Big Yucky Disaster: Buyers Abandon BYD
In most parts of the world, electric vehicles are treated as the second coming of Jesus. Meanwhile in Omaha, Warren Buffett is having doubts whether it was such a good idea to pay $230m for 10 percent of China’s cellphonebattery/car/EV/appliance/house builder BYD.
BYD’s share price has fallen by more than 40 percent over the past three months, China’s First Financial Daily remarks (via Gasgoo.) Can you guess the main reason for the serious drubbing?
BYD’s “electric cars cannot achieve commercialization in a short term,” said Cao He, an auto analyst with Mingzu Securities Co. That’s Chinese for: Nobody wants them. Even with generous government handouts they are unsalable. Last month, the Chinese government unveiled a plan to subsidize private purchases of electric cars. BYD’s F3DM plug-in hybrid sedan and e6 electric car are on the list.
In China, the government would give me 50,000 yuan ($7,320) for buying an F3DM hybrid car. I would collect 60,000 yuan ($8,850) if I would overcome my range anxiety and would buy an e6 plug-in. If I would move to scenic Shenzhen, on the other side on the Hong Kong border, the deal would get even juicier: Shenzhen would put another 30,000 yuan ($4,425) on the hood of the F3DM and would incentivize the e6 with an extra 60,000 yuan ($8,850). In Shenzhen, I could collect $17,700 if I would by an e6. Many people in Shenzhen could live comfortably for several years on that kind of money.
Of course, this creates long lines in front of BYD showrooms and waiting lists not seen since the glory years of East Germany, you would think.
Baloney. Since BYD started selling their F3DM cars to private consumers in March 29, they sold only 14 units sold in April, 2 units in May and 12 units in June. That’s for the hybrid. Yes, 28 in total.
There are no e6 sales, because none is available. Maybe by the end of the year.
To make matters worse, BYD’s June sales of all cars, including their formerly bestselling F3 car, fell 21 percent from May. BYD may be having a bit of a problem.
China’s First Financial Daily quotes an unnamed “industry expert” who said that mass production of “electric cars is still a long way ahead. Therefore, economies of scale may not be able to work magic in a short time with the high cost of battery packs and inadequate support facilities for electric vehicles.” Do the Chinese know something we don’t?
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BYD is not ready for prime time. The cutaway F3DM that they've displayed at the NAIAS had body seam sealant that looked like it was out of a '67 Dart, and the drivetrain pieces were rough castings with visible hand grinding marks. That they'd display a car like that at such a high profile show says to me that they don't quite get the concept of quality. When I interviewed Don Runkle for the EcoMotors story, he said that one of his favorite engines was the Buick 3800, which I described as the ultimate silk purse out of a sow's ear. He told me that when he got the team together to redesign the old Buick V6, he got a bunch of Japanese sportbike engines from a variety of mfgs, had them torn down to components, and then set those components side by side with the original GM V6 parts, demonstrating that the sportbike parts looked "like jewelry" compared to the GM parts. I think that just as panel gaps demonstrate a commitment to quality, so does the finished look of every component of the car, even the ones that customers rarely if ever see. Why shouldn't engine parts be elegantly designed? Hot rodders and customizers understand the aesthetic value of dressing up the mechanical parts. So do most global car companies, but I'm not sure if BYD gets that.
AFAIK most Chinese homes don't have garages, most cars are parked on the streets or underground parkades. This would make the "plugin" feature of a plugin-hybrid like the F3DM useless. Unless there are decent electric charging infrastructure in place, I just don't see electric vehicles being viable in China. Parallel hybrids on the other hand may have a shot in the short term.