BYD has announced a 25 percent reduction for its 2010 sales target due to capacity constraints. The company now expects to sell 600,000 vehicles. However, this figure would still represent rapid growth as evidenced by the company’s 63.5 percent growth in domestic Chinese vehicle sales in the first six months of 2010 compared to the same period in 2009. BYD’s growth in China this year would represent a significant increase in market share.
Berkshire Hathaway owns a ten percent stake in BYD and Warren Buffett has described the investment as a bet on BYD Founder Wang Chuan-Fu. Hedge fund manager Li Lu brought the company to the attention of Berkshire Hathaway Vice Chairman Charlie Munger several years ago and made investments in BYD with Mr. Munger through an investment partnership. Mr. Munger later asked David Sokol to conduct additional due diligence on BYD and the results convinced Mr. Buffett to make a large investment for Berkshire. Mr. Munger recently identified Li Lu as one of the leading candidates to manage Berkshire Hathaway’s investments in the future. Mr. Sokol’s role in the BYD purchase was discussed in a recent Fortune magazine article that covered a wide array of topics.
BYD is planning to introduce its flagship electric e6 model in the United States in the near future. There are still many questions regarding the exact timing of the introduction as well as the details surrounding pricing and distribution channels. For now, the majority of BYD’s business remains in China with only 8,000 units exported in the first half of 2010 versus 289,000 units sold within China. If BYD can introduce the e6 in a timely manner and at the right price, the vehicle may represent tough competition for the Chevrolet Volt which will be introduced later this year.
We have covered developments at BYD in some detail over the past year. Click on this link to view the archives of articles related to BYD.
Disclosure: The author of this article owns shares of Berkshire Hathaway.