Chinese electric vehicle manufacturer BYD is entering the railway transportation market with its announcement of plans to build a monorail service in Shenzhen.

Known as the Skyrail, it will take around two years to build, one-third the time for building an average metro system, and at about 20 percent of the cost, according to the company.

With an investment of 5 billion yuan ($743 million; 676 million euros; 611 million) over five years, BYD aims to solve the traffic jam problem in crowded cities caused by population increases.

At the ceremony, BYD Chairman Wang Chuanfu said the city of Shantou in Guangdong province had signed a contract with BYD to build a 250-kilometer-long Skyrail system, and another 20 cities are in negotiations to introduce the new transportation system.

"Skyrail could integrate with the current public transportation system in a bid to establish a multidimensional network linking spaces underground, on the ground and in the air," Wang says.

It can run as fast as 80 km per hour, with delivery capacity of about 10,000 to 30,000 passengers one way each hour.

After the 4.4-km Skyrail started operations on BYD's Shenzhen campus, railway transportation officially became the company's fourth core business after IT, automobiles and new energy.

Wang says BYD is determined to be the first private company in China to enter the railway transportation industry.

On Oct 11, Wang also signed a contract worth 60 billion yuan with China Development Bank for strategic cooperation in the monorail system industry.

Peng Qi, an automobile industry analyst in the research center of China Merchants Securities, says the development of the Skyrail depends on how many orders it could successfully get, and that needs to be negotiated with local governments.

He believes the new system is suitable for third- and fourth-tier cities, as well as linking suburbs and downtowns in first-tier cities, but he is afraid smaller cities can't afford the cost.

The advantage of BYD's Skyrail is its low cost, he said.

He compares the Skyrail to an aerial electronic bus, saying BYD has comprehensive resources for manufacturing electronic buses, including electronic motors, battery and electronic controls, so the company only needs to outsource track manufacturing.

grace@chinadailyhk.com

(China Daily European Weekly 10/21/2016 page27)