BYD inks energy storage deal

08:39, September 28, 2010      

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By Cong Mu

Amid corporate fanfare over a visit from billionaire Warren Buffet, high-tech battery maker BYD Co signed a deal Monday with China Southern Power Grid to cooperate on energy storage systems.

Warren Buffett-invested BYD inked the agreement during a BYD Auto national dealers conference in Shenzhen. No financial details were released.

Buffett, who strolled into the event with the BYD CEO, Wang Chuanfu, said the company's new energy endeavors would benefit both China and the world.

In addition to Buffett, four board members from his firm Berkshire Hathaway, which owns 10 percent of BYD Co, made an appearance at the conference in a show of support for the struggling automaker.

"BYD is the right choice for me" and the company "has a bright future," Buffet said reading from a prepared statement. However, the investment guru did not say whether Berkshire Hathaway, would keep its 10 percent stake in BYD.

After going through a series of rapid expansions, the company has recently hit a few speed bumps including slowing sales, the loss of some dealers and having to scale back their annual sales target by 25 percent.

Zeng Zhiling, a JD Power analyst based in Shanghai, said that BYD was perhaps at-tempting to expand too quickly, stressing out some dealers.

BYD sold 289,000 gasoline-powered vehicles in the first half of the year, an increase of 63.5 percent year-on-year.

Shenzhen-based BYD's current success relies on a business model Wang developed in his previous work in cell-phone battery production, where the focus was on keeping costs low and expansion fast, JD Power's Zeng said. But it remains to be seen whether the Wang model can work in the auto industry, he added.

While Buffet posed for pictures with key dealers, some were not impressed with all the fanfare for the world's second richest man. "Buffet can't save BYD. It's us the dealers who are keeping the company afloat," said a Shaanxi Province-based dealer speaking on the sidelines of the event who requested anonymity. "If we can't sell BYD cars, Buffet can't make money either."

Source: Global Times


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