China’s BYD Aims to Build Not Just an Electric Car, But an Ecosystem

By · October 18, 2010

BYD e6 electric car

The BYD e6 electric car promises 200 miles of driving range.

The Chinese company known as BYD—that’s Build Your Dreams—has an audacious plan to solve China’s energy and environment problems. Readers of this site might know BYD as the carmaker backed by famed investor Warren Buffet—and as the top contender to bring Chinese-made electric cars and plug-in hybrids to the United States.

But it may come as a surprise that BYD views the U.S. market as somewhat irrelevant, and doesn’t see high-volume sales of its all-electric e6 or the BYD F3DM plug-in hybrid as that high of a priority.

That’s because BYD’s Chairman, Chuanfu Wang, has a much bigger vision. “The goal is to create a zero emissions ecosystem,” said Michael Austin, a Chicago-based BYD vice president with marketing and public relations duties. “And you don’t create the zero carbon zero emissions ecosystem by just producing a whole bunch of electric vehicles.” BYD’s electric and plug-in hybrid cars, now available in China, will go on sale to U.S. private consumers as early as 2012.

Vertical Integration

I recently spoke with Austin, a former Motorola executive who began working with BYD about a decade ago, when he was looking for an affordable source of commodity batteries for Motorola cell phones. Of the three-dozen or so Chinese companies making cell phone batteries at the time, BYD was the only one with durable and safe battery chemistry—backed by its own intellectual property regarding battery technology. Moreover, the company’s philosophy of vertical manufacturing integration allowed the company to reach an enormous scale.

“They own the chemicals. They own the mines. They refine the chemicals. They make their own cans for the cells. They did their own windings,” Austin said. “They did every component of the build, and that total vertical solution got them in a place where they had the lowest cost, so they could control the market.”

And what they did for batteries, they also did for cell phones. Currently, 30 to 40 percent of the world’s cell phones, regardless of the brand, can be traced back to BYD. Now they are applying the same scale to solar panels and to automobiles. They have 100 million square feet of factory space. They make every component of the vehicle, except the tires and the safety glass. And for the past two years, the company’s F3 sedan has been China’s number one seller.

Coal-Powered Nightmare, Avoided

BYD needs its massive scale of manufacturing to match the size of the Chinese auto market. Last year, China bypassed the United States to become the largest automobile market in the world, and it continues to grow at an impressive rate. “If BYD were to sell tens of thousands of electric vehicles in Tianjin and in Beijing, it would create a worse environmental condition than China has today. All they have are coal-burning plants,” Austin said.

BYD e6 power button

The power button on the BYD e6.

Instead, BYD wants to couple solar energy generation with massive amounts of stationary energy storage using its batteries. Then, add efficient lighting at home—BYD also makes LED lighting—and electric cars for the road. “If you discharge to those energy storage plants to electric vehicles, then you have zero emissions.” Voila! The ecosystem is complete.

Back in the U.S.A.

Given the size of the Chinese auto market, and the Chinese government’s goal of making electric cars represent 10 to 20 percent of total cars sales, the U.S. auto market is nearly an afterthought.

Nonetheless, with that kind of scale driving production and reduced cost in China, it’s possible to bring the same total energy solution to the United States. Austin: “We don’t want to just sell electric vehicles in our U.S. dealerships. That’s not selling the zero emission story. We want to sell solar panels. We want to sell solar-shaded parking. We want to sell LED lighting. We want to sell energy storage for your home, and charging stations coupled to energy storage, so we can do DC-to-DC quick charging. Oh, and you can use solar panels to charge your energy storage, that’s now powering your vehicle.”

BYD wants to work down the price of its electric car—without any subsidy—to $20,000 or less. Austin says that the price of BYD's EV batteries is currently at $350 per kilowatt hour. “That’s lower than everybody else. Nobody else is even close to that,” Austin said. “And that’s where we are at today.

It all comes full circle, when you consider the effects of the Chinese economy on the price of gasoline. “BYD is completely convinced that the emerging markets are going to eat up all the gasoline. When China and India emerge, the price is going to skyrocket,” Austin said.

The price in the U.S. and the developed world, that is. The Chinese government will continue to subsidize its gas to around $1.50 a gallon, according to Austin. “They don’t curb their consumption. So, we’ll get screwed with high prices, and they’ll continue to consume at incredible rates," he said. Consider that less than six percent of Chinese currently own cars, but that around 30 percent now have the financial means to buy a vehicle. “There are 330 million cars yet to be sold,” Austin said.

Comments

· Bill Thompson (not verified) · 7 years ago

I think BYD is missing the boat on electric cars in the US. If they could build one million of their E-3's, a Corolla size car that will go twice as far on a charge as the Chev Volt and cost half as much there would be a backlog of orders for years.

The E-6 is too expensive but a lot more for the money than the Volt.

I'd probably keep my Camry for long distant drives but 99% of my driving is around town and even a round trip to Tampa is only 70 miles.

· · 7 years ago

“We don’t want to just sell electric vehicles in our U.S. dealerships. That’s not selling the zero emission story. We want to sell solar panels. We want to sell solar-shaded parking. We want to sell LED lighting. We want to sell energy storage for your home, and charging stations coupled to energy storage, so we can do DC-to-DC quick charging. Oh, and you can use solar panels to charge your energy storage, that’s now powering your vehicle.”

Hallelujah!!!

[Wonder if any from Big Oil is paying attention to BYD, to PlugInCars.Com, or, dare I suggest it, SolarChargedDriving.Com? Have to wonder what they're thinking if they are -- and why, in god's name, if they haven't already starting moving on investing in solar big time, what the hell they're thinking!]

· MajorTravisty (not verified) · 7 years ago

Christof Demont: "Have to wonder what [Big Oil's] thinking if they are -- and why, in god's name, if they haven't already starting moving on investing in solar big time, what the hell they're thinking!"

Big Oil's thinking of how much money they're going to make once China and India emerge. 330 million more cars in China and probably the same number in India within the next decade, any Western country that's dependant on oil will come to a halt.

· CARL Rising-Moore (not verified) · 7 years ago

I own BYD stock because of many of the comments made in this article.

Several years ago, I decided to invest in renewable energy and after many months of research, I decided that BYD was so far ahead of the pack that it seems impossible that others can come close, although I do hope they try, especially in the USA the largest polluter and importer of oil per capita in the world.

Not mentioned in the article is that fact that Daimler, (Mercedes), has joined in a 50 50 deal with BYD to produce an electric car for China. Also, BYD has joined with a reputable home builder to build solar homes in the USA.

And more:

Electric Buses
LED's
Wind and Solar battery storage systems for utilities
Retrofitting homes with solar cells and battery storage

I have been hoping for a breakthrough in the renewable energy field for over 30 years as I watched the levels of CO2 increase and the oil companies get fat as we build military bases in the Gulf to control the flow of oil. The entire world must adapt to a carbon reduction program soon, or the world's human and the fragile environment that sustains us will collapse.

This threat of global weather change is the issue that can unite all humanity that now separates us by culture, religion and geographic location.

Good luck BYD, as if you need it.

Carl Rising-Moore

· · 7 years ago

Hey Carl - Right on. Seems like BYD does have the total picture. Good point about relationship with Daimler, as well. Do you get concerned that BYD is over-reaching? For example, Michael told me that the BYD e6, with 200 miles of range, will be able to recharge to 50 percent--meaning adding 100 miles more of a range--in 10 minutes with a DC-to-DC quick charger. Adding 100 miles in 10 minutes is way way beyond what anyone else is promising. In this space, if it sounds too good to be true, it usually is. Time will tell.

· JJ (not verified) · 7 years ago

Carl Rising-Moore: does BYD pay dividends?

· JJ (not verified) · 7 years ago

Brad:

"BYD’s electric and plug-in hybrid cars, now available in China,"

If the EV cars are now used in China, someone should be able to verify that now, and not wait till 2012.

· JJ (not verified) · 7 years ago

BYD are marketing genuises for making such a complementary circle of products and supply of raw materials etc.
Good luck to them.

Can't wait for the price of household (120 volt) LED lights to come down in price.

· · 7 years ago

F3DM has been out about two years. Very low numbers, maybe a few hundred. e6 just came out. Both only in fleets, I think.

By the way, China has millions of electric vehicles--almost all our two-wheelers.

http://www.hybridcars.com/economics/us-and-china-will-cooperate-not-comp...

· JJ (not verified) · 7 years ago

"e6 just came out" ok... I understand your question.

China will lead us with "new" electric products too LOL.

On a British program called Coronation st we sometimes see an electric milk truck doing deliveries.

Gotta go...

· CARL Rising-Moore (not verified) · 7 years ago

Brad,

BYD has produced the first "dual mode" car... plug in plus a small gas engine to charge the batteries for extended trips. In reality, most passenger cars travel about 40 miles per day in the USA, so for most people, the EV is an option for the here and now for local commutes.

The E6 is being tested in China now as a taxi. As well, a deal has been struck with a city in China for 1000 buses. It seems that BYD is not interested in expanding too fast for the short term as to the sale of it's EV's and dual mode cars. This company is conservative when it comes to testing it's products. BYD likes to get out the bugs out before offerings to the mass market.

As for charging the e6 on a quick charge, I am not sure how that will effect the life of the battery. Overnight trickle charge is apparently better from that perspective. However this is a question for an expert at BYD. The BYD lithium/iron battery might allow such a quick charge without diminishing the life of the battery.

This company seems to have tapped into a stream of intelligent engineers and administrators. The R and D department of BYD is far larger and much more sophisticated then anything comparable in the USA, Europe or Japan, all focused on renewable energy solutions. Currently, BYD is pumping out patents at breakneck speed. As the CEO stated, "we never rest".

It would be very difficult for a start up company to replicate the success and ingenuity of this company that is distributing their products on every continent. Established companies would be advised to join in business relations with BYD to ride this rising Tiger.

BYD Frankfurt Germany will be up and running soon and it is not too difficult to imagine the Daimler/BYD electric car taking Europe by storm, especially with the solar charging stations for cross country travel.

As to the other question here... No, BYD does not offer dividends... they don't need to.

I am more interested in saving our planet then making money, but it seems that I can do both with this company. I am in for the long term.

I am considering writing a book about BYD because it would answer many questions for those that look to the future of sustainable and benign energy development.

· richard ran (not verified) · 7 years ago

Actually, they paid dividend, last dividend paid around June. I hope they don't, but they did. Carl, go check your account statement or your broker may own you something.
I own this stock for 5 years. one major difference about this company from all the venture backed start up is that BYD has been profitable from very start, never lose money in any reporting period that i know. despite marching from industry to industry, financing many very forward looking technological efforts, these efforts would have the right to burn capital for many years in the silicon valley culture.

and it financed all these crazy industry barrier smashing growth almost completely from self generated profits. in its 15 year history of existence, there are only two dilution events: its IPO in 2002, and a 10% stake for Warren Buffett, issued as the request of Berkshire. its total debt is about 2B+ usd, but the scale of the operation is enormous, its has factories here a square kilometer there a square kilometer, i just lost track of them. i think at least 10 gigantic factory campuses. recently it got a little out of hands, build a new factory in land zoned for agriculture and Chinese government confiscated that half build factory. it has now over 200k employees., with (almost) full value chain of three major businesses: electronics (cell phone, note book and tablet pc), automobil and alternative energy (solar, grid power storage, electric car/bus)
and all this has been bootstrapped just 15 years ago with shoe string budget of 300K usd

· Carl Rising-Moore (not verified) · 7 years ago

Good for you Richard, you got in at a very good time. Have you traveled China?

And thanks for the tip, I don't pay close enough attention to my earnings.

Do you own BYDDY or BYDDF or directly in Hong Kong through HK 1211?

There are those that squeal like stuck pigs because of the success of BYD claiming all sorts of nonsense, but in fact this company stands head and shoulders above any other in terms of vision, fiscal responsibility, sense of community, (in the manner that the company cares for it's employees), sharing, (a recent initiative to offer free solar installations on 1000 homes in Tibet), ingenuity and environmental sustainability, (regardless of the recent minor set back of building a plant on agricultural land).

· richard ran (not verified) · 7 years ago

Carl,

i bought 1211 from HK, but when the statement came, they show up as BYDDF, I asked they said that is the only way. the stock split 1:3.8, so it is a good buy. I traveled to China, en route through ShenZhen for the share holder meeting on May 13th this year, and ride the electric taxi E6 for about a hour.

the system they donated to Tibet are the same system they installed with KB home in California, maybe smaller in KWH. these system are ideal for the nomadic life style and very good fit for all remote and less developed part of the world. Warren and Bill said develop this technology by itself is a charity. The new factory is mostly an issue of did not follow the government approval procedure as almost all Chinese factories are build on land that once was farmland.

BYD is a very practical and utilitarian company despite its business initiatives are as green as any in the world. they talked about its electric car has to make money, for BYD as well as for taxi operators. and it does not see a perpetual subsidy in any of the "green" businesses. at best they are just a first push to help the industry pass a critical mass. they focus on taxi because they said it is the segment that make the most sense both from a financial point of view and environment point of view. a taxi consume 10 time gasoline as an ordinary family car (In China, where taxi are driven two shift a day) and 20 time as much as a "second family car", therefore one one electric taxi can reduce city pollution equal to 20 nissan lleaf or GM volt. so they are not just to make an environment statement, they are actually care about final results and trying to quantify them.
i think BYD is a very unusual company and if you want to write a book about it, I can give you more information if you need them. you can contact me richardranATyahooDOTcom

· Carl Rising-Moore (not verified) · 7 years ago

Thanks for this information Richard.

Let's stay in touch. My email address is carlrisingmoore@gmail.com.

I will write you a note soon.

· Carl Rising-Moore (not verified) · 7 years ago

TO: Richard Ran,

I tried sending you a message to the address you shared with me above, but it bounced back. Please send me a message at carlrisingmoore@gmail.com so we can hook up. We have some important things to discuss about the BYD book idea.

Thanks,

Carl

· · 7 years ago

Hey Guys,
Here is an unofficial follow-up from BYD:

"I think BYD is missing the boat on electric cars in the US. If they could build one million of their E-3's, a Corolla size car that will go twice as far on a charge as the Chev Volt and cost half as much there would be a backlog of orders for years."
Michael: F3DM is selling for RMB 160,000 to consumers (pre-incentive) and about RMB 100K (post incentives) and it is the model that would match the Toyota Camry and goes all-electric 60 miles. It’s in the US today for fleets at around $29K (pre-incentives).

"BYD is over-reaching?... 200 miles of range…100 miles more of a range--in 10 minutes with a DC-to-DC quick charger"
Michael: Shenzhen Taxi has put 100KM on e6 fleet’s through this regime. The 10 minute charge and subsequent 100 mile drive range at 50% charge is a reality.

"Does BYD pay dividends?"
Michael: 1211 pays every year, 0285 has not paid yet.

"Can't wait for the price of household (120 volt) LED lights to come down in price"
Michael: The BYD 4W LED “life-time” Light Bulb (with the same light of a 40W) is selling at Sam’s Clubs in China for about ~RMB 100 (~$12) a bulb (40,000 hours min life). The 6W goes for ~RMB 120.

"As for charging the e6 on a quick charge, I am not sure how that will effect the life of the battery….The BYD lithium/iron battery might allow such a quick charge without diminishing the life of the battery."
Michael: This is true – we don’t see a significant impact with rapid charging the iron-phosphate chemistry.

"Regardless of the recent minor set back of building a plant on agricultural land"
Michael: BYD felt like a simple re-zoning of these 112 acres of agricultural lands in Xi’an to industrial zones would have brought the stressed regions of Xi’an many needed jobs for the working men and women of Shaanxi province. We believe that these investments have elevated the standard of living in these recession-stricken areas and are still hopeful that the Economic Development Agency in Xi’an that leased BYD these stressed properties will be able to still secure appropriate zoning on the land (which was promised when BYD leased the land). This land and 7 buildings that BYD was constructing were part of a $20M expansion project that hadn’t yet contributed any production, sales or profit. Contrary to reports, construction was at an initial stage and the simple buildings that were under construction had not been completed – there is no material adverse effect on BYD. The company’s earnings and operations won’t be affected by the confiscation. As reported by many reputable investment firms, the government’s decision will help bring relief to BYD with regard to its plans for an A-share listing in China and resolution to the case will end the uncertainty surrounding the stock for our investors.

· · 7 years ago

Thanks for the update Brad and Michael. It seems that BYD is setting the bar very high for those companies that wish to help solve the world's global warming problem while making a profit. China must also be acknowledged in this regard with the subsidies that will help develop the EV and hybrid solutions worldwide. This resulting economy of scale will no doubt help kick start this evolving science into a stand alone technology that will effectively compete with the Internal Combustion Engine.

· Anonymous (not verified) · 7 years ago

Nov. 9 (Bloomberg) -- China’s passenger-car sales in October rose at the fastest pace in six months as government incentives for fuel-efficient cars boosted buying in the world’s largest auto market.

Wholesale deliveries of cars, sport-utility vehicles and multipurpose vehicles increased 27 percent from a year earlier to 1.2 million last month, the China Association of Automobile Manufacturers said today in a statement.

China, the world’s biggest polluter, introduced a 3,000 yuan ($450) subsidy for energy-efficient vehicles in June to help cut smog.

China’s auto sales may reach 17 million units this year, Zhu Hongren, the Ministry of Industry and Information Technology’s chief engineer, said Oct. 28.

China halved a small-car sales tax to 5 percent last year to spur demand, helping the country overtake the U.S. as the world’s largest vehicle market. The government raised the tax to 7.5 percent this year, hurting domestic carmakers such as BYD Co.

Shenzhen-based BYD’s October vehicle sales fell 13 percent from a year earlier to 40,578, the company said last week.

China may raise a vehicle-use tax on large passenger cars, according to draft plan posted on the National People’s Congress website on Oct 29. Cars equipped with engines of between 1.6 liters and 2.0 liters may be taxed 660 yuan to 960 yuan, according to the plan. Cars equipped with engines exceeding 4.0 liters may be charged 3,600 yuan to 5,400 yuan.

===============================
After the positive GM news, car sales in China on the Rise again after new incentives

· old_man (not verified) · 7 years ago

Ladies and gentlemen, please look up Oliver Parker Fritchle. His electric car could do 100 miles in 1905. His published 1908 Lincoln-to-New York endurance run trip journal along with photographs is called "The 100 Mile Fritchle Electric". What is old and lost is now new and chic!
P.S. Lets not forget the 1916 Owen Magnetic or Woods Dual Power.

· Michael (not verified) · 7 years ago

Thanks to everyone for all your input on this forum. I am a small-time investor and I have a minimal amount of BYDDF shares and I'm contemplating an "all-in" move because I believe in BYD's vision and I'm comforted that the best investor in history invested all he was allowed to in the company.

I may be vindicating my decision to buy shares in this company but I think that there is another factor in here that is overlooked. The CEO just won one of China's most prestigious awards - given by the government! This tells me that the national government supports this man's vision and that BYD is not at a great risk of running into trouble with the powers-that-be as it continues to grow. The factory hiccup was probably a snag with a regional government and (hopefully) a lesson learned for the company. I see big things in the long term for this company.

· chadwick (not verified) · 7 years ago

I am having trouble finding out which stock to buy around byddf. There are several and they are quite confusing to the novice stock buyer. I see the talk about 1211 and 0285, but I don't know the difference. In your opinnion what would be the best investment to take advantage of the early stages of electric vehicles sales in the U.S.?

· · 7 years ago

I'm not experiences with this either, but I think it's on the pink sheets as BYDDF.PK. Does that help?

· rc toys (not verified) · 7 years ago

good luck BYD, i hope you can done it

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