Buffett-Backed BYD Targets Toyota

Posted by: Bruce Einhorn on March 8, 2010

Can an automaker from China capitalize on the Toyota recall scandals? With the reputation of the Prius tarnished, the Chinese company backed by Warren Buffett, BYD, could hardly have found a better time to roll out its green cars in the U.S. and Europe. The company attracted Buffett’s attention in 2008 thanks to its green-car strategy, and a BYD spokesman today told Bloomberg News the company will begin selling its electric and hybrid cars in Europe next year. BYD hopes to start sales in the U.S. even earlier, with Chairman Wang Chuanfu saying in January that American drivers might be able to get behind the wheel of BYD cars by yearend. Helping BYD reach its export goals is a new partnership with Daimler; the two companies announced on March 2 plans to cooperate on building electric vehicles.

BYD has plenty of obstacles still to overcome. As the Bloomberg News story points out, the company only sold 48 of its hybrids in China last year and hasn’t even begun selling its E6 electric car in the Chinese market. Still, the Toyota scandal could prove to be a great equalizer for BYD. Before the recalls, many people would have doubted BYD’s ability to close the quality gap with Toyota. Now that the market leader has stumbled so badly, BYD has an easier job selling consumers on the idea there’s not that much difference between itself and mighty Toyota.

Reader Comments

mohammed

March 8, 2010 12:52 PM

made in china products are crap.

John

March 8, 2010 2:26 PM

I want to buy shares of BYD. What is the exact full name of the Company. Does this company have a ADR (American Depository reciept), so I can purchase it through Scottrade? Can you help me buy shares of BYD. Thank you.
I am very interested, John

J

March 8, 2010 2:28 PM

This artical is just plain stupid. There is no comparision between the two companies.

C. H. Ng

March 8, 2010 8:56 PM

Selling electric cars in China market is more difficult because many Chinese are living in high rise apartments and parking bays where they can easily recharge their cars are very limited. The other reason is the higher cost as compared with conventional cars.

Since BYD's electric cars have not really being selling successfully & proven even in her home turf, venturing in foreign market such as Europe & USA can be even more tougher. But having said that, BYD with her dynamic boss around, I won't bet against them failing when you got investor as sharp & famous as Warren Buffet backing them.

Gary

March 9, 2010 11:58 AM

I sought out and rode in a new BYD taxi in Lima, Peru a few months ago. What a crummy car! Sharp edges on exposed metal seat tracks, the cheapest possible interior materials, buzzy motor, rough shifts. The other Asian cars I rode in were much, much better (Hyundai, Suzuki, ...) For a country which seemed to have a bustling economy, the real curiousity was why no US autos were around, just Asian and European makes.

Royal Lichter

March 9, 2010 12:22 PM

I smell a Buffett opportunity...

SC

March 9, 2010 4:08 PM

BYD is listed on the Hong Stock Stock Exchange (Stock code 01211.HK). Buffett got int at around HK$8. Now it is selling around HK$62

blowfish

March 9, 2010 8:39 PM

Aren't these Electric cars all use a Rheostat or Potentiometer to regulate the speed? The control is not much more different than the ones that got away ( Literally ) in the Toyota's drive by wire.

Some article suggested a phenomenon call " Tin Whisker" are caused by due the un-Leaded solder. The silver material that joint electrical contacts together.
http://en.wikipedia.org/wiki/Whisker_(metallurgy)
Because of no-Lead this situation arise and cause shorting intermittently.

Also the FAA Fed aviation & Aeronautics decreed all the components that goes flying ina plane has to have Lead in the solder or else no dice. So wonder if this is another explanation.

Now back to the topic of EV, many of us just didnt realize EV needs juice from the wall plug, and the power either comes from Hydro-Generating Dam where water pushes the Generator to turn and we get Electricity for free except to build the Infrastructure.
Or comes from Coal fire Generating / Atomic Gen plant.

The two latter gen plants and Dr David Suzuki are diametrically opposed.
So if u don't live in an area supplied by Hydro-Gen power, will u be very environmentally Koshered?

Mike

March 9, 2010 9:46 PM

John, there is no ADR of BYD. You can get more info at

http://www.google.com/finance?q=hkg:+1211

and

http://www.hkex.com.hk/invest/index.asp?id=company/quote_page_e.asp?WidCoID=1211&WidCoAbbName=&Month=&langcode=e

Personally, I don't see this company as much of a challenge in the near future. Toyota is screwing up and they are handling the PR worse than Tiger Woods.

What makes you think BYD is going to take over the market when Honda still maintains a pristine image in the US? Even Hyundai is making big strides. This article is complete nonsense. A car that barely sells in China won't take over the US market anytime soon...especially if its electric. It's going to take some time for people to adapt to that.

All the people that just bought hybrids are not going to just ditch them to buy BYD's electric car. If BYD wants to win the US market, focus on hybrid vehicles and undercut Toyota's Prius. However, Toyota will recover in the next 5 years. If BYD enters before then, it should be able to get a small share. If it enters after that, forget it. Too late.

CK

March 9, 2010 11:22 PM

Chinese Car Manufacturers have a long way to go even before they reach the Quality & Engineering standards of even second rung car manufacturers of the world. No doubt Toyota has had a set back because of the recent glitch, but if at all any manufacturers have to benefit from that it would only be Honda, VW, GM & Ford. BYD would be dreaming (pun intended, if it is thinking that US customers would immediately line up in front of their door for electric cars. I have driven Chinese cars and they have cheap interiors and poor quality and finish. I would be scared to own and drive one. Atleast, Toyota is standing by the quality of their cars and is working overtime to fix the problems. Can't think of Chinese manufacturers giving that commitment. Incidentally, BYD is an abbrevation of 'Build your Dreams' - Hah!.

alex

March 10, 2010 3:07 AM

you are a big s---!
“mohammed
March 8, 2010 12:52 PM
made in china products are crap.”

Interconnect

March 10, 2010 4:50 AM

Mr Wang Chuanfu compliments on great success in US, where consumer is the king. If the consumer in the US, in addition to the NHSA has approved BYD, many countries in your region China, consumers in your region China, compliments the great name BYD and wanted themselves be the first as many countries in BYD home region has PTA, FTA with preferential tariff status and Free Trade alliance courtesy WTO Geneva. The networked car event of ITU, Geneva at the Geneva Motor Show has several milestones for the networking, communication of car. BYD should come up with electric car, networked with battery technology transfer, assembly/franchise for local markets in the region. Markets as Afghanistan, Pakistan the SAARC region has several concessions with China prospective for cooperation, for license.

MARK URAKAWA

March 10, 2010 8:11 AM

SORRY BYD AND TM IN THE SAME LEAGUE
I DONT KNOW WHAT THIS AUTHOR IS SMOKING
BUT HE IS DELUSIONAL. DIFFERENT CLASS
AS FOR A CHINESE CAR, I DOUBT IF THE
AUTHOR EVER RODE IN A CHINESE CAR.
AS FOR TOYOTA I OWNED 8 OF THEM
AND WILL BUY ANOTHER. WOULD I BUY A
CHINESE CAR? ABSOLUTLY NO

Henry L.

March 10, 2010 9:24 AM

BYD is not in the same league as Toyota even with Toyota recent problems. I suspect it will take quite some time for BYD to be successful outside China. To be successful, BYD has to deliver against highly biased perceptions (thanks to the sucessful dis-information in the media) in the West and outperform for atleast 5 years before public percept START to change.

Larry

March 10, 2010 12:49 PM

The symbol is TM

Interconnect

March 10, 2010 3:40 PM

Chairman Wang Chuanfu Daimler e6 agreement is very encouraging. Many emerging countries in the SAARC region interested in manufacture, assemble, the EV with the battery technology from BYD/Daimler. Pilot assembly of e6 with BYD technology, but local fabrication is important.

K

March 11, 2010 2:25 PM

J - I completely agree

Alex

March 12, 2010 10:11 AM

John,

They do in fact have an ADR. They trade here in the states under the ticker BYDDF.

Louise O'Brien

March 13, 2010 7:11 AM

We can't wait to buy electric cars in Australia. Every home has at least one garage with a powerpoint so it will be easy for us to recharge EVs overnight. People are joining lists to buy electric vehicles as soon as they come into the country. The local manufacturers seem to asleep at the wheel so I will be buying an imported EV.

Brian

March 13, 2010 7:13 PM

Quick! someone please put Mohammed back to the mental institution before he bites again. You must be a fool. My iphone is made in china and I wouldn't let you touch it.

Keith Ip

March 13, 2010 10:43 PM

I think battery recharge is the major concern of drivers, it doesn't as convenient as gasoline which can be refueled timely from gas station. Battery recharge is time consuming, drivers can't stay hours in the car until the recharge is done. BYD must think about this, is that possible to get partnership which can support this.

C. H. Ng

March 14, 2010 9:49 PM

Both China & India may be current emerging powers but when come to building cars, they are just new kids on the block. But we shouldn't discount or ever doubt their abilities coz they will definitely catch up or be as good as Japan & Korea of today in a short term.

A shrewd & world famous investor such as Mr Warren Buffet must had seen something in BYD we ordinary laymen don't or can't see, that he initially wanted to buy more but Chairman Wang just limited him to 10% of BYD. As a consumer, we can have our choices of what (cars) to buy; as curious observers we can have our skepticisms of anything made in China (or by BYD for that matter) but lets us not laugh now or they (Mr Wang & Mr Warren Buffet) might have the last laughter after all.

Please

March 21, 2010 7:06 PM

MOst of you people should do your research before you make stupid comments. I think BYD has signed partnerships with VW and Diamler. The one with Diamler is most intriguing because they would be working on a new brand together. I suspect that BYD will use this partnerships to enter foreign markets. Further more have you bother researching their new line I belive its the G3 or something like that, It actually looks good. For those of you saying they have along way to go just remember Honda was total crap when they first came out in the US look at them now. BYD already has partnership with dialmer and vw so thats a big plus. A big part of their sucess also comes form the backing of the chinese goverment.

Tung @ Kai Ping, GD, yinwoh

April 8, 2010 4:56 PM

Don't read opinions, look at numbers. Look at the sales figures of BYD. It beats all domestic and foreign brand cars that made in China or elsewhere. Its the number one selling car. Chinese people are not stupid. You get what you pay for. If BYD E6 cost US$50K and the Toyota one cost US$55K, I will buy the BYD brand. When Lexus first came out, no one wanted to buy it either. People were still buying Benz. As more of those Lexus commercials came out with the glasses on top of the hood and areodynamic, etc..., sales grew. At today's buying opportunity, I would buy a Lexus over a Mercedes Benz at the same class at the same price. Talk all you want now, BYD will come and attack you just like Dell computers and Apple Iphones, .... and among all the shoes and jeans in the whole world.

More than half of the stuffs on your desk came/made from China.

Post a comment

 

About

Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

BW Mall - Sponsored Links

Buy a link now!