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BYD hopes the sun will shine on its new line of business

July 14, 2010

I’m still skeptical about the chance of success for Chinese automaker BYD’s pure electric and dual mode vehicles, both here and in China. BYD wasn’t especially happy with the tone of this story I wrote for Automotive News.

But it may have hit on something with its latest line of business, solar energy.

In China, people joke that BYD makes everything that goes into a car except glass and tires. It is taking the same vertically-integrated approach to the solar business.  BYD mines the silica that is used in its own solar cells, and it sells silica to other solar cell makers.  It manufactures solar cells that are sold under its own brand and other brand names.  

In January, BYD announced it would invest 22.5 billion RMB (US $3.32 billion at current exchange rates) to build a solar power battery plant in China. It also manufacturers solar panels and LED lighting, and makes home chargers ranging from 110 to 480 volts for electric vehicles.  

Most of those products were on display on July 13 in Lancaster, CA, an exurb of Los Angeles. Lancaster is out in the desert, so lot’s of sunshine. Ideal for showcasing solar technologies, and BYD and KB Homes built a home in Lancaster they claim creates more energy than it uses.

BYD is known in China as a manufacturer of affordable (i.e. economy, okay, cheap) cars.  Its F3 compact sedan (powered by a traditional internal combustion engine) was the best-selling light vehicle in China in 2009. The F3 starts at around 56,000 RMB, or US $8,270 at current exchange rates.

But BYD began life as a supplier of batteries for consumer goods such as mobile phones, and is still one of the world’s largest manufacturer of  mobile phone batteries. BYD founder and chairman Wang Chuanfu is widely revered (in some circles) as a business genius. I reserve judgment. But, he is certainly ambitious.

BYD supplied solar panels, energy storage batteries, and LED energy-saving light bulbs to the Lancaster home. BYD also supplied a recharger for an electric vehicle in the home’s garage. A BYD e6 battery electric vehicle and an F3DM hybrid were also out front. But KB wouldn’t go along with providing a BYD electric car with each home sold, joked Micheal Austin, vice president of the North American business region for BYD America. 

It’s considerably easier to make a solar panel than an electric car. And the batteries that store the energy in the home use the same lithium iron phosphate technology as BYD’s car batteries.  But the energy discharge rate of the home solar energy storage battery is slower, so the demands on the battery considerably lower.  The batteries that store energy gathered from the solar panels for the home have a 25-year life span, compared to a 10 year warranty for a car battery, said BYD senior vice president Stella Li, who was also in Lancaster.

The drawing on the front of the BYD Solar Energy booklet I received at the event is of a solar panel farm, but the photo on the second page is of Wang Chuanfu and BYD investor Warren Buffett. Wang is handing Buffet a toy car in exchange for Buffet’s wallet. (A joke photo, says Austin. Sort of.)

So, is BYD an automaker that dabbles in solar tech, a battery maker that also makes cars and solar panels, or what, I asked Li?

“We will be an automaker, but a unique automaker,” said Li.

Good answer!  Clearly, BYD is learning the U.S. PR game.  Another indication the Chinese are learning what U.S. politicians want to hear: In her speech to the gathering of Lancaster, CA city officials, BYD people, KB Homes execs, reporters, and a bunch of LA County Sheriffs (inexplicable to me as this didn’t appear to be a high-crime area),  Li stressed how BYD’s “cost-efficient” technology could create more green tech jobs in the United States.

(She also somewhat jokingly pitched the idea of selling the excess electricity the home generated.)

Though I will remain skeptical about BYD’s pure electric and hybrid cars until proven wrong, I think the company could be on to something with the solar business. The technology involved is a less complex than a vehicle.  And as Duan Chengwu, a Shanghai-based analyst with IHS Global Insight points out, “The rhythm of BYD’s massive renewable energy program is very harmonious with the Chinese governments’ initiatives.” So, federal and local government support is pretty much guaranteed.

Indeed, Andrew Pan, the North American rep for the south China city of Shenzhen that is home to BYD, was at the Lancaster event (which was really hot, I guess because it is the desert…).  Shenzhen’s local government is the first customer in China for BYD’s e-6 all electric cars. Already, 50 have been delivered.  Another 200 are on order for a taxi fleet, says Austin.  

Few of BYD’s new energy vehicles (to use the Chinese term) have yet been sold to ordinary consumers.  No e6 EVs are in consumer’s hands. And BYD’s  F3DM hybrid vehicle has just gone on sale to consumers in China. BYD figures early adopters will be the first buyers. Which will be more like trying to sell hybrid vehicles in Detroit than in California.

 BYD isn’t going to bring its internal combustion engine cars to the U.S., says Austin. “We will only ship all electric or dual-mode vehicles to the U.S.,” he says.

Austin told me that the F3DM and the e6 will be sold to fleets in the U.S. starting this year, and that the F3DM hybrid would likely arrive here first.

I think BYD will need to upgrade the fit and finish on its cars for the U.S. market. I drove an e6 around the block in Lancaster. The exterior is boring, the interior pretty cheesy. Reminded me of the Coda EV I saw a few months ago. Both were so non-descript my only memory is of the colors blue for the exterior and tan for the interior.

But, BYD has time to make improvements. The fleet sales here in the U.S. are information-gathering excursions. Li said BYD is aiming for sales to consumers in the U.S. to begin in the next two years. Plenty of wiggle room.

It will be interesting to see if, and when, BYD’s electric cars enter the consumer market here. I’m waiting for that to happen in China, too. I’m not sure how long the wait will be. But, I admit to being a little impressed with BYD’s excursion into the solar side of things.

Plugged in in Lancaster

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