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Dual Mode: An industrial revolution?

– by Guan Xuejun
On October 10, 2008, a week after Warren Buffett, king of the stock market, became one of its shareholders, BYD bought Zhongwei Wafer Co., a semiconductor manufacturer based in Ningbo, Zhejiang Province, with close to ¥200 million ($29 million). This is BYD’s first major acquisition after it had received about HK$1.8 billion in investment from MidAmerican Energy Holdings Inc. under Buffett.
This move, according to people close to the automaker, is intended to strengthen the upstream electronic components link of its supply chain, thereby speeding up its commercialization of the electric cars. By this takeover, BYD has acquired the R&D and manufacturing capabilities in drive control for electric cars. Aside from its leading position in battery technology, BYD is now in a position to develop control technology for electric motors.  
Earlier, BYD had successfully launched its conventional car project through the acquisition of Qinchuan Automobile Co. based in Xi’an and the Beijing Automotive Die Co. In the first half of 2008 sales of BYD cars grew 94 percent over the same previous period. With success in conventional gasoline-driven car manufacturing, BYD is beginning to accelerate industrialization in the field of new energy cars.
BYD’s series of moves are unconventional viewed from a historical or industry perspective.
What Warren Buffett is thinking
David Sokol, chairman of MidAmerican Energy, said: “BYD’s technologies will be an integral part of the future in the protection of the environment, especially relating to global climate change.” This is an important reason for Warren Buffett to invest in the Chinese company.
At the press conference announcing Buffet’s investment, Chairman Wang Chuanfu said: “MidAmerican’s electricity energy networks across the United States will make it easier for BYD to build infrastructures such as charging stations for electric vehicles once it begins selling in the U.S. market,” which explains why he chose MidAmerican Energy as a strategic investment partner.
According to reliable sources, MidAmerican Energy has all along followed closely the development of electric vehicle technology. At the end of July 2008, after he visited BYD at its Shenzhen headquarters, David Sokol was impressed by what BYD had achieved in the previous 12 years. Sokol said: “We are very impressed by BYD’s outstanding management team which has achieved so much over the last 12 years, and its research and development capability, especially the capability of translating technologies to products.”
The history of economic development in the world shows that, whenever a new industry emerges, financial capital takes part in its development, pushing it rapidly to maturity. The IT industry is a case in point. At a time when the conventional combustion engine hits the ceiling in fuel efficiency and when petroleum resources are diminishing, financial capital is attracted to new energy and new technology projects. Evidently, Buffett’s investment in BYD accords with rules guiding the development of industries.
Existing technology spoiler
Confronted with a global financial crisis, major German automakers have asked the federal government for financial support for developing green technologies. The French government has decided to provide capital to automakers for developing cars that meet future eco-friendly requirements. It is becoming more and more difficult to develop green products in the area of conventional combustion engine technology.
At the 10th China International High-Tech Fair held in Shenzhen in October 2008, BYD announced its latest achievement in the development of new energy vehicles – the DM (dual mode) technology. Industrial production and marketing of a dual mode electric car, the F3DM, is expected before the end of this year.
BYD’s dual mode electric car is a combination of EV (electric vehicle) and HEV (hybrid electric vehicle). Simply put, it is a rechargeable hybrid electric vehicle. According to Lian Yubo, BYD Auto’s chief engineer, the F3DM can be driven about 100 km in electric mode. When the battery pack is about to be depleted, its gasoline engine kicks in, which continues to power the car. The F3DM is a series, rather than a parallel, hybrid.
The battery pack can be recharged using a home power plug. At present, conventional Lithium-ion batteries require at least 4-5 hours for a recharge, whereas the battery pack powering the F3DM can be recharged to 80 percent of capacity within 15 minutes at special industrial charging stations. Recharging to full capacity at an ordinary home power outlet requires nine hours. A battery pack has a life of more than 2,000 cycles (recharging after depletion), for a lifetime range of over 600,000 km. Besides, the plug-in hybrid has a maximum output power of 125 kW, equivalent to that of a car with a 2.4-liter engine.
BYD’s plug-in hybrid owes its superior performance to its unique Ferrous-based batteries, the latest breakthrough in new energy development. At present, two types of iron-based batteries are being developed around the world: the ferrous and the Lithium-iron. BYD’s is of the ferrous type. No other company has claimed to be able to produce high-performance ferrate batteries on an industrial scale. In a ferrous battery, synthesized ferrates such as K2FeO4 and BaFeO4 are used as materials for the positive electrode. The ferrous battery has dense energy capacity, is small in size, light in weight and pollution free, according to Lian Yubo.   
For car battery, it is difficult to meet the three requirements of low cost, large capacity and safety. BYD has made breakthroughs on all these aspects. In addition, raw materials for the battery and its manufacturing process are pollution free. It is green energy. The hybrid car powered by this iron-based battery is a green car in its true sense.
With an electric motor driving the dual mode hybrid car, the transmission, manual or automatic, is done away with. The technology for the electric motor is mature. Tests show that the electric motor is highly reliable. The revolutionary DM technology is expected to spoil existing automotive technologies. And transmission-free speed change and electricity-driven four-wheel drive, these technologies will have an epoch-making significance in the history of the world’s auto industry, too.
A major problem that hampers the electric car entering homes is the cost factor. Prices for hybrid cars are much higher than those for conventional vehicles. Currently, BYD’s plug-in hybrid is more expensive than the conventional car but the price difference is far lower than that between hybrids and conventional cars abroad. It is easy to imagine that, free of the conventional transmission, the traditional automobile structure and platform technology will undergo drastic changes. Production cost for assembled vehicles is expected to fall by big margins. These factors will ensure that hybrid cars will gain popularity at a fast pace.
BYD is expected to exert a remarkable impact on the auto industry. BYD’s progress in hybrid technology shows that China’s auto industry has achieved a new breakthrough in new energy development and can now stand on its own among the world’s auto manufacturers.
Rewritten by Raymond Chen based
on the story carried by

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