BYD aims to be a green giant. But it needs to sell lot’s of cars to fund that dream.

BYD Co. Ltd’s car sales in China took a hit in August, falling19% compared to the same month in 2009, according yto J.D. Power and Associates. 

A BYD spokesman made light of the matter, naturally, saying the entire market was weak in August (thoughpassenger vehicle sales rose 25% in August according to J.D. Power). http://www.reuters.com/article/idUSTOE68603T20100907

In any case, BYD chairman Wang Chuanfu has another trick up his sleeve besides auto sales–becoming a holistic green company. Can a company that started out making batteries become a green giant? Not without selling a lot of cars to fund the expansion.  Here in Los Angeles, I have a front seat to see what happens.  

On September 16, BYD and the Los Angeles Department of Water and Power signed an agreement to develop an energy storage unit for the city’s wind power farm.  http://mayor.lacity.org/PressRoom/PressReleases/LACITYP_011469

It is the second non-automotive green tech event BYD has held here in recent months. A few weeks ago, I went to an event in Lancaster, CA hosted by BYD, among others. (see July 14 blog) http://www.kbhome.com/pdf/press/2589/KB-BYD_Green_Home_%20Final_100713.pdf

That event involved a house built by KB Home that included BYD’s solar panels, and other green tech.  In Lancaster, I asked BYD senior vice president Stella Li if BYD is an auto maker that dabbles solar tech, a battery maker that also makes cars and solar panels, or what? She replied that BYD is “a unique automaker.” But I think Wang Chuanfu dreams of being much more.

I haven’t seen it reported on anywhere else, but Wang’s speech at the Sept 16  LADWP event was very strategic, and telling. He said:

“BYD’s dream is to help the West solve their pollution problems and achieve the goal of reduced oil dependence. 

However, solar and wind power plants in themselves cannot help us replace fossil-fuel electric generation, it requires renewable-power with “firm capacity” — Firm Capacity and Energy that we can rely upon at peak demand.  Energy Storage (our second focus) makes renewable energy generation relevant to the grid.  Only with renewable-energy generation and energy storage in place will electric vehicles truly be ZERO-emissions.  That is my true goal.  A zero-carbon, zero-emissions eco-system “template” that we can create and run our homes and our vehicles, our businesses and our public transportation.”

Wait a minute, the U.S. needs a Chinese company to wean itself from foreign oil dependence? Wang makes a good point, though. Electric vehicles charged with electricity generated from fossil fuels ain’t that green.  And I have to hand it to Wang—he’s creating, or at least pointing out, synergies between BYD’s different business lines.

Buildings play an important role in driving (get it?) Wang’s point home, as it turns out. BYD plans to build “green theme” dealerships in the U.S., says Michael Austin, vice president at BYD America (which will be headquartered right here in Los Angeles).

“Our delivery may be different,” says Austin. “It’s not a car dealership, it’s a green dealership.”

A green dealership would educate customers on how to reduce their electricity costs, etc., he says.  Then it would sell them an electric car. And a home charger. And maybe a solar panel. As Austin says, “Real solutions that you can buy.”

There won’t be any BYD green dealerships in the U.S. until at least 2011, however. BYD is sticking to its plan of first using its hybrid and pure electric cars in municipal fleets here in Los Angeles, beginning later this year. Those fleets will be Petri dishes of a sort, helping BYD to pinpoint what changes need to be made to make its cars palatable to American drivers.

One move I recommend: Allowing the e6 electric vehicle battery to be tested here in the U.S.—perhaps at the Argonne National Lab– so American consumers can see independent test results of the technology.  

Then, of course, BYD will need to make the car’s driving experience match U.S. consumers’ expectations. BYD is thinking of that, apparently. It will hire U.S. industrial design engineers with experience working on cars for the U.S. market to create U.S. versions of the Chinese models, says Austin. That won’t begin until the first quarter of 2011, he adds.

For all cars, whether electric or internal combustion, the car’s interior ranks first in importance in J.D. Power studies as far as satisfaction is concerned, says Tim Dunne, director of global automotive operations at J.D. Power and Associates.

“I can’t think it can ever be a bad move to try to tailor your product to the market,” Dunne says. “For all buyers, whether of alternative powertrain or internal combustion cars, interior designs are important. That’s where they spend all their time.”  

Especially if you’re a commuter in Southern California.

It all sounds good. But Wang’s grand vision is a long way from being realized. He has already scaled back his grandiose sales targets for autos in the face of the August sales numbers. That may allow BYD to focus some of its energy on its other businesses. But car sales are the company’s cash cow. It will be tough for BYD to do it all.