US Taxpayers Footing Bill for Chinese Car Maker in Calif.

Sunday, 28 Apr 2013 06:27 PM

By Greg Richter

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A Chinese electric car maker will begin manufacturing its electric buses in California on Wednesday in order to qualify for a federal subsidy.

BYD Co.’s move won’t bring a lot of jobs yet, The Wall Street Journal reports, but it will be able to take advantage of the subsidy immediately. The company will be able to sell its buses at a huge markdown. U.S. taxpayers will foot the rest of the bill – which can be up to 80 percent per bus.

BYD spokesman Micheal Austin told the Journal that the company’s U.S. facility meets "Buy America" guidelines that allow buyers to take advantage of the government help.

Long Beach Transit, which serves several communities south of Los Angeles, intends to buy 10 of BYD’s buses for $12.1 million. About half of the cost will be paid for through federal dollars with the rest paid by state funds.

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Though it would normally be more cost-effective to build the buses in China and ship them to the United States, transportation analyst Harry Chen told the Journal BYD’s move was likely more marketing gimmick than anything else.

There market for all-electric buses in the United States is tiny; fewer than 100 per year are sold. The more likely future is natural gas-powered buses or natural gas/electric hybrids, Michael Beck of Booz & Co., told the Journal.

"Electric buses may be able to compete against conventional diesel buses. But they will not be able to compete against natural-gas-powered buses, because the cost of natural gas is less than one-third the cost of diesel," he said.

BYD also makes batteries for mobile phones and solar-power storage.

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