China wants to raise its annual production capacity to 500,000 hybrid or all-electric cars and buses by the end of 2011, from 2,100 last year. Japan and South Korea together will be producing 1.1 million hybrid or all-electric light vehicles by then and North America will be making 267,000.

Beyond manufacturing, subsidies of up to $8,800 are being offered to taxi fleets and local government agencies in 13 Chinese cities for each hybrid or all-electric vehicle they purchase. The state electricity grid has been ordered to set up electric car charging stations in Beijing, Shanghai and Tianjin.

Electric cars have several practical advantages in China. Intercity driving is rare. Commutes are fairly short and frequently at low speeds because of traffic jams. So the limitations of all-electric cars — the latest models in China have a top speed of 60 miles an hour and a range of 120 miles between charges — are less of a problem.

First-time car buyers also make up four-fifths of the Chinese market, and these buyers have not yet grown accustomed to the greater power and range of gasoline-powered cars.

BYD has 5,000 auto engineers and an equal number of battery engineers, most of them living at its headquarters in Shenzhen in a cluster of 15 yellow apartment buildings, each 18 stories high. Young engineers earn less than $600 a month, including benefits.

When Tianjin-Qingyuan puts its entirely battery-powered Saibao midsize sedan on sale this autumn, the body will come from a sedan that normally sells for $14,600 when equipped with a gasoline engine. But the engine and gas tank will be replaced with a $14,000 battery pack and electric motor.

That means the retail price will nearly double, to almost $30,000. Even if the government awards the maximum subsidy of $8,800 to buyers, that is a hefty premium.

Large-scale production could drive down the cost of the battery pack and electric motor by 30 or 40 percent, still leaving electric cars more expensive than gasoline-powered ones.

Battery Issues

Rechargeable lithium-ion batteries also have a poor reputation in China. Counterfeit lithium-ion batteries in cellphones occasionally explode, causing injuries. And Sony had to recall genuine lithium-ion batteries in laptops in 2006 and 2008 after some overheated and caught fire or exploded.

These safety problems have been associated with lithium-ion cobalt batteries, however, not the more chemically stable lithium-ion phosphate batteries now being adapted to automotive use.

The tougher challenge is that all lithium-ion batteries are expensive, whether made with cobalt or phosphate. That will be a hurdle for thrifty Chinese consumers, especially if gas prices stay relatively low compared to their highs last summer.

United States Initiatives

The United States Department of Energy has its own $25 billion program to develop electric-powered cars and improve battery technology, and will receive another $2 billion for battery development as part of the economic stimulus program enacted by Congress.