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Smith Electric partners with another Chinese firm, to form U.S. EV company

June 5, 2015

I recently spoke with Bryan Hansel, CEO of Smith Electric, just as he was about to get on a plane to China. We discussed his company’s new joint venture with a Chinese partner, FDG Electric Vehicles Inc. This JV is very interesting for a number of reasons. For one, Smith Electric is still alive. I last spoke with Bryan in August of 2012. Many of the companies that I wrote about back then are now gone. More interesting, however, is that this JV will be based in the United States. And most interesting, to me anyway, is the nature of FDG Electric Vehicles, the Chinese partner.
Smith Electric, based in Kansas City, Missouri, manufactures and markets electric commercial vehicles. Its lineup is currently limited to two models, the Edison and the Newton. You can find out more about it by reading the company website.
When I wrote about Smith in 2012, Smith had announced a $25 million investment from Chinese supplier Wanxiang, and had signed a Letter of Intent to form a joint venture with Wanxiang to produce electric school buses in China. That clearly didn’t work out. I asked Hansel about the Wanxiang JV. “We spent a lot of time (but) we never got to a point where we thought it was a win-win,” he told me. I also asked a Wanxiang executive, who only said, “We invested in the JV. It did not get launched.”
In early May, Smith announced a new JV with another Chinese company, FDG. So why should we believe Smith’s latest joint venture will work out, I asked Hansel? He told me: “We spent a year and half getting here. FDG has already put investment in Smith and also in the JV. FDGs entire existence is based on electric vehicles. We are completely committed to making this happen. Smith also does only EVs. Our reality is we need to make this a success.”
A few details: The JV is incorporated in Delaware and will, according to the Smith press release, “offer a combined portfolio of all-electric vehicles and fleet electrification solutions for customers in the U.S. and its protectorates.”
Smith Electric is putting its core products i.e. its electric drivetrains and its U.S. customer base, into the JV. Hansel said he isn’t concerned that Smith’s intellectual property will be compromised. “None of our technology is going to China,” he said. “This JV is all about demand in the U.S. We are very comfortable about maintaining control over our IP.”
The JV will assemble the existing Smith electric van, the Newton, as well as a new truck-based van designed by FDG, said Hansel. The new van will be built on a truck chassis. Hansel figures it will meet what he sees as an unmet need in the market.
The vans on the market today, such as the Mercedes Benz Sprinter, are more consumer- vehicle based, he said. The new van that the JV will produce is really a truck, said Hansel, in “a weight category above Sprinter, and below Newton.” The Newton weighs from 14,000 to 26,400 lbs.
The chassis will be produced in China and shipped to the U.S. as semi-knocked down kits. Smith will be “putting the metal together then putting in the drivetrain,” said Hansel. How confident is he that the chassis is high-quality. I asked Hansel? FDG spent three years and $300 million developing the platform, he said.
Plus, “we have done a tremendous amount of due diligence making sure this is truly a global platform with both U.S. and European capability,” added Hansel.
The battery will likely come from FDG as well. It will be produced by Sinopoly, a Hong Kong-based battery company with plants in China. Actually, FDG is Sinopoly and Sinopoly is FDG. More on that below.
Hansel couldn’t say what the range of the new electric van will be, but “I don’t know that range is going to be an issue,” he said. “We can put a fair number of batteries on it. The Newton (range) is 120 miles per vehicle. This could get 150 or more miles.”
He didn’t have a cost estimate for van the JV will produce for the U.S. market. That is one reason for this trip to China, he said. “We will walk the shop floor for the first time,” he said. But, he added, “We’re confident that we can be very competitive in this space.”
Smith Electric wants to start selling the new van in 2016. But, “until I get through this week, I can’t be accurate,” Hansel told me.
Smith Electric isn’t currently producing EV here in the U.S. It decided to stop producing the Newton in April of 2014 because the cost structure wasn’t working, said Hansel. “Our strategic decision was to stop shipping money with every truck,” he told me.
There’s plenty of demand for the Newton, he said. Customers are still asking for it, he said, but at a lower price. Smith has sold about 800 in total. In the future, the battery for the Newton will also be sourced from China – probably from Sinopoly. That should start in the third quarter of this year.
If Smith Electric sells a few hundred Newtons this year, “we are happy,” said Hansel. “As we look forward, we know we can make money building the Newton with the battery from China and the Malaysia supply chain,” he said.
The new Chinese partner
Smith Electric was approached by FDG to form a joint venture, said Hansel. FDG saw opportunity in the U.S. market and figured working with Smith Electric would be a way to access that opportunity.
Listed in Hong Kong (729HK), FDG Electric Vehicles Ltd. was formed by joining various electric vehicle-related assets under one corporate roof. Those include two EV manufacturing plants in China, an R&D company in Beijing, and Sinopoly, which has two battery manufacturing plants in China as well as an R&D center.
Companies such as FDG aim to take advantage of China’s Central government push to expand the production and use of new energy vehicles, which includes battery electric and plug-in hybrid electric vehicles as well as hydrogen fuel cell vehicles. FDG’s new chairman and CEO (appointed March 2014) Mr. Cao Zhong has an excellent government pedigree including working at the NDRC. These kinds of connections are important for a Chinese company.
It is a good bet that the capital to form FDG came from provincial governments. Look at the company website. The two EV manufacturing sites, in Zhejiang Province and Yunnan Province, exist to help the provincial governments meet requirements to buy electric vehicles. And of course it’s always better to buy a vehicle from a company in which you are an investor.
Though FDG listed on the HK exchange in 1991, it was not FDG at the time. It has gone through many iterations, and got into the EV business in 2009 when it acquired Thunder Sky Battery, soon to be known as Sinopoly. FDG has operated at a loss for the last five years, but that isn’t a surprise as electric vehicle sales in China have been slow to take off. Investing in Smith Electric allows FDG to diversify into other markets. There is no guarantee that the U.S. market will prove any more fruitful, of course. But at least Smith Electric does have an existing customer base.
I think this joint venture will be more successful than Smith’s last effort because, as Hansel pointed out, both companies only do EVs and they need to make it work. And though PEV sales in the U.S. aren’t exactly burgeoning, I think the backers of FDG have deep pockets. I’ll follow its development with interest and my usual dose of skepticism.

Tesla’s Powerwall battery. Where have I seen this idea before?

June 1, 2015

I recently interviewed Bryan Hansel, CEO of Smith Electric. I will write up that interesting interview in the next few days. Of the many companies I have written about in this blog over the last five years or so, Smith Electric is one of the few that is still up and running. It just announced a JV with a Chinese company. More on that when I have time to write it up later this week.

Meanwhile, I wanted to post a column I wrote for a Chinese publication I write for monthly, Automobile and Parts, published by Orient Auto.

Tesla versus BYD in the public relations arena: the winner is clear
Elon Musk is a master of public relations. Who else can raise a company’s stock price with a simple tweet? Now, Musk, the CEO of Tesla Motors, has used Twitter to create the impression that energy storage systems are a new thing. After weeks of tweets about a new product line, on April 30, Tesla launched the Powerwall home energy storage system. It is a lithium-ion rechargeable battery for daily use and for storing backup power. Tesla also makes a larger versions of the system for business and utility use.
Within days Tesla said it had 38,000 reservations for the Powerwall, with installation beginning this summer. Tesla said it also received 2,500 reservations for power packs, the large business and utility systems. It already has contracts for pilot projects with businesses and utilities including Target, a large low-cost department store chain, and Southern California Edison, a utility in Southern California, according to its website. In all, Tesla has around $800 million in potential sales for a technology that has been around for a long time. But this is the first time Elon Musk has been selling it.
To give Elon Musk his due credit, the Powerwall is a very sexy-looking home battery. Thin and white, the wall-mounted unit resembles a work of modern art. Tesla offers two versions, 10kWh weekly battery for backup energy storage or 7kWh model for daily energy needs. They cost $3,500 and $3,000 respectively, excluding the inverter and installation. Several batteries can be installed together for energy-hungry homes. And, the batteries are charged with solar panels installed by Solar City, a company Musk co-founded.
Now it’s not that I have anything against Tesla selling home energy storage systems. I’m all for renewable energy. What bothers me is that the press has covered this as if Musk invented the idea. In reality, many companies offer batteries for home energy storage. But they don’t have the Musk name, or the Musk public relations machine, behind them.
One company in particular came to mind when I saw the Tesla announcement—BYD. Back in 2010 I attended the showing of a model house in the City of Lancaster, a few hours east of Los Angeles. Built by KB Homes, the house had BYD solar panels on the roof, a BYD battery to store energy from those solar panels, BYD’s LED lighting, and a recharge unit for the BYD F3DM and e6 electric vehicles in the driveway.
At the time. I wrote that BYD might be more successful with its home energy storage business than with its electric vehicles. And the model home’s technology worked, Lancaster Mayor R. Rex Parris said. “They partnered with KB home and proved the concept. As far as Lancaster is concerned, BYD did great job,” he recently told me.
Great, but I haven’t read anything about BYD’s home energy storage batteries in years. And most of the press its electric vehicles have received here in the U.S. has been negative. What happened? Was BYD way ahead of its time, were its products no good, or is BYD really bad at public relations? All three are a little bit true, I think.
At that time, the idea of using batteries to store energy generated by renewable sources such as wind and solar was just beginning to enter the public consciousness. So there wasn’t much thought about having a home that could generate and store its own energy. And BYD was already in the press here, in what would turn out to be an increasingly negative way.
In January of 2010 BYD announced it would sell its e6 battery electric vehicle in the U.S. by the end of the year. Unfortunately, the e6 wasn’t a very good car – though the electric vehicle technology was okay, the interior was sub-standard. So the media was more focused on the EV than the energy storage products. And when the plans to launch the EV fell through over a period of months that left a bad taste in the mouth of many journalists who had initially believed BYD.
Meanwhile, BYD did itself no favors on the public relations side. It didn’t allow independent evaluation of its electric vehicles, and was over-confident of the vehicles’ quality. So it continued to talk about launching the e6 over the next three years, but the launch still didn’t happen. Finally BYD abandoned that plan, but the public relations damage was done.
BYD also had problems introducing its electric buses to the U.S. market. Those buses are being built in a plant in Lancaster. BYD placed a few electric buses in test fleets in various cities, including Los Angeles. But then it had a problem with the contract to sell buses to the California city of Long Beach. No problem with the buses, but the contract was cancelled, which looked like yet another failure on BYD’s part. BYD fixed the contract problem, won the contract in a re-bid, and is now set to sell electric buses to Long Beach. But I haven’t read about that in the press.
BYD told me that it isn’t interested in the energy market, and that it is successful in another field that Tesla just made news about — selling large energy storage systems to utilities and businesses here in the U.S.
“We haven’t done home systems,” Michael Austin, vice president of BYD America, told me. “Most of our (energy storage) deals are $12 million to $15 million apiece.” That includes sales to Puget Sound Energy, Duke Energy, and Chevron.
Those kinds of deals don’t get much coverage in the consumer media, however, unless Elon Musk is talking about them.
I asked Austin what he thought of the Powerwall announcement. Elon Musk “has a sexy product, priced right,” said Austin. Tesla entering the home energy storage market was good for the whole industry, said Austin. If the market really started to grow, BYD might consider entering it, he said.
Before it does that, I urge BYD to allow some independent testing of its home energy storage batteries. Sure, it may have tested them itself. But some outside validation can provide assurance and generate some positive public relations. It should also hire some industrial design experts to improve the look of its home batteries. Going up against the Elon Musk marketing juggernaut will be tough; any challenger better be both high quality and beautiful.
In any case, it is too soon to say that Elon Musk and Tesla are a success in the home energy storage area. The reservations didn’t require a deposit. Let’s wait to see how many people actually spend money to buy a Powerwall.

This year’s Auto China: All about those PHEVs

May 16, 2015

What a difference a few years makes. In 2013, the year the latest NEV policy was issued, electric vehicles – including pure electric and plug-in hybrid electric – were a huge presence at AutoChina. This year electrification was still a big presence – but it was much more subtle. That is because the central government, local governments, and automakers are starting to understand the limitations of the technology. Despite those limitations, however, China’s central government is sticking to its plans for expanded electrification.
I stand by my past predictions that the place where widespread electrification will be seen in China is in fleets, especially municipal government fleets. The technology will make sense for fleets, and even if it doesn’t, Beijing has told local governments to electrify their fleets. So there. But electrified vehicles of all kinds will still be part of the consumer selection as well. They have to be.
The takeaway: Electrification in China is growing but let’s not get ahead of ourselves. Plug- in electric vehicles will be a part of China’s car parc, and given the forecast size of China’s light vehicle market, that will mean equal a lot of plug-in electric vehicles ( including pure electric and plug-in hybrid electric). Indeed, China will likely be the biggest PEV market in the world. But there isn’t going to be a wholesale move to electric vehicles.
Dazed but electrified
As usual, I was a bit dazed my first day at the show. I had flown in two days before and was still very sleep-deprived. And just when I had the old venue down, Shanghai moved the show to a huge new venue on the other side of the river in Hongqiao. I was lost a lot.
On the positive side, the show was not at all crowded this year. For one, the venue is enormous. But also the organizers were clearly more successful this year at limiting attendance to press and industry folks instead of family, friends, and just about anyone else who had any connection to someone who should be there on media days.
One thing that was clear is that foreign automakers are betting that plug-in hybrid electric vehicles will be the type of passenger EV that sells in China in the near term. There were a lot of clues: Cadillac chose the Shanghai show for the global debut of its 2016 Cadillac CT6 sedan PHEV. This was handy; GM can please the Chinese government while also showing off a cool-looking luxury car. Volvo, which is a Swedish/Chinese blend, debuted a plug-in hybrid electric version of its S60L sedan. Peugeot and BMW also showed new PHEVs. And that is just the foreign brands.
China’s domestic automakers also had a bevy of electric vehicles in their stands.
Qoros, the company that seems to be always on the verge of putting out a nice car, introduced an in-your-face PHEV, the Qoros 2 concept. BYD, the current star of the PHEV passenger car segment in China, showed a near-production version of its Tang PHEV compact SUV. There were many others, of course. But I was too dazed to note them all.
SAIC isn’t giving up on pure-electric vehicles. BAIC had a big display devoted to electrification, combined with connected car technology. Connected car was a big theme at the show, by the way, but I’m not going in to that here.

BAIC  had a big EV display, combined with its Leshi connected car concept.

BAIC had a big EV display, combined with its Leshi connected car concept.


Besides a new version of its small e50 all-electric vehicle,
SAIC trotted out its e50 EV again.

SAIC trotted out its e50 EV again.


SAIC also showed (among other models) an all-electric van – I think this will be where we see more all-electric models in China. They can be used for municipal and other fleets, and won’t face the same issues finding charging as consumer EVs will since the vans will return to a set location each night.
SAIC's electric van

SAIC’s electric van


Non-automotive firms such as Google and Apple are talking about getting into the car manufacturing business, and Chinese tech firms are doing the same.
Pateo, whose CEO is my old friend Freeman Shen, debuted its concept of a fully-connected electric vehicle.
So electrification is still advancing in China. And it seems many smaller cities in China are still looking to create their own little green technology park, including companies with electric vehicle technology. That’s what I gather from my sources at companies in that sector. So there are still government dollars, and central government goodwill, to be had where pure electric and plug-in hybrid vehicles are concerned.
Now let me get in a shameless plug for an old friend. Many of you likely know Yale Zhang, an analyst and industry consultant extraordinaire. Yale knows China’s automotive market up close and personal. He’s a local guy and has been following the industry for decades.
His company, Auto Foresight, has begun to issue a bi-annual electric vehicle report. I dare say this will be one of the most accurate overviews of the market available. The first report has been out since March; the next one will be out in September.
Here is a link to the contents. I don’t know about you, but I have a really hard time keeping track of the always-evolving NEV policies in China. This report looks like a great way to keep track of that, and see how automakers – and consumers — have responded.
I look forward to referring to it as a handy guide. If you make inquiries about the report, tell them Alysha sent you.

China’s EV sales are on the “kuai che” train, which is pretty slow

April 2, 2015

A friend in China recently asked me for my thoughts on the electric vehicle sales numbers in China. I realized I hadn’t thought about them much! That’s odd for one who blogs about China and electric vehicles, but then I haven’t been posting much lately. Alas, other, better-paying tasks have been taking up my time. My friend’s question was a good one, however, and I decided to answer it with, finally, a blog post.
It’s fair to say that China’s new energy vehicle policy (which includes battery-electric, plug-in hybrid electric, and hydrogen fuel-cell vehicles) has been consistent if not entirely realistic. The numbers put forth in the original policy in 2010 were completely unrealistic. That has since been modified several times.
As in many countries, there isn’t much demand for NEVs in China without government subsidies. China’s subsidy policy was also unrealistic, to the extent that it was limited in its time frame. It’s easy to see when the last policy ended – just look for a huge dip in NEV (and let’s face it, we’re only talking about BEVs and PHEVs, collectively plug-in electric vehicles or PEVs, for now) production numbers.
Why have NEV production and sales numbers suddenly spiked again? Because in late 2014 the government confirmed its subsidy policy for PEVs. Automakers aren’t interested in producing NEVs without assurance that the government won’t “reward” them. Of course, they also face pressure from the central government to produce NEVs, but they resist that pressure by only paying lip service to such production until it becomes clear there is government financial backing.
So, what were the NEV sales figures for January-February (sales figures in China for the first two months of the year are generally reported as one number because the Chinese New Year holiday moves around and has a big impact on numbers for the month in which it falls.)?
In January and February, 12,853 NEVs were produced in China, and 12,440 were sold. Of that, 6,519 BEVs were produced and 5,996 were sold. As for PHEVs, 6,334 were produced and 6,444 were sold. Those are pretty small numbers considering 4 million light vehicles were sold in China in the first two months of 2015 according to LMC Automotive, including 3.46 million passenger vehicles and 571,465 light commercial vehicles. But the NEV sales are a big jump over 2014, when year-end sales for BEVs were 45,048 units and for PHEVs 29,715 units.
The big jump in 2015 numbers is still a far cry from the volumes China will need to reach its target of a cumulative 336,000 units produced and sold in 2015. That is a bit more realistic than the original target of 500,000, however. The production target for 2020 is still two million units, and total number of NEVs on the road by then is still five million, as near as I can figure.
Targets aside, let’s consider the sales numbers for the first two months of 2015. Who were those sales to? What kind of vehicles were sold? Key questions. I doubt consumers did much of the buying. I’ll bet a lot of them were sold to municipal fleets. That doesn’t really matter. I have long maintained that the primary market in China for PEVs will be municipal fleets, including buses, taxis, and passenger vehicles. Still, I’d love to see a breakdown of the sales.
Meanwhile, with some certainty regarding the central government’s policy support continuing, China’s state-owned automakers have gone bonkers over PEVs. But their strategies differ markedly, as my twin ChinaEV, the Chinese website at http://www.chinaev.org, points out in a March 31 story. It looks at plans by Beijing Auto (BAIC), SAIC, and Guangzhou Auto to introduce a cumulative 25 new NEV models over the next three years. BAIC focuses on battery-electric passenger vehicles and delivery trucks; SAIC focuses on PHEV passenger cars, with “more emphasis on vehicle performance and mileage”; and Guangzhou Auto plans both BEV and PHEV passenger car launches.

SAIC showed a big line up of PEVs at the 2014 show. What will it have this year?

SAIC showed a big line up of PEVs at the 2014 show. What will it have this year?


Of course, pricing and especially more public charging posts will be key contributors to consumer sales for all these models, if they all make it to market. And since local governments own all three, you can bet that the local governments will be making some NEV purchases.
I’m headed to Shanghai in a few weeks to attend Auto China, among other things. It will be interesting to see how prominently NEVs figure in the stands this year. That also fluctuates based on policy. I’ll report back.
Around five years ago, I remember John Du, head of GM’s China Lab in Shanghai, telling me that there was no going back on China’s plans for NEVs. “The train has left the station,” he said. Well, turns out Du was correct, but that train is like the slow train I once accidentally bought a hard-seat ticket for in China about 15 years ago. This was labeled at “kuai che,” or “fast train.” In reality, it was very slow. It stopped at every town. What should have been a 2.5 hour trip took five hours. But I got there. I should have taken the “tebie kuai che,” it turned out (“especially fast train”).
China’s NEV train is a kuai che. But it will eventually get there.

Not just China where everyone jumps into the EV sea….

March 22, 2015

I used to think that only in China did every tom dick and harry company want to go into the electric vehicle business.  I was wrong.  The latest “Tesla fighter?” Richard Branson. Remember that even Elon Musk realized that making a car is tough, Richard….

http://www.autoworldnews.com/articles/13767/20150322/richard-branson-says-virgin-is-working-on-tesla-ev-rival.htm

KBB analysts have proper responses to Musk’s believe he can banish range anxiety

March 20, 2015

Elon Musk said he would banish range anxiety with an app. Don’t think his method would go over big in China since there aren’t Tesla recharging stations everywhere. This app would just cause more anxiety, as one KBB analyst points out!

Karl Brauer, senior analyst for Kelley Blue Book’s KBB.com:

“Incorporating charging locations into a vehicle’s navigation system and trip planning is an excellent feature, but it’s also not new or innovative. The Nissan Leaf offered this feature when it was introduced back in 2010, and nearly every electric car offers it today. Knowing where an electric vehicle charging location is and having enough energy to get to that location are two different issues. It sounds like the Model S will be more capable of alerting the driver when he or she is nearing that threshold, but I’m not sure these warnings equate to eliminating range anxiety. One could argue such aggressive warnings will only remind drivers how critical it is to get to a charging stating before draining the battery pack. And this situation remains a much bigger deal in an electric car than one powered by gasoline or diesel fuel, where a roadside assistance organization can deliver a gallon of fuel and usually get you going in a matter of minutes.”

Matt DeLorenzo, managing editor for Kelley Blue Book’s KBB.com:

“This solution to range anxiety reminds me of Ettore Bugatti who responded to one of his customer’s complaint that his car was hard to start in cold weather. He reportedly said ‘If you can afford a Type 35, then surely you can afford a heated garage.’ In other words, Musk is giving the buyers of his luxury car an app that says ‘don’t drive too far from one of my chargers.’ As for his comment about driving 10 hours and wearing a diaper, obviously he never has taken a road trip of any length. If you take a conventional car, you can drive 10 hours and stop for gas in that time, which takes about 5-10 minutes. In a Tesla, best case scenario, is enforced stops of at least a half hour or more (and what if the charger is in use, then it will take even more time). I think the range anxiety is complicated by the fact that recharging adds additional time to what is already a long road trip.”

China’s BYD shows off a nice bus but still hankers after passenger EV sales in U.S.

February 5, 2015

One thing I can say about BYD, it’s becoming consistent. That’s good. The Chinese automaker learned some lessons from the blunders when it first tried to enter the U.S. market. It has stuck to its strategy of selling its electric buses here for the time being. But I learned from BYD executives at a recent event here in Los Angeles the company still has its eye on the retail EV market, as well.

Yesterday I attended an event meant to show off BYD’s new articulated battery-electric bus. The 60 footer, billed as “the world’s largest battery electric vehicle,” was nice. I’ve come to expect that from BYD buses. Of course I’m not driving them so can’t speak to performance. But they are always spacious, well finished, and of course quiet.
OLYMPUS DIGITAL CAMERA

This bus, which we took from Union Station in downtown Los Angeles to City Club, a fancy venue on a high floor of another downtown location, wasn’t quiet however. It was quite loud, a result of being packed with people, from reporters to sustainability consultants to labor issue professionals to bankers. All but the journalists had played or are playing a role in BYD’s effort to build and promote e-buses here in California.

BYD has had some success in getting small numbers of its e-buses into municipal fleets for demonstration and testing. Five of them will start operating in the Los Angeles municipal fleet this year. BYD buses are also trolling the roads in Mexico, Chile, Edmonton, and Sydney, among other locations. And in January in New Orleans at a trade show, BYD unveiled a long-distance electric bus that could go a claimed 190 miles on a single charge.
What about the 25-bus Long Beach Transit contract that BYD had apparently landed only to have it snatched away because BYD had not filed the correct paperwork related to the federal funding Long Beach would have used for the purchase?

BYD re-bid for the contract. “Long Beach is in the final stage of evaluating bids,” said BYD’s new VP of sales, Macy Neshati, whom I spoke with at the event. “We’d really love to see that come together.”
The demo bus we took to City Club was a 60-ft articulated pure electric vehicle. An articulated bus is two 30-foot buses connected by an accordion-like section. According to BYD, the articulated bus holds 120 passengers and can go 170 miles on a single charge. “Proudly designed and built in the United States of America,” said the promotional material.

Neshati said the 60-ft. articulate buses will cost around $1.2 million each. A 40-ft. bus costs around $800,000, he said.

Electric buses have been around for quite some time, but they have been slow to catch on. Why, I asked Neshati? Bus companies are risk-averse, he said. They worry that the technology is “new” and that the companies will go out of business. That’s why government subsidies are needed.
“We try to explain to them that there is no risk” working with BYD, he said. “We are not a startup. We have the resources and the capital.”

Nonetheless, government funding is still the secret sauce to get contracts, and BYD has several funding applications in progress with the California Energy Commission, said Neshati.

Is Berkshire Hathaway the secret sauce for BYD’s retail distribution?

So, BYD’s bus business seems to be going okay. What about electric passenger cars? That is where BYD got off to a rocky start here in the U.S.

When BYD opened its North American headquarters here in Los Angeles in late 2011, it planned to build a dealership network and sell the e6 pure electric crossover.

But the vehicle was not ready for prime time in the U.S. market. Its fit and finish were not up to U.S. consumer standards, among other issues. So BYD put those plans on hold to concentrate on selling its electric buses here in the U.S. To that end, it opened a manufacturing plant in Lancaster, Calif. in 2013.

So, I asked both Neshati and Matthew Jurjevich, market research analyst with BYD America Corp., what’s up with retail sales of PEVs here in the U.S.? They gave me slightly different answers but both confirmed that BYD still plans to sell passenger EVs here.

“We are keenly interested in being able to bring an all-electric car (to the U.S.) market, with a mix of plug-in hybrid electric” cars as well, said Neshati.

Jurjevich wouldn’t speculate on what kind of vehicle would get here first, though he did point out that BYD’s philosophy has always been to bring affordable cars to market. But he did say retail sales are “100 percent on our road map.”

BYD should have a number of models to choose from in coming years. Its first electric vehicle, the pure-electric e6, sold poorly. It seems to have been relegated to taxi fleet status for now. But it is working on an improved BEV, it seems.

Meanwhile, its new plug-in hybrid electric (PHEV) models have proven popular in China. Final figures aren’t yet available, but 2014 sales of the Qin PHEV sedan were expected to be around 15,000 units, said BYD. According to LMC Automotive, BYD sold 437,725 light vehicles in 2014, down 14 percent compared to 2013.

It expects its Tang PHEV SUV, launched in January, to sell very well, and more PHEV SUV models will follow, BYD has said.

BYD Tang PHEV

BYD Tang PHEV


Those models might appeal to U.S. drivers. But distribution is the 800-pound gorilla. BYD started to set up a dealership network here in the U.S. in 2012 but shelved that plan. Now, however, the U.S. media is full of speculation that Berkshire Hathaway Automotive, Warren Buffett’s recently-acquired dealership group, will distribute BYD vehicles in the U.S. Buffett bought 9.9 percent of BYD’s Hong Kong-listed company in 2008.

I asked both BYD execs about using Buffett’s dealerships to sell BYD cars. “That is 100 percent speculation,” said Jurjevich. As for Neshati, he said: “At this point it is all speculation.”

I don’t see BYD cars being sold at Berkshire Hathaway dealerships here in the U.S. within the next 2-3 years. I don’t think they are ready for the U. S. market, frankly. But I may be wrong. I’m going to check them out at the Shanghai Auto Show in April.

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