Joining The Monorail Bandwagon

By Wang Jun

When the driverless train glided out of the station in Shenzhen， the city in south Chinas Guangdong Province famed as the nations first special economic zone， it was another feather in the cap of Chinese electric vehicle （EV） manufacturer BYD.

The trial run on October 13 marked the debut of SkyRail， BYDs monorail project. With the trial operation of the three-stop， 1-km monorail， the EV manufacturer has entered the mass transit market.

In June， the Shenzhen-based BYD signed an agreement with the authorities of the Pingshan New District of Shenzhen to build a monorail covering at least 50 km and set up a national monorail demonstration zone within the next three years.

According to a BYD press release， the monorail is the fruit of a five-year research and development project with an invest- ment of 5 billion yuan （$738.55 million）.

At the launch， BYD President and Chairman Wang Chuanfu said with urbanization accelerating in China， the population and the number of automobiles were also growing rapidly， leading to traffic snarls and air pollution.

Traffic jams， a long-standing problem， have spread from first-tier cities to second-， third- and even fourth-tier ones. While the cities are building new roads， the growth of road capacity is slower than the increase in the number of vehicles.

“Excessive reliance on automobiles will create unprecedented challenges. Its necessary to alleviate the load on roadways， and better utilize the subway and monorail system， especially the latter，” Wang added.“Accelerating the development of rail transit is necessary to ease traffic jams in cities.”

Calling mass transit systems an indispensable solution， Wang said the SkyRail project can complement existing public transport to create a layered system encompassing the underground， roads and overground.

On the eve of the SkyRails debut， BYD clinched a deal， signing an agreement with the municipal government of Shantou， another city in Guangdong， to build a 35-km monorail. Shantou plans to build a 251.4-km rail network. According to Wang， more than 20 Chinese cities have expressed interest in building monorails with BYD.

A report by business information provider website Huxiu.com states the future core businesses of BYD will be information technology， automobile， new energy and the SkyRail. Development of these businesses， especially the hi-tech ones， needs steady financial input.

BYDs mid-year financial report for 2016 says in the first half of the year， the companys income totaled 44.95 billion yuan（$6.64 billion）， surging by 42.32 percent year on year. Net profit reached 2.26 billion yuan （$334 million）， up by 384.2 percent. However， business activities caused a net cash outflow of 1.43 billion yuan （$211.23 million）， indicating BYD still needs high financial input for business growth.

The huxiu.com report conjectured that the money for the SkyRail project had come from funds earmarked for researching and developing new-energy vehicles in the past five years， when BYD received support from the government， including subsidies.

On October 11， BYD signed a 60-billionyuan （$8.86 billion） agreement for strategic cooperation in the monorail industry with the China Development Bank.

At the press conference on October 13， Wang said since the SkyRail can be built in one third of the time needed for the metro and costs only one fifth of metro construction costs， it is highly suitable for second- and third-tier cities to improve their transport systems.

“For instance， Shantou has a demand for 200 km of rail transport， with an investment of nearly 50 billion yuan （$7.39 billion），” he said. “In China， there are 273 third-tier cities like Shantou. If each of them invests only 20 billion yuan （$2.95 billion）， there will be a 5-trillion-yuan （$738.55 billion） market. That is a big enough market to create another BYD.”