these Chinese batteries going to die within a few years? Are the engines and transmissions made within the same tolerances of American companies? My guess is no, based on my experience with other Chinese "junk" I ended up buying.

  • Report this Comment On December 20, 2008, at 7:55 PM, jt02xx wrote:

    Patzj -- Why would we want to let facts murky this comparison? Milli's argument sounds good...if you are depending on the tax payers to make your payroll!

  • Report this Comment On December 20, 2008, at 10:34 PM, cnicog wrote:

    forget about those cars, Honda will be the winner, with the FCX clarity, hydrogen powered

  • Report this Comment On December 21, 2008, at 11:44 AM, Patzj wrote:

    11x -- I own gas and electric China motorcycles that work - no frills required.

    Your cell phone likely runs on China/BYD batteries, so why question one's own repeat purchases?

  • Report this Comment On December 21, 2008, at 1:40 PM, BlueLakeVentures wrote:

    More stuff on other hybrids and plug-in's at http://newgenerationgas.com/energysolutions/electricandhybri...

  • Report this Comment On December 21, 2008, at 2:26 PM, TheBinsk wrote:

    From Rich Smith's profile:

    "City, State, Country: Variously Moscow, Kiev and D.C.

    "Favorite Stock: TM" (Toyota Motors)

    "Favorite Vacation Spot: Sharm el-Sheik" (Middle East)

    Rule #1: Know the source before trusting the opinion.

  • Report this Comment On December 21, 2008, at 6:59 PM, redneckdemon wrote:

    TheBinsk: I agree. On the other hand, what, exactly, is it you are saying about the authur? He likes to travel? I looked up some of his other articles, just to be sure, and yep, his opinions are fairly agreeable with me. I really don't care where he lives, or where he likes to spend the holidays. He writes good articles, does his research, and hasen't blown up anything I know about.

  • Report this Comment On December 21, 2008, at 9:20 PM, TheBinsk wrote:

    I was certainly not trying to imply anything that negative. If you think his advice is unbiased after reading his bio that is your prerogative. Perhaps I should have just included the link to his entire profile instead of picking portions that I thought were interesting. Good point. Lesson learned on my part.

    http://boards.fool.com/Profile.asp?uid=15230197

  • Report this Comment On December 22, 2008, at 1:12 PM, DevAdv wrote:

    For the author: "As it turns out, the first car company to reach the market with an actual, workable electric car will not be based in Detroit, but in..."

    ...Bangalore, not Shenzen. And that should be present tense, not future.

    http://www.revaindia.com/

  • Report this Comment On December 24, 2008, at 8:02 PM, lesliehugh wrote:

    China’s domestic and South East Asian market will be good just for this Electric Vehicle. It will expand into an auto exhaust free green zone, which will be the envy of the world. Although US is a good profitable market, if our culture denies the EV it is our loss to both environment as well as good sense.

    Everybody also seems to forget the EV has only four major parts, 1- chassis panels, 2- electric motors, 3- electronic control unit, 4- batteries. A good electrical motor can easily last a million miles. The BIG automakers are so afraid to lose the maintenance market that is why they destroyed the EV-1. When EV s are established, we will see third party providers make better control electronics, batteries and motors to compete with the BIG automakers.

Add your comment.

DocumentId: 798422, ~/Articles/ArticleHandler.aspx, 4/16/2014 1:28:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement