"I believe it is win-win cooperation, since both sides have their strengths: BYD has battery technology, and Mercedes-Benz certainly has all-around knowledge on cars," Xia says.

BYD has already adopted the lithium-ion battery technology that originated from the US, which is "the most promising battery technology for electric vehicles", as Song says.

"The battery is the most essential component of an electric vehicle. But the battery efficiency of BYD is at least 20 percent lower than that in developed countries," he adds.

Wang Jianjun, vice-general manager of BYD, says the company will stick to this battery technology, since it is the easiest way to commercialize electric vehicles.

"We will develop technologies in two niche markets: One for private customers in selected cities, one for public transportation. We will gradually roll out the pilot operation of city buses in major cities," he says.

Despite the cool reception from the market, Wang Chuanfu, chairman and president of BYD, says development of the electric car is necessary in order to catch up with the foreign auto giants.

"Honestly speaking, Chinese cars are not able to compete in the conventional car area, if only by lower price. We have to develop (electric vehicles)."

Although labeled as the electric car pioneer, BYD's current revenue relies heavily on conventional cars. Li Yunfei, assistant general manager of BYD Co Ltd, admits that most of the BYD electric vehicles are still being tested.

From 2005 to 2010, sales of BYD conventional cars kept a year-on-year growth rate of more than 100 percent, once considered as the "BYD miracle" in the auto industry.

Among its models, BYD F3 is the top seller of Chinese small car models. It is known for its fashionable design and low price, which starts at 56,000 yuan.

The glory comes with criticism and suspicion, though.

For years BYD has been criticized for its copyright infringement, on its car design and its battery technology. A joke well-known among Chinese drivers is that if you replace the logo of a BYD F3 with one from a Toyota Corolla, "nobody can tell them apart from a distance".

At the same time, BYD is facing a problem every Chinese car brand is worried about. By winning the market with a low price in the beginning, it found its cars were stereotyped - cheap and of poor quality. To change its image, BYD introduced S6, the first mid- to high-end SUV, at last month's Shanghai auto show.

The company was also affected by its dealership policy adjustment. Its revenue in 2010 plummeted by 34 percent to 2.52 billion yuan, down from 3.79 billion yuan in 2009. BYD adjusted its sales goal from the original 800,000 units to 600,000 units, but sold only 520,000.

Since 2008, the company has been trying to push its product in the US market. It finally made progress when the Los Angeles authorities agreed to test the e6 last year.

It originally planned to introduce e6 to the US at the end of last year, but later postponed entry to the US mass market till the first quarter of 2012.

Some speculate that the delays were caused by patent infringement, but the company denied the accusations, saying it wanted to "make the car roomier for the US customers".