China's boom has sparked an explosion of automobiles on city streets—and a corresponding deterioration in air quality. In Beijing, levels of nitrogen dioxide—a major cause of smog—have jumped 50% since 1996. But the same affluence that's driving car sales is also fueling demand for an antidote: two-wheeled electric vehicles. Some 10 million electric bikes were sold in China last year, up from just 40,000 in 1998. Shanghai, which outlawed gas-powered scooters in 1996, now has 1.35 million e-bikers. The result is flush times for the nation's 481 official e-bike makers (and countless "unofficial" ones). Luyuan Electric Vehicle Co., whose chairman, Ni Jie, joined in a lawsuit forcing the Fuzhou government to overturn its ban on e-bikes in 2003, was one of six Chinese companies to sell more than 200,000 of them last year. And that's just the start: A government report estimates that by 2010, electric bikes will be a $8.6 billion industry.