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China Bets Big on Electric Cars

It’s rapidly becoming one of the most famous (or infamous) features of China’s most developed cities: In places like Beijing and Shanghai, the smog is so thick that it’s sometimes hard to see more than a few blocks, visitors say. It’s a bad problem that may be getting worse.
While the Chinese government has emphatically encouraged modernization, officials are sensitive about the clearly visible environmental side effects of China’s automotive boom. In 2009, the government announced big plans to make China the world’s electric-car superpower, allocating billions for research and calling for 1 million electric cars to be on its roads by mid-decade.
That was a lofty goal, and the hope was that China’s domestic auto industry would take the lead. But so far, not much progress has been made — and that may create an opening for Western automakers.

Chinese automakers face tough obstacles
China’s domestic electric-vehicle leader is BYD Auto, the battery-and-auto maker that is partially owned by Warren Buffett’s Berkshire Hathaway (NYS: BRK.A) . BYD, which has struggled in the last couple of years after a strong start, claims that its E6 electric sedan has a range of about 190 miles — a bit more than entry-level versions of Tesla Motors’ (NAS: TSLA) upcoming Model S sedan.
The E6 has enjoyed some modest success as a taxi in China, but significant sales have so far eluded the company. That hasn’t stopped BYD from pressing forward, though. At this week’s auto show in Beijing, the company showed an all-new electric car, the Denza, the first product of a joint venture with Mercedes-maker Daimler, along with a new plug-in hybrid car called the Qin (not to be confused with the “Dear Qin” concept car that Toyota (NYS: TM) is presenting at the same show).
But those models are exceptional, not least because they are so far the only home-grown Chinese EVs that look ready for the big time. Chinese automakers have faced the same obstacles to mass-market EVs that have challenged the major global automakers — the cost and weight of batteries, indifferent consumers — without the deep pockets and technological resources that Western automakers can bring to bear on the problem.
Meanwhile, those Western automakers are sensing an opportunity.
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