Is this the real deal, or vaporware?
Most people know only one thing about BYD Co. Ltd.: billionaire investor Warren Buffett bought their stock, so they must have something to brag about.
At first glance, it seems an impossible task: the car has yet to meet U.S. safety standards, and the company has yet to hire any U.S. dealers.
It’s a tall task for anyone – perhaps impossible. But company executives stuck to their story line. “The market is looking for EVs and hybrids,” said Henry Li, general manager of BYD Motors Inc. “That is the trend, and we have the right product.”
Li said the company will introduce its car on the West Coast, and has begun interviewing potential dealers. The company will focus on major cities, with about five dealerships in each city. Eventually, the company wants a network of 500 dealerships, but Li offered no timetable.
For the initial introduction, “We don’t need many dealers,” he said. “It is a special car that needs special care.”
As he said this, reporters eyed the e6 onstage. The vehicle is about the size of a Ford Focus, with seating for five. BYD claims a top speed of 87 mph, and a zero-to-60 mph acceleration in 14 seconds.
The car is supposed to have a daily range of 205 miles, which seems optimistic, given the daily range of rival (and smaller) EVs, which average 100 miles or so.
The vehicle’s ferrous iron battery pack is positioned under the floor.
As of last year, the car cost about $40,000 to manufacture, Li said. The company isn’t ready to announce pricing, but Li said the company may be willing to sell the car at a loss – at least during the introduction.
He also noted that the company may start off by leasing the vehicle, a common strategy for EV makers to soften the high cost of the battery pack.
Can the company meet its own optimistic timetable? Jeff Schuster, executive director of automotive intelligence for J.D. Power and Associates, says it would be “very unlikely” that the company could assemble a substantial network of dealerships in less than a year.
And if BYD insists upon exclusive dealerships at the outset, few dealers would want to risk their money, Schuster adds. That would be a sizable investment for a lineup that includes just one car – and an unknown brand, at that.
Likewise, BYD would need more time to craft a marketing campaign, which would have to precede the vehicle’s debut, Schuster notes. The company might conceivably sell a token number of vehicles.
At this point, we should note that Chinese auto executives have a habit of talking big – perhaps an occupational hazard for those who live and work in a market that defies common sense.
Last year, China eclipsed the U.S. as the world’s largest car market, and BYD Auto grew with it. Last year, the company’s sales in China soared 160% to 450,000 cars, and BYD is targeting sales of 800,000 units in 2010.
This is heady stuff for BYD Auto, which entered the auto business in 2003. Its parent company, BYD Co., got its launch in 1995 as a battery maker. Currently it is the world’s largest producer of rechargeable cell phone batteries, and it also produces telephone handsets for Nokia Corp.
Based in the southern Chinese city of Shenzhen, BYD Auto now has a lineup of 8 models, and it is adding to the list.
In 2006, the company started exporting vehicles, and it now exports cars to Africa, South America and the Middle East.
Despite its rapid growth, the company had a low international profile until 2008, when Buffett purchased a $232 million stake in the company. The following year, Buffett displayed the e6 hatchback at Berkshire Hathaway’s annual shareholders meeting.
So Mr. Buffett believes in this car. But the e6 still must meet safety standards administered by the National Highway Traffic Safety Administration.
According to agency spokesman Eric Bolton, an automaker can conduct its own crash tests for a vehicle that it wants to sell in the United States. The company then submits the data to NHTSA, which conducts its own crash tests after the vehicle goes on sale.
On Dec. 30, NHTSA approved the importation of five e6 sedans for display at the Detroit Auto Show. But those vehicles don’t comply with federal standards, Bolton said.
Can BYD Auto get regulatory approval and create a network of dealerships quickly enough to launch its vehicle this year? “It is quite challenging,” Li admitted. “It will take take to ramp up our sales volume.”
It seems like a tall order, but perhaps Mr. Buffett knows something we don’t. He is, after all, a billionaire.