Visiting BYD in China: It does a lot more than electric vehicles, but EVs are what I care about!

BYD www.byd.com  is really taking up a lot of my time these days. After attending the opening of its North American headquarters here in Los Angeles, on a recent trip to China I visited its headquarters in the south China city of Shenzhen.   I have been skeptical of BYD’s technology, and of its chances to succeed here in the U.S. I still think it will need skill and a big dose of good fortune to succeed here. But after touring the headquarters in Shenzhen, I was truly impressed at the scope of BYD’s businesses and fairly convinced that it will not be destroyed by the recent dramatic decline in China of its vehicle sales.  http://tinyurl.com/7m2u34s   Success of its cars here in the U.S. is still unsure, however.

I knew BYD got its start producing batteries for mobile phones and laptops, and that it now produces batteries for electric vehicles. And that it also produces solar panels. But I didn’t know it also designs and produces laptop computers and mobile phones for third parties. It also produces the casing for mobile phones and laptops.

Then there are the batteries. BYD holds 65% of the world market for nickel metal hydride batteries that go into consumer electronics, Leona Zhang, of BYD’s public relations department, told me. It produces batteries for Amazon, Energizer, Phillips, and others, BYD also produces lithium ion batteries for mobile phones for Samsung, LG, Motorola, and others. It holds 25% of the worldwide market for cell phone batteries, said Zhang. It has 11 plants across China.

But you probably don’t want to hear about its solar farm or the cool home energy battery storage device I saw in Shenzhen.

Or its test track, which I unfortunately didn’t get to drive an e6 on, though I did drive an e6 around the HQ grounds. Even if you do, I am not going to talk about them anymore. I’m going to talk about BYD’s electric vehicles, mostly. I saw a lot of them in Shenzhen. But the BYD EVs I saw were all electric buses and taxis. (Except the e6 that the BYD people picked me up in, and which they gave me a ride to the airport in.) BYD has 600 battery-electric buses on the road in Shenzhen and 300 e-6 taxis.

Just as in the U.S., demand in China for battery electric vehicles is hampered by consumers’ doubts about a new technology, lack of a charging infrastructure, and a higher price than for a comparable gasoline-powered car. For now, BYD and other automakers here are counting on government subsidies that can reach RMB 120,000  or more per vehicle to create a market for electric vehicles. So far, however, the subsidies haven’t convinced the general public to buy electric.

To be sure, BYD’s e6 pure electric crossover vehicle just became available to consumers in China in late October. But at RMB 369,800, or $58,125 at current exchange rates, before rebates, it is pretty pricey compared to similar gas-powered vehicles. So far, demand has been small. BYD seems to understand that consumers aren’t going to warm to pure electric vehicles very quickly. That’s why it is initially pitching the e6 as a fleet vehicle.

There are 300 e6 taxis on Shenzhen's streets. This one is recharging at the Futian recharging station.

Another potential pothole in the near-term growth of China’s battery electric vehicle market: The government’s focus seems to be shifting to hybrid and/or plug-in electric vehicles in the near and medium term. China’s premier Wen Jiabao recently said that China lacked key technologies to develop BEVs, and so China should look to more mature electric vehicle technologies right now to grow the EV market. http://tinyurl.com/7vmgn8l

Fortunately, BYD is positioning to take advantage of growth in the hybrid market. BYD SVP Stella Li told me via email that BYD will focus on both pure electric vehicles and its dual-mode hybridm called the F3DM. BYD thinks the dual mode model will see higher sales than the pure electric vehicles, she said. So BYD is upgrading both the F3DM’s engine—making it turbo-charged– and the interior design, she said. http://tinyurl.com/6s8vcud

Of course, BYD’s sales of gasoline-powered vehicles have seen a huge downturn recently. Right now, the bright spot is healthy sales of its new gas-powered SUV; the S6m launched last May (or maybe June. It was introduced in April at the Shanghai Auto Show). In the first ten months of this year, the S6 has sold 32,890 units, according to LMC Automotive, the former forecasting unit of J.D. Power and Associates. In October, it sold 9,647 units, the months’ biggest mover in the SUV segment.

The S6 is the first of BYD's upscale models to be launched. Sales are good so far.

I sat in an S6 in the BYD showroom at the headquarters. Not bad for a starting price of RMB 89, 800 or $14,115 at current exchange rates . It is rather nice looking. In fact, the S6’s appearance is similar to a Lexus SUV. But hey, all those premium SUVs have a similar appearance. In any case, Chinese consumers seem to think the S6 offers xinjiabi, or value for money, an important selling point in the China market.

A steady stream of such improved models will not only help BYD’s cash flow, but will improve its overall image, which may encourage consumers to consider its hybrid or electric models when they buy their next car. I hope the next model launched is nice as the S6. And that we see some e6 electric vehicles on the road here in the U.S. soon.