BYD’s Electric Car Plans Inch Forward, Fleets First

By · November 08, 2012

BYD e6 on a clean energy island

BYD aims to begin selling its electric vehicles, including the all-electric e6, to consumers in the US starting next year. It’s hard to know if that’s fantasy or not.

I was in Kathmandu, Nepal, a couple of weeks ago. After finishing a trek, I mentioned to another American there that I write about China and electric vehicles. “Oh,” he said, “I only know BYD. It is doing really well.” Not exactly, I had to tell him. Its cars—electric and gas—aren’t selling and another of its core businesses, mobile phone handset components and assembly, is in the dumps. I read a few days later that BYD’s 2012 third quarter net profit was down 94 percent compared to the same period in 2011. The falling profits were due to a slowdown in car sales, said BYD, and also from losses in its solar panel business.

So the picture for BYD looks pretty bad, right? I’m not sure. BYD is still earning money, though a lot less than in the past. And it does seem to be getting some traction with its electric vehicles, though I don’t think EVs are actually bringing in much income. Meanwhile, it is still selling regular gas-powered cars in China, some 303,858 units in the first nine months of 2012, according to LMC Automotive. That is down 7 percent on-year, but September sales were up 5 percent.

Start With Fleets

I get a steady stream of press releases from BYD touting achievements ranging from the University of Utah’s purchase of a BYD electric bus, to a memorandum of understanding with a London cab company named greentomato cars to create a fleet of 50 cabs using BYD’s electric vehicles. Micheal Austin, BYD’s PR guy here in the U.S., assures me that BYD’s U.S. strategy is not impacted by the fall in earnings. It still plans to pursue fleets here in the U.S. for the time being. “Fleets make better sense while our parts and service strategy gets firmed up,” he said in an email.

In China, BYD is also pursuing fleet business first for its electric vehicles. Thus, a recent announcement that the company is offering a zero initial payment with payoff in installments deal for its e6 electric car is not as desperate as it sounds. The scheme, which is supported by the state-owned China Development Bank, targets taxi fleets not private owners. China has some 1.2 million taxis. Beijing is leaning heavily on municipalities to electrify their taxi and bus fleets, but the high cost of electric vehicles has caused local governments to drag their feet. So the zero-down scheme is a pretty smart move.

Of course, none of those deals equal a bunch more income for BYD in the near term. And founder and Chairman Wang Chuanfu’s pursuit of diverse “green” businesses such as solar seems to be hurting BYD’s overall financial health. Wang is the key to BYD’s future. The company is dual-listed on the Hong Kong and Shenzhen stock exchanges, but Wang owns 24 percent of the shares. So BYD is for all intents and purposes owned by Wang Chuanfu. If he decides to change direction, the ship will turn. That may be why Warren Buffett is still holding his 9.9 percent stake in BYD.

BYD’s future may not be as bleak as it seems from the recent news. Having said that, I’m not recommending anyone rush out and buy BYD stock.

Comments

· · 2 years ago

The BYD looks like a Subaru. China will not let BYD go out of business they have kept all the struggling business from drowning.

· Matt 4 byd (not verified) · 2 years ago

BYD is the future...Warren buffet did not sell a part even if the stock was falling down...I won't sell a dime even if it loose 90% of the current price! ;-)

· Anonymous (not verified) · 2 years ago

I hope you are not going to recommend BYD when everything look obviously good....with high price ~ that's too late. Asking other chasing high is guilty same asking people avoid low price to miss opportunity... I think reader should do their own study... if buy must buy during low price. If not forget about it.

· Anonymous (not verified) · 2 years ago

Hi Dear,
I hope you are not going to recommend BYD when everything look obviously good....with high price ~ that's too late. Asking other chasing high is guilty same asking people avoid low price to miss opportunity... I think reader should do their own study... if buy must buy during low price. If not forget about it.

· charles wilson (not verified) · 2 years ago

What do you think about BYD's new financing program with Taxies and busses?

· Anonymous (not verified) · 2 years ago

The simple strategy of "buy low sell high" is based on hope. Blind hope is simple foolishness, but hope based on understanding of BYD's real technical capability translates into potential success. BYD is currently making all the right moves in a fundamental sense. It has a talented leader that is capable of calling the shots without distractions from the stock market.

· Anonymous (not verified) · 2 years ago

The financing program is an ingenius one, especially for taxi and bus in Chinese market and maybe other markets as well. It puzzled me why Nissan/GM/TOYOTA didn't focus the design on fleet use first, instead of family car. The advantage of EV is low driving cost, therefore, the more you drive the more you save. The disadvantage of EV is that it can not meet the need of occational long trip. Buses, taxi, delivery truck and other routinely used vehicle should be the first market that make the most economical sense.
Please follow up to see how this program turns out.

New to EVs? Start here

  1. Electric Cars Pros and Cons
    EVs are a great solution for most people. But not everybody.
  2. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  3. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  4. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.
  5. The Ultimate Guide to Electric Car Charging Networks
    If you plan to charge in public, you'll want to sign up for charging network membership (or two).
  6. Electric Vehicle Charging for Businesses
    How do you ensure that electric car owners will be happy with every visit to your charging spot?
  7. How to Use the PlugShare EV Charging Station Tool
    Locate EV charging stations and optimize their use with a powerful mobile app.
  8. Quick Charging of Electric Cars
    Add 50 to 60 miles of range in about 20 minutes. Here's how.
  9. The Real Price of EV Public Charging
    Compare the cost of charging on the road to what you pay at home.
  10. Electric Vehicle Charging Etiquette
    Thou shalt charge only when necessary. And other rules to live by.