China’s BYD Plans to Dominate Global Hybrid Market

BYD, the Chinese car company backed by investment guru Warren Buffet, has big dreams. The company hopes to be China’s No. 1 automaker in about five years and to be the world’s leading carmaker by 2025. And they plan to get there by selling green cars—as many as 9 million hybrid or plug-in cars a year by 2025, according to company executives. That’s the total number of cars and trucks that Toyota, currently the world’s largest carmaker, sold last year.

To achieve its goals, BYD will have to pick up its pace. Last December, BYD became the first automaker to sell a plug-in hybrid car in the world, but sold fewer than 100 F3DM plug-in hybrids through August, according to Gasgoo, a website reporting on the Chinese auto industry.

The company will have an even bigger challenge selling its e6 all-electric car, which carries a price tag of about $44,000—twice the cost of the F3DM plug-in hybrid. The company will rely on the Chinese government, which has a keen interest in greener cars, to buy the e6 car for fleets, when it introduces the car in China later this year. BYD signed a memorandum of understanding with Volkswagen in May to explore options for partnership on hybrids and electric vehicles.

The New York Times earlier this year reported that China plans to boost its annual production of electric and hybrid cars to 500,000 in the next two years from just 2,100 last year.

BYD aims to bring the e6 to the United States by 2010. Unlike the small city-oriented electric runabouts on slate from established carmakers, the E6 is a five-passenger wagon capable of carting a typical American family. Moreover, the E6 has a range of 200 to 250 miles. Yet, BYD’s cars have not yet been certified for sale, and face questions on quality, crashworthiness, and equipment.

Despite these hurdles with selling green cars, BYD’s overall vehicle sales have been brisk. The company sold 250,000 cars in the first eight months of the year—on pace to double last year’s sales and profits. BYD’s gas-powered F3 was the No. 1 selling car in China three times this year.

Rising sales and Buffet’s imprimatur helped BYD’s stock surge about 650 percent during the past year—earning Buffet a cool $1 billion after paying $230 million for a 10 percent stake last year. The company’s chairman Wang Chuanfu said earlier this month that Buffet, who currently owns a 10 percent interest, intended to raise his stake in BYD.


  • Eric

    As much as I want to see electric cars in every driveway, I am none too excited about them being made in China. Are they going to be sold at walmart with all the other junk made there? This is one of the last major manufacturing industries left that they haven’t taken over. Hurry up Ford! So we can buy American electrics before it is too late!

  • FamilyGuy

    I’m a big fan of the wagon for five. But, they have no track record here in America. How safe? How durable? How long will they last?

    I feel good buying a Honda, Subaru, Toyota, Nissan and even a Ford these days. But I know nothing about BYD other then what I read here. I’d love to see it, but I won’t be one of the first to jump on the wagon.

    I don’t mind risking short money on somethings. But where’s my family at stake, that’s a different matter. Also, a car is not short money by any stretch.

    Maybe the competition will be good?

  • DC

    This car has been in the news for some time. The thing that I have always wandered about this car is its range. While its certanly feasable to build a car with this sort of range, what I have not seen or seen anyone asking is, has any independant reviewer or tester actually seen this car go that far on a single charge? As usual safely and quality issues are always brought up whenever this car get mentioned, why is that? So in total, we have a car that AFAIK, has never been publicly tested as to its range, and according to many sources, its implied it may not be very safe. Unsafe for who? Chevron or the people driving this non-production car? Anyone got any definitive facts regarding the e6?

  • meeker

    I wonder what colors of lead paint they are offering…
    Are the heaters going to be a fire hazard?
    Are their tires gonna have the gum strip protection or not?
    Are the seats cushions going to contain formaldehyde?

    No way am I going to buy a car from China until their track record improves a lot.

  • richard123

    Like a lot of you point out, every one can make a car but how reliable and safe are those cars? Think about it: why big global auto companies cannot make and sell electrical cars immediately? It’s not technology. In fact, electrical cars are much less complicated than gas engine propelled cars because you don’t need complicated mechanical components like engine and transmission. All you need is battery and electrical motors. That’s one major reason BYD bets heavily on electrical cars. If Ford, Toyota or any big companies want, they can design and assemble an electrical car for you right now. The problem is durability and safety. A new technology like electrical car has to be tested for many years to make sure that no major recall would be needed just after launch. So, what I want to say is: there is a huge risk in buying a car from a small and untested companies.

  • Dj

    I am putting my egg`s in three baskect. Tesla , Tesla and Tesla. This American company is doing the leg work for us. I am buying a Tesla Model S when it come out in 2011.

    -300 mile range
    - 45 minute QuickCharge
    - 0-60 mph in 5.6 seconds
    - Seats 7 people
    - More cargo space than sedans
    - 2X as efficient as hybrids
    - 17 inch infotainment touchscreen

    With a range up to 300 miles and 45-minute QuickCharge, the Model S can carry five adults and two children in quiet comfort – and you can charge it from any outlet, without ever stopping for gas. World’s first mass-produced electric vehicle offers performance, efficiency and unrivaled utility for a base price of $49,900*, making it the only car you’ll ever need

    Three battery pack options offer a range of 160, 230 or 300 miles per charge. With the 45 minute QuickCharge or a 5 minute battery swap, you can drive from LA to San Francisco, Washington to New York or take even longer road trips in about the same time as in a conventional car

    With seating for five adults and two children, plus an additional trunk under the hood, Model S has passenger carrying capacity and versatility rivaling SUVs and minivans. Rear seats fold flat, and the hatch gives way to a roomy opening, so you can stow a mountain bike, 50-inch flat-screen TV, full drum set or futon frame – more than ample for the entire family and their gear.

    Model S offers 100 percent torque, 100 percent of the time without jerky shifting and a fraction of the noise and harshness of internal combustion engines. This smooth and constant power delivery, combined with the sporty handling of the chassis and suspension, leads to a superior driving experience.

    The Model S powertrain features a liquid-cooled, floor-mounted battery pack and a single-speed gearbox, delivering effortless acceleration, responsive handling and quiet simplicity — no fancy clutchwork or gear-shifting required. Model S costs about $4 to fully charge – a bargain even when gasoline is $1 per gallon. You can listen to Pandora Radio or consult Google Maps on the 17 inch touchscreen with in-car 3G connectivity

    Dj

  • Dave K.

    I remember the last time we were saying “Oh those little cars from Asia aren’t safe, they’re not reliable and they look cheap”, that was 30 years ago and now Toyota and Honda dominate the market. Scoff at Chinese cars at your own peril, it won’t take them 30 years! Think I’ll buy some BYD stock…

  • Zhang

    Come on, if you don’t want to buy “junk” from Walmart then just go to Target. It’s a free market where everybody competes. The dominant factor is performance/price ratio and, whether you want to face it or not, Chinese manufacturers are beating others. There is no such thing as “junk” in the market, there are winners and losers.

    BYD’s has been working on rechargeable battery technologies for years and it is ahead of other companies right now. This is the dominant factor in this competition and I don’t see where Ford is on this…

  • Zhang

    Come on, if you don’t want to buy “junk” from Walmart then just go to Target. It’s a free market where everybody competes. The dominant factor is performance/price ratio and, whether you want to face it or not, Chinese manufacturers are beating others. There is no such thing as “junk” in the market, there are winners and losers.

    BYD’s has been working on rechargeable battery technologies for years and it is ahead of other companies right now. This is the dominant factor in this competition and I don’t see where Ford is on this…

  • Freddy

    @Dave K: There’s a difference for not trusting a country due to previous wars with them and not trusting them due to quality control.

    @Zhang: There is something called “junk” when things break down or have to be recalled shortly after you buy them. These are cars, though. Cars can endanger its drivers and passengers and other people around them.

    I’m not saying that they aren’t going to use the same practices as other companies in China. The U.S. has had more than their share of bad products. It just seems that lately, products from there have had tainted written all over them.

    From today:
    http://www.msnbc.msn.com/id/32899266/ns/business-autos/

  • Zhang

    If you are willing to pay $100 for a pair of socks, I myself can produce it for you thread by thread, with the best quality control in the world.

    Furthermore, for a piece of product with a US brand, but manufactured in China (most common scenario in Walmart), who do you think is responsible for controlling the quality? Who makes the decision of spending X amount of money and getting Y level of quality control?

    The term “junk” and the point of “not trusting a country” are purely emotional and are not appropriate in a mature technical discussion like this. Let’s be mature and talk with facts, numbers and logic. If Chinese products “break down or have to be recalled shortly after you buy them”, how could Walmart even survive, assuming consumers are not idiots. If you want to express your point that “Chinese products are not trustworthy”, do not just say “they break down”, since products from every country break down. You can at least say “they break down with a higher probability than average”, if not giving the real break down rate numbers…

  • Zhang

    I understand statistical numbers are hard to get. But do you really have personal experiences of Chinese products having bad quality? What Chinese product did you buy that broke down faster than the same type of product you had from another country? Are their prices close enough that you would rather avoid Chinese products of that type in the future? I am Chinese and I’m just curious how ppl begin to have those impressions — all from the media?

  • Freddy

    Zhang, I don’t mean to offend you or China, in general. I’m sure a lot of prejudices have a lot to do with media. There seems to be so many stories lately on recalls from China that it’s hard to ignore. Of course, media can be very manipulative as well.

    I did a quick search and found this:
    http://www.mondaq.com/article.asp?articleid=57594

    I understand that many products in the U.S. come from China, so that would signify more recalls in general, but it does seem a bit high overall. If this information is incorrect, please feel free to respond. Maybe 2007 was the worst of it and things have changed, but until the track record gets better, consumers may be looking at more “Made in” labels.

    Oh, and many consumers are idiots. Especially, ones at Walmart. Have you seen this yet? http://www.peopleofwalmart.com/ ;)

    I understand that many shoppers just can’t afford the “better” things, especially nowadays. Some just don’t do the research. And some just don’t care, they just look at the price.

    Why do you think so many Americans are overweight? When you look at a loaf of bread for 99 cents that’s bad for you and another that’s $3.99, but good for you, it’s harder to make that more expensive purchase. I also know that American corporations like Walmart don’t care about their consumer. They care about money and profit, so it’s not just one country’s problem.

    The main thing is an ethical problem. No, I don’t want $100 pair of socks made from the gods. But I also don’t want socks for a penny that turn my toes green. Both are extreme examples. However, there has to be a line drawn on quality to cost and that can’t be strictly on the consumer because we don’t know exactly how things are made until it’s too late. Corporations shouldn’t allow it. We put too much trust in products, but hopefully that’s changing.

  • RKRB

    Dear Zhang:
    Impossible question to answer but here’s one take. First, also please remember that many AMericans also deeply hope that people in all countries, including China, will enjoy a good future and have actually tried hard to bring this about. Still, some resentments exist, and here are some explanations whihc may help (keep in mind these are explanations and not my opinions):
    –1. one can’t compare product quality for different countries because so many things are made exclusively in China.
    –2 there seems a common perception, based largely on the media (which is itself an example of low product quality for sure), that Chinese manufacturers cut lots and lots of corners in quality, labor rights, product safety, environmental regulations, etc. to make more profit for the manufacturer (of course, American politicians, companies, designers, and consumers demand that those corners be cut in order to make a profit for themselves or to to have cheaper products).
    –3. There’s also a media-promoted perception (and, again, it could be completely wrong) that China is not playing by the rules (think WTO, currency valuation, rampant DVD piracy, cyberwarfare, technology transfer, the Chery-GM “lawsuit,” etc.).
    –4. America has largely lost its once-dominant economic and manufacturing capability, and this has caused a great deal of loss of pride, social and economic hardship, unemployment, etc.
    –5. There is probably much suspicion about the future intentions of the Chinese government (remember the backtracking of the Cultural Revolution and the Tibetan publicity?).
    –6. There just seems to be sour grapes — any nation which is Number One is going to be resented — when Europeans militarily and culturally dominated the world they were resented by foreigners, when the US was dominant foreigners hated us, and as China assumes manufacturing and then political, economic, cultural, and military dominance, and throws its weight around, foreigners will begin having the same feelings towards China. Get used to it.

    Again, those are just explanations and they are not necessarily my opinions at all! Hope this helps understand. Good luck building good hybrid cars. Many Americans also hope that people of all countries will enjoy a decent future. Supposedly, globalization means everyone benefits from better products, or at least that’s what our politicians and businessmen have assured us.

  • Zhang

    Hi Freddy, thanks for sharing the informative report. As you pointed out, without the information about “how many percent of toys in the US market are manufactured in China”, it’s hard for us to conclude anything from the number “98%”. The year-to-year comparison is comparing China to China. And what we can see is up to 2006, number of recalls grows much slower than the amount of import — indicating that quality of toys manufactured in China is improving significantly. The extremely sudden increase in 2007 is admittedly embarassing, but this is clearly an 1 yr exception rather than a trend. As the report pointed out, overall the amount of import and the number of recalls grows at the same rate, despite the odd in 2007. Based on this report, it is quite unfair to conclude any negative correlation between China and toy’s quality.

    Furthermore, it is pointed out in the report that “most of the recalls of toys manufactured in China during 2007 were not due to manufacturing problems originating in China, but rather design problems originating outside of China”…

    Thanks for correcting my assumption about consumers’ ability to make judgements. In this context, I agree that it is an enthical problem to take advantage of the weakness and laziness of consumers. My point is, why labeling this problem with “China” since the decision of doing that is not made by Chinese manufacturers? I strongly doubt that with the influences from big companies and the government, the US media tends to redirect ppl’s anger and insatisfaction to China, which seems to be a very good target.

    I can understand the doubt of Chinese cars’ quality since China has focused more on low-end products until now. It is fair to ask “can they make high quality products even if we pay high price”, since ppl haven’t seen too much Chinese high-end products yet. But I really don’t see why China’s past dominance in manufacturing “Walmart products” should count as a negative factor in predicting Chinese cars’ quality. If Chinese manufacturers produce $1 socks at higher qualities than other countries’ $1 socks, is it more or less likely that they will produce $20,000 cars in higher quality? You can say it’s a question mark, but it never should be a minus…

  • Joey

    I bought ford stock(F) 10 years ago. Didn’t make me anything.

    I bought BYD stock: BYDDY at 20, it’s above 85 in 6 months. If this company turns into the Toyota of China, I can retire.

  • Anonymous

    dream on Eric.

  • Peter

    How about Tesla? Does it has a proven track record? No. Does anyone know how reliable it is? Probably not many, and the result may varies depending on who you ask. How safe is it? Any independent crash test like IIHS? Again, probably not, not least I heard of any. Any independent test on Tesla battery if it’ll explode (like some on airplanes recently, for details see: http://www.nytimes.com/2009/10/27/business/27fires.html) after a crash? How long will Tesla last (both as a vehicle and as a company)?

    In a word, Tesla is not questioned for safety, or reliability because: 1) it’s so expensive that most of us can’t afford; 2) it’s so expensive that one have to assume those who buy/bought it/them must know a thing or two we don’t; 3) it’s so expensive that I don’t care if those who buy/bought it/them are idiots; 3) it’s made by American in America –> Confidence! 4)BYD is an unknown manufacturer on the far side of the globe in a country called China from where a lot of your neighbourhood Walmart stocks means –> C.R.A.P.!

    Don’t think me wrong, I also have serious doubt on BYD’s ability to bring the EV to American soil in large quantities in the next 12 months.

  • Peter

    My above comment is a reply to comment#2 from FamilyGuy.

  • Sarah

    i know that chinese products were from very low quality in the past but from what i am hearing chinese products are improving a lot… also the chinese are going to be able to produce good quality at low prices… so i would maybe think about it if saying “i will never buy that car”…. i really do believe that the chinese product market will get really powerful……

  • Pit Peterson

    Just one question, when the electric power from Coal- like it is pretty often, why should a EV produce less CO2. And if the power comes from nuclear you have many other problems… Maybe we should first of all to think about tu use much smaller ICE like the European – now one needs today a 8 or 6 cylinder…