China is savouring the fruits of its economic boom. But it's also counting the costs. Its cars and industry are now the world's biggest emitters of carbon dioxide. But according to the Chinese, this is the brand-spanking new answer to their car pollution problem. It's a plug-in electric car, made by a company called BYD, which stands for "build your dream".

PAUL LIN, BYD MARKETING MANAGER: Chinas’ auto market is racing.

Paul Lin is BYD's marketing manager and this is their gleaming showroom in the southern city of Shenzhen. BYD started life as a maker of mobile phone batteries just 13 years ago and has only been producing cars for five.

PAUL LIN: And we find our battery cannot only be used for the mobile phone or some kind of the electric consumer devices. It can also be used for cars, used for solar panels, used for everything. So, based on that, we acquired a state-owned company in 2003, a car company to enter the auto business.

The car they've come up with is the F3. It runs up to 100km on battery power alone - enough for the average commute, says the manufacturer. And when the battery runs low, the petrol engine switches in.

PAUL LIN: Which means it can run for more than 100km by pure electric mode. And after that, you want to go longer distance, the gasoline engine start. And support.

And according to the company's promotional video, there are a number of options for refuelling. While the solar panel is something they're still working on, the makers insist this is more than just another eco-friendly hybrid. They claim no other car has yet been able to travel so far on just battery power.

PAUL LIN: If you only go for less than 100km per day, you can go back your home and charge the car in your garage. And in another day, you just go to work by pure electric mode again.

Outside the showroom, I get the chance to try one for myself. Inside, everything about the car looks normal - the steering wheel, dashboard - the only difference is how it's powered.

REPORTER:  It's now powered by battery? Well, it's not going to win any awards for style, this car, but it certainly has a real kick. Quite powerful acceleration - very smooth, in fact - smoother than I thought.

BYD believes its batteries give it a winning edge.

WOMAN: All our battery is recycled. The power is recycled so it's environmental beneficial, so people will like it, not only China. Most Western people will like it very much

Chairman Mao said the East is red but maybe the East is green?

WOMAN: Right.

The batteries can be fully charged in nine hours from a regular electrical outlet, or much faster at BYD's own charging stations of which there are only seven so far, but the plan is eventually for thousands. Green technology has long been in the slow lane in China. But it now seems to recognise the need to reduce its fast-growing dependence on crude oil and to limit its choking emissions.

VOICEOVER: In contemporary society, severe energy deficiency, carbon dioxide emissions of automobile and air pollution are the three main current environmental issues in the world.

CHRISTIAN BASSET, ACTIVIST “CLEAN THE AIR”: I am totally convinced that, especially concerning roadside pollution in every large Chinese city, China wants to solve it, and using an electric car is a way to drastically reduce roadside air pollution.

Hong Kong environmental activist Christian Basset says electric cars would be a small, but important, milestone.

REPORTER:   Even if 10% of China's motorists started driving electric cars in the next 10 years, what impact would that have?

CHRISTIAN BASSET The impact would not be tremendous on the scale of the country. However, as a green organisation, we see it as an evolution of the mentalities. And more people think about the green car, if more people think about green technology, so much the better.

Ordinary Chinese certainly seem impressed by the idea of a greener car. The visitors today - local customs officers beaming national pride.

CUSTOM OFFICER (Translation):  I was talking to the engineers about the car, they are very proud of their achievement, I feel inspired by them. I am very proud of them.

After recent scandals, the central government is actively trying to rebuild confidence in the 'Made in China' brand. It's already placing its own orders for the home-grown hybrid - a sort of green nationalism, as it were.

PAUL LIN: And China's Government is concentrate day by day, time by time. Let the public know the new energy car will be the future.

The F3 will cost around $32,000, and while there are no plans yet to sell it in Australia, BYD hope to have it in US showrooms within two years, and in Europe shortly after. China is positioning itself as a growing power in the clean-energy technologies that will one day fuel the world economy, which is probably why Warren Buffet, the shrewd US investor, has just paid US$230 million for a 9% stake in the company.

But this isn't the first attempt to mass produce an electric car. Three years ago Dateline reported from America on the rise and fall of General Motors' electric car. While many believe it was the victim of big oil interests, GM's head of PR, Dave Barthmuss, told Dateline that consumers just weren't interested.

DAVID BARTHMUSS, GENERAL MOTORS:  People did not demand the EV 1 from GM in large enough numbers for us to pursue it. I have not seen an auto company come out with a battery program that has a vehicle that will have the kind of range and quick charge that's needed to appeal to a mass market at a price point where the common man or woman can afford it on a monthly basis.

VOICEOVER: Ladies and gentleman, that's the sound of a crushed automobile being shredded into a million pieces.

But now the electric car is having its revenge. Having scuppered it once before, General Motors is planning to unveil a new plug-in vehicle next year. But BYD has beaten them to the punch. The F3 goes on sale in China later this year. It's another blow to the US car industry, from a company with its sights set on world domination.

PAUL LIN: Our ambition in 2015 is to become the China number one and we hope in 2025 we can become the world number one. Of course it's by our new energy car.

The looming recession offers opportunity to an auto new-comer that has come a long way very quickly.

Reporter/Camera

ADRIAN BROWN

Additional Camera

ROB McBRIDE

Fixer

JAYMEE NG

Editors

MICAH McGOWN

ROWAN TUCKER-EVANS

Producer

AARON THOMAS

Translations / Subtitling

JING HAN

Original Music composed by

VICKI HANSEN