Although BYD Company Limited (HKG:1211) doesn’t directly compete with Tesla Motors Inc (NASDAQ:TSLA)—at least not yet, anyway—the company has taken another major step toward pushing into the U.S. market. In fact, it appears that California likes electric vehicles in general, not just Tesla’s EVs. Tesla has been extremely popular in California, and now several California public transportation systems have either purchased or may be planning to purchase electric buses from Chinese bus maker BYD Motors.
BYD moving into U.S: “monumental”
BYD Company Limited (HKG:1211) is preparing to open up the doors of its new electric bus factory toward the end of this month in Tesla Motors Inc (NASDAQ:TSLA)’s home state of California. The facility will be located in Lancaster, Calif. and will open on April 28.
“What’s kinda cool about this and a lot of people probably don’t understand how big it is, this is the first Chinese vehicle company to put a factory on U.S. soil,” said Micheal Austin, vice president of BYD America, in an interview with ValueWalk. “So it’s an electric bus factory so it’s not a consumer car factory, but it’s pretty monumental.”
Austin said they have already hired 25 Americans to work in the new facility and expect to have created 100 jobs there by the end of this year and 200 jobs by the end of next year.
BYD moves into Tesla territory
Executives at BYD Company Limited (HKG:1211) and Tesla Motors Inc (NASDAQ:TSLA) have been trading barbs for some time, perhaps sensing the competition which is probably coming at some point in the future. BYD CEO Wang Chuanfu called Tesla’s Model S “a rich man’s toy” and said “BYD could make a Tesla as soon as consumer demand for electric cars really takes off,” according to a translation of his comments.
Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk, for his part, has laughed at BYD Company Limited (HKG:1211) as well. Those comments were made back in 2011, however, so it’s unclear what his thoughts on the company are now.
BYD buses run 24 hours on one charge
BYD Company Limited (HKG:1211) also runs a second facility in Lancaster which produces energy modules for its buses. The electric buses give off no emissions and can run for 24 hours straight on a single off-peak charge of three to five hours.
BYD Company Limited (HKG:1211) has been pursuing U.S. transit contracts for some time. Austin said they visited the top ten transit companies in the U.S. and had them run their routes with a BYD bus. He said everything affects how far the bus will travel on a single charge, from temperature, to the grade of the route and how much stop-and-start there is in traffic. In fact, the results they got from the atrocious traffic in Manhattan surprised even them.
“Manhattan traffic was actually fantastic for our bus,” Austin told ValueWalk. “Our bus can run up to 30 hours at the New York transit, which, by the way, surprised some of us because we didn’t realize how much regenerative braking it would get in very slow moving traffic, whereas diesel buses perform horrible in slow, stop and go traffic because they’re idling all the time.”
The company also recently launched electric taxis in New York City.
BYD wins major North American contracts
According to Austin, the first two buses which will roll off their California assembly line this month are destined for the Antelope Valley Transit Authority in California. He said they also will be delivering some to Los Angeles, possibly as many as 25. He sees the potential for another order from Long Beach, Calif. of 10 more buses. In addition, the executive said they have received orders for private entities and will be shipping some buses to Canada for a one-year evaluation there.
“We actually are just completing one in Montreal,” Austin said. “Montreal is very unique in that 98% of their energy is generated by hydro-electric, so Montreal, Quebec, they’re looking at themselves and they’re saying, ‘We’re stupid if we’re using diesel buses when we get 98% of our energy from hydro-electricity.'”
He says government officials there have already said that they will be converting their public transportation system to electric vehicles. Austin feels confident that they will win that contract as well. He said Montreal has had one of their buses all winter long, and he believes no other competitor has a bus that can run for 24 hours on a single charge.
BYD also a major mobile phone component maker
BYD Company Limited (HKG:1211) has been around for nearly 20 years, although it only relatively recently has come to the attention of major investors like Warren Buffett and Berkshire Hathaway Inc (NYSE:BRK.A) (NYSE:BRK.B).
The company started out making rechargeable batteries for mobile phones. Austin estimates today that BYD Company Limited (HKG:1211) holds 30% of the manufacturing market for mobile phones and 35% of the original design manufacturer market. He says they partner with the likes of Apple Inc. (NASDAQ:AAPL) and other big names in the industry.
So will BYD Company Limited (HKG:1211) ever take on Tesla Motors Inc (NASDAQ:TSLA) head to head in consumer cars? It sounds like it’s just a matter of time. When asked about whether they would be showing off any of their vehicles at Berkshire Hathaway Inc (NYSE:BRK.A) (NYSE:BRK.B) upcoming shareholder meeting, Austin said, “When we start making a consumer play in the U.S., then it will make sense to bring some of the consumer vehicles to show off.”