FT By Patti Waldmeir in Shanghai
Published: August 31 2009 12:24 Last updated: August 31 2009 12:24
BYD, the upstart Chinese car company backed by US investment guru Warren Buffett, said on Monday that it would start selling its e6 all-electric sedans in the US next year, a year ahead of schedule.
Announcing in Hong Kong that the company had nearly doubled first half net profits from a year earlier, Wang Chuanfu, BYD’s chairman, also said he was considering selling more shares to Mr Buffett.
MidAmerican Energy Holdings, a unit of Mr Buffett’s Berkshire Hathaway, bought a 10 per cent stake in BYD last September. “MidAmerican has always intended to raise its stake in BYD because it has confidence in the company’s prospects,” Mr Wang said, but added “we are still considering (whether to sell more)”.
His comments sent BYD’s shares up 8 per cent to close at HK$48.60, more than six times what MidAmerican paid for its stake nearly a year ago.
BYD is a global leader in rechargeable battery technology, but only a recent entrant to the Chinese car industry. Mr Wang, an engineer-turned-entrepeneur, plans to combine batteries with cars to spearhead a green revolution in electric vehicles, with the help of Chinese government subsidies.
BYD started selling hybrid electric vehicles to some fleet customers in China late last year but will only start limited private sales next month.
Auto analysts in China have questioned how successful such sales will be. Despite government subsidies of Rmb30,000 to Rmb50,000 for the purchase of alternative fuel vehicles, the BYD hybrid electric car will still cost nearly twice as much as the equivalent BYD conventional model.
“From a relative perspective, that’s still very expensive,” said Klaus Paur of TNS, the marketing consultancy, in Shanghai. Most Chinese customers remain dubious about electric vehicle reliability and repair costs, he said.
Mr Wang’s announcement that BYD would accelerate plans to sell its e6 all-electric model in the US may be largely “a marketing move aimed at the mainland market”, according to Mr Paur.
BYD wants to portray itself as a global player, to boost its image among mainland consumers – and perhaps to help with plans for a mainland stock market listing, possibly within the next year.
In terms of conventional car sales, BYD’s growth has been very strong: it sold its first branded car in China only in 2005. On Monday, Mr Wang said he hoped to exceed his 2009 sales target of 400,000 vehicles, as the Chinese auto market continues to steam ahead powered largely by government subsidies for the small cars that BYD sells.
With additional reporting by Shirley Chen in Shanghai"