BYD sets plans for EV sales -- but not to consumers

Automotive News reports on Chinese automaker BYD's plans for an electric car.

Automotive News
4 min read

LONG BEACH, Calif.--BYD Auto Co. recently said it would locate its U.S. headquarters in Los Angeles and begin selling a plug-in electric car in the United States by year end. But the Chinese automaker has a history of big announcements that don't pan out.

This time may be different. But don't expect to see a BYD-badged electric vehicle on your street any time soon--unless, perhaps, you live in downtown Los Angeles.

"Initially, we will sell the e6 electric car to government agencies to get feedback," Fred Ni, general manager of BYD's North America operations, told Automotive News on the sidelines of an international trade conference here. "We may not start immediately marketing to individuals."

In 2007, BYD unveiled plans to mass-produce an electric car. It showed an early version of the e6 at the 2008 Beijing auto show. But the car just went on sale in China, and only to government fleets.

No. 7 in China

BYD, formed in 1995 as a maker of cell phone batteries, began manufacturing cars in 2003. A portion of the company, including its automotive unit, is listed on the Hong Kong stock exchange. The unlisted portion is closely held.

It is the seventh-largest automaker in China and sold about 450,000 units in 2009, according to J.D. Power and Associates. This year BYD aims to sell 800,000 units. Its gasoline-powered F3 small car, priced at around $7,500, was China's top-selling model in 2009 at more than 280,000 units.

Measured by revenue, BYD Auto was China's 14th-largest vehicle manufacturer, according to a list compiled by the China Machinery Industry Federation and China Association of Automobile Manufacturers. BYD's 2009 revenues totaled 21.5 billion yuan ($3.14 billion).

BYD has sold no plug-in electric cars and only a few hundred plug-in hybrid cars, all in China. Kevin Huang, a market analyst in Guangzhou, China, with JATO Dynamics, questions the public perception of BYD as a high-tech company. "When people talk about BYD, they think of 'battery car' rather than 'cheap,'" he says. "But low price is still the major reason for its rapid growth."

Ni says BYD is talking with dealership groups in the United States about a partnership that would serve as a distribution network. He would not give specific names.

BYD e6
China's BYD's e6 all-electric sedan. BYD

Battery doubts

Distribution is not the only hurdle the Chinese brand faces here. The brand is not well known, and consumer trust of its technology will be hard to gain, says Duan Chengwu, senior technical analyst in Shanghai with IHS Global Insight. "There is no solid evidence to convince consumers that their battery technology is mature enough," he says.

Indeed, Long Nanyao, vice chairman of InterChina Consulting, says BYD's battery technology is not ready for high-volume use in the auto industry. BYD's quality control is not stringent enough for the charging and discharging cycles required for multicell traction battery packs, he says.

"They are coming from a 'good enough' mentality, with lower accuracies and wider tolerances," Long says. "We do expect BYD to make breakthroughs, but we also expect it to take time."

Nevertheless, Warren Buffett's Mid-American Energy Holdings gave BYD's technology a vote of confidence with a $230 million investment. Mid-American declined to comment for this story.

BYD's electric cars use a lithium ion phosphate battery developed by parent BYD Co., a major global manufacturer of lithium ion batteries for cell phones. BYD says the battery can go more than 200 miles on a charge.

Industry experts say that could be true--when the battery is brand-new and the driving conditions are ideal, with few stops or hills and not much drain by the air-conditioning system, for example.

Ni grants that the 200-mile estimate was "under specific conditions," but insists they are similar to testing conditions used by other automakers. "If you are driving in 100-degree weather and running the air conditioner all the time," it might not hold true, he says.

L.A.'s lure

Vance Baugham, president of the World Trade Center Association of Los Angeles-Long Beach, visited BYD in China and helped lure the automaker to Los Angeles. The bait included lowered fees at the Port of Los Angeles, help renovating the building in downtown Los Angeles that will serve as BYD's headquarters and promises of sales to the Los Angeles County and Los Angeles municipal fleets. BYD also signed a deal with the city's Department of Light and Power to install a network of residential and public charging stations, he says.

Baugham is not concerned about the timing of the launch of BYD cars in the United States. The company also will promote its solar panel, energy storage, and LED lighting technology at its Los Angeles headquarters.

"They are not [just] an automobile company," Baugham says. "They are a series of companies."

After the e6, BYD likely will bring a hybrid model to the United States, Ni says. It will be based on the F3DM hybrid currently on sale in China, but styled differently. Says Ni: "We will make the car more attractive."

(Source: Automotive News)