SAIC, China’s No. 1 Carmaker, to Launch Series of Hybrid Cars

By , Money Morning •

Money Morning Staff Reports

SAIC Motor Co. Ltd., China's largest carmaker and the partner of both General Motors Corp. (NYSE: GM) and Volkswagen AG (OTC ADR: VLKAY) in that fast-growing Asian country, plans to launch a series of hybrid and electric vehicles by 2012 - part of a move by China's carmakers to meet the growing market demand for "new-energy vehicles."

SAIC said its plans for 2010 include the introduction of a hybrid Roewe 750 sedan. The new technology could improve fuel effiency by 20% over the existing non-green model of the same sedan. SAIC's "blueprint" for  new energy vehicles was unveiled this week, according to a report by ShanghaiDaily.com.

Another plug-in hybrid version of the Roewe 550 mid-class sedan that could slash fuel consumption by 50% is due to hit the market by 2012, when SAIC's self-developed fleet of electric vehicles will start being marketed.

SAIC is partnering with GM and VW on these new-energy vehicles and says its investment on this new category of alternative autos will rise to nearly $900 million (6 billion yuan) because of its focus on hybrid models, and on cars that rely solely on electric power.

As China's economy has grown in both scale and sophistication, concerns about energy use and the environment have advanced, as well - stoking demand for energy-efficient cars and trucks. China's automakers have already invested millions in these new transportation technologies, and Chinese carmakers have pushed for mass-production to begin in order to meet this escalation in demand.

Challenges and obstacles abound. Alternative-energy vehicles cost a lot more, and they require a national service-and-refueling "infrastructure" to be able to operate. That infrastructure doesn't exist in China, right now.

Despite these problems, however, China's government wants to 60,000 new-energy vehicles - including plug-in electric and plug-in hybrid cars - on the country's highways streets by 2012.

SAIC has reportedly inked a deal with the Shanghai city government to provide roughly 1,000 new-energy vehicles - including all-electric, fuel cell and hybrids - for the 2010 World Expo.

SAIC has already unveiled several "green" cars over the past couple of years, including a VW Passat Lingyu - a car developed specifically for the Chinese market - and a hybrid Buick LaCrosse sedan (called the Eco-Hybrid).

China's Chery Automobile Co. Ltd. also said it would launch two hybrid models this year after a pure electric car rolled off the assembly line in February.

According to ShanghaiDaily, China has granted production permits to five models, including BYD Co. Ltd.'s F3 dual-mode electric car, Chongqing Changan Automobile Co. Ltd.'s Jiexun-HEV hybrid and Toyota Motor Corp.'s (NYSE ADR: TM) Prius hybrid, which has battled perceptions that its price is much higher than hybrid models made by rival carmakers.

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