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invested in BYD about a year and a half ago.

Since then, I've been trying to learn everything I can about the company and it's founder Wang Chuanfu. Here is my investment write up of BYD: Wang Chuanfu has been called the Thomas Edison of our time combined with the Bill Gates of China by Warren Buffett. Charlie Munger said it s the best company in the world and the most amazing company he s ever seen. At the same time BYD is trading for $17 billion and should earn around $1 billion in earnings this year. It s trading for around 12 times next year s earnings. BYD already produces the number one car in China. All the upside of their electric cars and solar panels are priced in for free. It s our company s long-term target, to be China s No. 1 automaker by 2015 and to be the world s leading car maker by 2025, - Wang Chuanfu 1. History: Wang Chuan-Fu started BYD (the letters are the initials of the company's Chinese name) in 1995 in Shenzhen, China. A chemist and government researcher, Wang raised some $300,000 from relatives, rented about 2,000 square meters of space, and set out to manufacture rechargeable batteries to compete with imports from Sony and Sanyo. By about 2000, BYD had become one of the world's largest manufacturers of cellphone batteries. The company went on to design and manufacture mobile-phone handsets and parts for Motorola (MOT, Fortune 500), Nokia (NOK), Sony Ericsson, and Samsung. Wang entered the automobile business in 2003 by buying a Chinese state-owned car company that was all but defunct. He knew very little about making cars but proved to be a quick study. In October a BYD sedan called the F3 became the bestselling sedan in China, topping well-known brands like the Volkswagen Jetta and Toyota (TM) Corolla. Link: [money.cnn.com] Wang Chuanfu has been called the Thomas Edison of our time combined with the Bill Gates of China: "This guy," Munger tells Fortune, "is a combination of Thomas Edison and Jack Welch - something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it." But Buffett and Munger and Sokol think it is a very big deal indeed. They think BYD has a shot at becoming the world's largest automaker, primarily by selling electric cars, as well as a leader in the fast-growing solar power industry. One more thing reassured him. Berkshire Hathaway first tried to buy 25% of BYD, but Wang turned down the offer. He wanted to be in business with Buffett - to enhance his brand and open doors in the U.S., he says - but he would not let go of more than 10% of BYD's stock. "This was a man who didn't want to sell his company," Buffett says. "That was a good sign." Wang typically works until 11 p.m. or midnight, five or six days a week. "In China, people of my generation put work first and life second," says the CEO, whose wife takes responsibility for raising their two children. As for accumulating wealth? "I'm not interested in it," he claims. He certainly doesn't live a very lavish lifestyle. He was paid about $265,000 in 2008, and he lives in a BYD-owned apartment complex with other engineers. His only indulgences are a Mercedes and a Lexus, and they have a practical purpose: He takes their engines apart to see how they work. On a trip to the U.S., he once tried to disassemble the seat of a Toyota owned by Fred Ni, an executive who was driving him around. Shortly after BYD went public, Wang did something extraordinary: He took approximately 15% of his holdings in BYD and distributed the shares to about 20 other executives and engineers at the company. He still owns roughly 28% of the shares, worth about $1 billion.

Li Lu told me. Li Lu says.000 people. They seem to have a commanding lead right now.S.. Link: [money. sized up Wang during that visit and decided he was an unusually purposeful executive. Eventually. and Toyota. and because generating energy on a large scale (in coal or nuclear plants) is less wasteful than doing it on a small scale (by burning gasoline in an internal-combustion engine). a move putting it ahead of GM.5 tons.8 billion. The only way to conquer this market is to provide a product that is comparable at the beginning and superior in the end. . the last time BYD executives traveled to the Detroit auto show they rented a suburban house to save the cost of hotel rooms. called the F3DM (for "dual mode"). That's because electric engines are more efficient than internalcombustion engines. its batteries will last a long time and they will cost less than competitors . and they have lower fuel costs. Sokol. You want to meet him. he said There are not many in the world that have comparable experience and expertise. BYD's plug-in.000.say. and electricity is priced at 12 cents per kilowatt. 3.com] BYD s electric Cars will be much cheaper than competitors: BYD has also begun selling a plug-in electric car with a backup gasoline engine. which lost billions last year. His people at MidAmerican have studied clean technologies like batteries and wind power for years because of the threat of climate change. Sokol says. a Chevy Impala or a BMW X3 . "Many good entrepreneurs can go from zero to a couple of million in revenues and a couple of hundred people. goes farther on a single charge . energy companies will need to produce more energy while emitting less carbon dioxide. even when oil is cheap. and win over auto buyers by offering them lower operating costs and higher performance." When he got back to the U. Until recently. Nissan. he said. Sokol believed in electric cars.000 people in 11 factories. The numbers look something like this: Assume you drive 12. Few can do that. Equip those cars with electric motors. "This guy's amazing.The company itself is frugal. and fuel costs drop to $400 a year and emissions are reduced to about 1. By contrast.6 tons of carbon dioxide. Sokol says. Put simply. executives always flew coach. He was also named one of the 40 most powerful people in China by business Week. author of a slim volume on management principles called Pleased but Not Satisfied." Even before visiting BYD. about what most Americans pay. The BYD technology is super safe. Electric cars will be one answer. He's got over 100. eight in China and one each in India. Link: [theenergycollective. A gasoline-powered car that gets 20 miles to the gallon .cnn. Competitive Advantages: Cost advantage and quest to be the lowest cost producer: The big challenge now is to bring down the initial cost. Hungary. this little-known upstart has accelerated ahead of its much bigger rivals in the race to build an affordable electric car. and Romania.com] Wang Chuanfu is the richest man in China with a net worth of $5. had staged a gala at the Hotel George V during the Paris auto show. Today BYD employs 130.62 miles than other electric vehicles and sells for about $22.200 and generate about 6.will have annual fuel costs of $1. less than the plug-in Prius and much-hyped Chevy Volt are expected to cost when they hit the market in late 2010. One way or another.000 miles a year. BYD would like to sell the car for about the same price as conventional vehicles. gas costs $2 a gallon. One told me he was appalled when he learned that Ford. They generate fewer greenhouse gas emissions than cars that burn gasoline. Sokol told Buffett.

He notes that BYD is coming out with six. the manufacturing process at competing firms in Japan was similar to that at BYD. First. the movement of material and work in process between production steps was performed by robotic arms rather than workers. eliminating the need for expensive outsource production of new car body parts. That's also how Wang set up the company's first battery production line. a "process that involved much trial and error. but of course business champions seldom pay heed to grumblings from those they defeat." He studied Sony and Sanyo patents and took apart batteries to understand how they were made. so Wang decided to make one himself. from engine to dashboard. To develop good cars in the shortest time possible.He started BYD with a modest goal: to edge in on the Japanese-dominated battery business. unsuccessfully. new models in 2010. He reverse-engineered the setup for an identical production line that cost only about 1 million yuan.com] BYD s battery technology is around 5 years ahead of the nearest competitors such as Toyota.0% defect rate for the similar steps in BYD s process they were expensive.slideshare.caing. most of the process in Japanese plants was automated. Though robots were highly reliable defects during assembly were estimated to be slightly lower than the 1.000 and goes 50% farther than the Volt which is priced at $40.) BYD's breakthrough came when Wang decided to substitute migrant workers for machines. then thousands. BYD started making new stamps in eight months for 80 million yuan. BYD Sales Vice President Wang Jianjun says every automaker has to find its own path slowly.net] BYD takes apart the leading car modules of their competitors and copies them . "Importing batteries from Japan was very expensive.000. Link: [money. which can take two years and cost 200 million yuan. Nevertheless. "You'll discover that these new makes don't resemble anyone else's models. (Sony and Sanyo later sued BYD. In place of the robotic arms used on Japanese assembly lines. "There were import duties. [www. For example.000 or more apiece. Auto stamping offers a good example of BYD's strategy. Nissan and GM. In those early years. BYD actually cut costs by hiring hundreds. "Money is saved on every part. of people. for infringing on their patents.com] BYD s manufacturing process is much cheaper than their competitors In terms of the sequence of steps. "We made them ourselves. The F3DM is technologically superior top the Chevy Volt." Wang says." he said. BYD spends tens of millions of yuan every year buying and then dismantling the newest models built by manufacturers around the world. a fully automated Ni-Cd battery production line from Sanyo cost tens of millions of yuan.000 yuan. In addition the F3Dm is already being sold to retail customers but the Volt will be released near the end of the year. When carmaking." [english." he says. "Why are our cars so cheap?" retorted a mid-level staffer at BYD. and now it's building a third stamping plant near Shenzhen.cnn. the typical Japanese plant differed from BYD in several respects." In hopes of skirting patent issues. and delivery times were long.but they don t infringe on patents: BYD's success as a revolutionary copyist has drawn mixed reactions. it was the biggest applicant after Huawei and ZTC in Shenzhen last year. BYD has a team with hundreds of people who study global patent intricacies. The company obtained a complete stamping plant when it bought Qinchuan. As a result. for example. which cost $100. all mid-range cars costing more than 100. . The F3DM is priced at $22. At the same time. BYD found that reverse engineering can cut the cost of a new vehicle by more than one-third. BYD has begun applying for large numbers of patents.

the smaller amount of dry-room space at BYD s facility may have been the result of BYD not having access to information about the process used by its Japanese competitors. Ltd. . These geographic factors prompted government officials to look at applying resources from southern mines in solar energy projects. so we had to rely on our imagination to research and develop the battery technology and production process from other sources.com] Southern Shaanxi's mines are rich.co. At these firms. So in 2008. Japanese factories contained significantly more dry-room space than BYD s production facility. Wang noted. But the existing equipment and lines at Qinchuan were in a poor state of repair and had no capacity for expansion. however. The purchase price of roughly RMB 250 million seemed to be a bargain given the land that came along with it. Buying an auto company. nearly all assembly steps had to be performed in a dry-room environment. will spend CNY 22. Furthermore.tradingmarkets. Second. BYD s Shenzhen plant had more than 25 lines dedicated to battery production. developing new vehicles would cost approximately RMB 100 million per product According to a chart on page 21 of the Harvard report. Wang suspected that the amount of dry-room space in a Japanese factory was 10 times greater than that at BYD. 97% of which are mined in China. sunlight-bathed deserts with Inner Mongolia. Though not certain.uk] BYD is opening factories in resource rich areas to gain access to the rare earth minerals BYD Co. Early in the design of our lithium-ion process. was not for the faint of heart. have the potential to shift the world's power away from the West. As Newsnight's Economics Editor Paul Mason now reports these metals. Link: [www. The government plans perfectly meshed with BYD's development goals. At BYD. (SEHK: 1211). Link: [news. the BYD dry room was designed such that operators sat around its perimeter and worked on parts by putting their hands through airtight sleeves that extended into the humidity-controlled environment.000 vehicles per year and production lines for two additional vehicle models would require a further investment of between RMB 400 million and RMB 500 million. Harvard BYD Case Study Access to rare earth minerals: The 17 metals which are known as rare earths are a vital component in most of the world's new technologies.bbc.0001 and was depreciated over five years. giving birth to a local photovoltaic industry.Wang estimated that each robotic arm cost approximately RMB 800.000MW solar cell production base in the northwestern province of Shaanxi from 2009 to 2015. Ironically.5 billion building a 5. Wang estimated that building a new facility with a capacity of 100. citing the local government's latest circular economy development strategy. while the province's northern region shares vast. an indigenous manufacturer of rechargeable batteries and vehicles in China. Equipping a line to do final assembly would have required several robotic arms. Further. the Japanese plants were off limits to us. BYD produces batteries at least 20% cheaper than Sanyo. only the steps from the final formation of the cylindrical shell to the electrolyte-filling process required a dry room. the company signed an agreement with the government in the southern provincial city of Shangluo to build a 1 gigawatt solar battery production facility.

In early 2009. BYD plans to invest 22.com] Massive R & D and 19.yourrenewablenews. discovering three silica mines and a vanadium mine. Shangluo has rich mineral resources. Deploying the armies of laborers at BYD is an officer corps of managers and engineers who invent and design the products. BYD's Shenzhen operation has been put in charge of researching the conversion and application of this new energy venture. A 27-hectare BYD New Energy Base is currently under construction on the city's eastern outskirts. said an insider at the Shaanxi Development and Reform Commission. which is the main raw material for solar cell production. Government sources said some of this money is earmarked for BYD. offering preferential power prices. The provincial government promised to secure direct power supplies to BYD and other major companies at a polysilicon industrial park.5 billion. But the plans rely on government financing.000 engineers who have graduated from the company's training programs . BYD may tap into another government bank account tied to a 10 billion yuan fund for alternative energy investment at a Xi'an national civil aviation base. The initial 450 million yuan investment includes a 50 million subsidy from the local government.000 new college . Shangluo's government has spent tens of millions of yuan on resource extraction. Link: [english.5 billion yuan in the province by 2015 and develop 5 GW worth of solar battery projects. which is expected to be able to turn out solar cells of 100 mega watts per year and create sales revenue of CNY 1. solar battery production plants. Development rights for two silica mines were awarded to BYD. the Shangluo government's land authority has already started working with BYD. and is expected to provide 1 GW generation capacity this year. On the provincial level. as well as subsidies that nearly match BYD's outlays. the Shaanxi government has set aside 800 million yuan for developing alternative energy.024 billion. mostly for upstream solar energy production. The first phase. According to the southern Shaanxi scheme. Moreover. will be built up one year later. including silicon smelting plants. covering a plot of land of 270.caing.. Nevertheless. Link: [www.and another 7. The company plans to invest CNY 450 million in the first phase of the project. starts building a solar cell project in Shangluo.000 engineers: GM or Toyota could not hire the amount of engineers working on electric cars that BYD has because the same engineers cost 10x more in industrialized countries. chairman and president of BYD. Wang Chuanfu.some 40% of those who enter either drop out or are dismissed . Several official documents reveal that BYD's investment estimate is based on predictions of extremely low resource costs. BYD plans to set up alternative energy facilities in Shangluo and the northern city of Yulin.com] Chinas leading battery producer BYD Co. had led a team to survey Shangluo at the end of this November and inked development contract of a solar cell plant with the local government. Shaanxi Province. In the future.In the future. and a 250 million loan from the Bank of China. local media said. BYD and Shaanxi's Information and Technology Department signed a batch of agreements linked to the alternative energy and auto industries. Today the company employs about 10. and solar power stations.000 square meters large. It is the largest project in terms of investment in Shangluo City. Ltd. The total investment in the project is expected to reach CNY 2. especially the high-purity silicon ore.

the Chinese government has expanded the trial cities for promoting energy-saving and new energy vehicles from 13 to 20. S6. of which only the M6 has been displayed to the public. including BYD.000 yuan ($14. Harvard Case Study Chinese battery and car maker BYD Co. The first private sales location is in Shenzhen .000 autos this year. said Monday it plans to boost capital spending 59% in 2010 to expand its automobile production amid robust domestic demand. Whereas other Chinese firms focused solely on production." he says. BYD devoted substantial resources roughly 2% of revenues to both product and process R&D. The five new vehicle products include the sedan.000 yuan. The idea is to combine Mercedes design excellence with BYD s technological savvy. particularly with respect to batteries. Yet Wang felt that BYD differed from its Chinese competitors along at least one critical dimension investment in R&D. where private buyers purchase energy-saving and new energy vehicles can get incentives and subsidies. and Shenzhen etc. As the first and only sedan chosen by National New Energy Vehicle Recommendation List." says a U. Wang says the engineers come from China's best schools. The first group focuses on the sales channel and does not care about the technology or the development of new components. Link: [money. executive who has studied BYD. Mercedes chief Dieter Zetsche said at the time.graduates are being trained.000 cars in 2009. In March. "They are very hard-working. Daimler s know-how in electric vehicle architecture and BYD s excellence in battery technology and e-drive systems are a perfect match. "They're basically breathing. the E6 has been available to government agencies and corporations since Dec. SUV and MPV. and working at the company 24/7.700) and 200. "They are the top of the top.S. Five cities have be chosen as the pilot cities for the trial program. Wang observed. BYD said it will launch the L3." BYD can afford to hire lots of them because their salaries are only about $600 to $700 a month.15. Shanghai. I6.wsj. The BYD F3 is the number one selling car in China and BYD as a whole is the 4th largest car company in China.com] Wang stresses that BYD. M6 all-new car models next year. and they can compete with anyone. the company announced a joint venture to develop electric cars in China with Mercedes. There are two types of Chinese companies in our industry. Clear leader in electric cars: Leading car makers are partnering with BYD to develop electric cars because BYD is so far ahead and the costs of developing their own technologies would be so expensive.. emphasize technology.com] The company more than doubled its sales to 450. and their competitive edge comes from the products they develop. has never faced a recall of its batteries. including Beijing. and the Chinese firm s access to its home market. Link: [online. eating. The car maker reiterated Monday its target of selling 800.cnn.com] BYD was the first company to get subsidies for its car buyers In 2010. Companies in the second group. 2008. G6. unlike Sony and Sanyo. Link: [theenergycollective. thinking. they also get subsidized housing in company-owned apartment complexes and low-cost meals in BYD canteens. All these new models will be priced between 100.

BYD's all-electric e6. has a total of 1. Wang in an interview.com] BYD could never compete with GM or Toyota in petroleum based cars.byd. Link: [online. we're all at the same starting line. In comparison." Mr.HK) yesterday signed a Memorandum of Understanding (MoU) with Daimler AG (stock ticker symbol: DAI) to enter into a comprehensive technology partnership for the development of electric vehicles for China. pacing and juggling calls in BYD's headquarters on the outskirts of Shenzhen. That means the whole system has 210 primary parts. VW s German rival Daimler announced two weeks ago it was also partnering with BYD to build electric cars in China.byd. they're far easier and cheaper to build -.wsj. stating that petroleum-powered vehicles are not sustainable due to the massive demand. Link: [webcache. Link: [www. but electric cars are much simpler to engineer and BYD leads everyone in technology Mr. and have relatively few parts." said Mr. compares the simplicity of building electric cars to the simplicity of a digital watch.as selected and will expand to other new energy car trial cities in China. Few products are as complex to develop and produce as gasoline-powered automobiles. you quickly .com] In a shockingly forthright appraisal of the Chinese auto market.and that makes for a level playing field.com] BYD becomes the supplier of electric car batteries to other car companies: Volkswagen and Mercedes Benz have announced they are partnering with BYD The Lavida electric model is likely to have most of its parts sourced from Chinese producers. including the battery expert Build Your Dreams (BYD). Zetsche remarked If you look at the population and the growth here.com] (Hongkong /Stuttgart) BYD Company Limited (1211.400 powertrain parts: a V6 engine composed of 840 parts and a transmission with 560 parts. But electric cars use only basic motors and gearboxes. "It's almost hopeless for a latecomer like us to compete with GM and other established auto makers with a century of experience in gasoline engines.googleusercontent." Mr. which are assembled with thousands of precisely engineered parts. has just two motors (45 parts each). Wang's strategy: capitalizing on the electric car's low barriers to entry. but it's virtually impossible for a newcomer to match the precision of a Swiss wristwatch. and that electric vehicles are imperative. "Anyone can design and produce digital watches. and two gearboxes (60 parts each) to go with each of the motors. "With electric vehicles. Wang says. Indeed. Link: [www. Aside from perfecting the battery itself. a gasoline-fueled vehicle. Wang." He says it doesn't overheat to the point where it can catch fire. BYD's F6. one powering the front axle and the other the rear. the 42-year-old Chinese entrepreneur. Speaking at an event in Beijing. Daimler CEO Dieter Zetsche laid out the harsh reality for the Chinese auto market. Mr. Wang says BYD's lithium-ion battery uses an iron-phosphate technology that is chemically stable and thus "inherently safe. excluding nuts and bolts.

cheap battery storage at scale would address one of the biggest drawbacks to wind and solar energy. BYD. how do we ramp that technology up so that we can use it for multiple purposes in the utility world? "Probably the most obvious is the ability to store intermittent renewable resources.com] The company hasn't yet decided whether it will enter the U.and dieselpowered vehicles." Sokol told me recently. the question is.com] BYD s batteries become connected to the grid to store solar and wind generated power: BYD built a 2-MW demonstration energy storage system in a 40-foot mobile container for PacifiCorp. [www.S. market.com] "We've never really had storage capability on utility systems. There just isn t enough oil for that.5 million U.autoguide. .com] Eventually BYD will be the lowest cost producer of solar panels: Wang said the company has a goal of reducing the cost of solar panels by 10 percent a year to make them more affordable to the general public.S. Sokol. such as wind or solar. So there has to be personal transportation that is not dependent on oil and is CO2-free to the greatest possible extent. in Portland. which is that. that features four-hour discharge.distributedenergy. and a 200-kW storage unit in a 40-foot container. has injected around five billion yuan (about 731. automobile parts and handset components. "Given the progress BYD has made on the technology of batteries for electric vehicles. Link: [money. they are unpredictable -. that is connected to the grid.contracostatimes.reach the conclusion that it would be unthinkable to provide these people with traditional gasoline. says BYD could instead become a battery supplier to global automakers.greenbiz. has set up a plant to mass produce lithium batteries for its electric cars in Huizhou. according to the China Securities Journal. Facilities for the production of batteries for the company s electric cars are almost ready now." Sokol said.com] BYD was first to the game. which produces rechargeable batteries. [www. and have it available when you need it. who now sits on BYD's board. It also has a 1-MW stationary demonstration storage project in its factory in Shenzhen. dollars) into the operation of the Huizhou plant. BYD is clearly a front runner. Link: [www.you can only make electricity when the wind is blowing or the sun is shining. as well as a 600-kW 40-foot storage container for 1.cnn. partly owned by Warren Buffet. where the economics of electric cars are not as compelling. Link: [www." Sokol says.5-hour discharge. that argument goes away. In this regard. Started 10 years before everyone else: Chinese battery and electric automaker BYD Co. by phone. since construction began in September last year. unlike coal or nuclear power. the newspaper Xinhua reported. south China s Guangdong Province. "If you can store electricity when the wind blows. Put simply.

com] China is spending far more money and allocating way more resources than any of country for clean technology: U. Wang disclosed that in 1998 he had instructed 20 of his top engineers to quietly scale up BYD's cellphone-battery technology so that it could be used to power cars some day. The electric mini car can be driven at the highest speed of 80 kilometers per hour and run 100 kilometers without charging. 14 have been sold on the terminal market with total orders of more than 500. is seen as a key step in the company s electric car manufacturing Link: [www. the output of electric vehicles will make up 10 percent of the total number of electric passenger vehicles. The first batch of electric vehicles firstly built by China Southern Power Grid in Shenzhen has been put into operation with two charging stations and 134 charging cords started.com] On a conference call. Currently.szcpost. the first eligible for mass production of lithium-ion batteries that are core technologies of BYD s electric cars.6 billion. The potential Chinese market is huge: Total investment in China in renewable energy by the government and private sector last year was $34.wsj. Beijing and even oversea.6 billion. Link: [online.yahoo.S. according to a report by the Pew Charitable Trusts.com] Zhen Zijian. is considering building battery-changing stations for electric vehicles. solar and other equipment and is limiting access to its market. At that time.cleancartalk. The two charging stations are designed to have 9 charging cabinets which could accommodate 18 vehicles at the same time. leaders want China's clean energy boom to drive technology exports and are sending a sales mission to Beijing this week.The Huizhou plant. since F3DM low-carbon dual-model electric vehicle going on market.S. Comparing with other types of vehicle of BYD.800 Yuan for relieving the current contradiction of demand and supply. which leads to some 21. China National Offshore Oil Corp. a clunky vehicle called the Flyer that was just a step above a golf cart. [www.com] According to the distributor of BYD in Shenzhen. the actual price of F3DM has been raised by 50. the ordering time for F3DM low carbon vehicle will be longer.2 billion kWh of electricity needed throughout the year. According to relevant information. They developed an all-electric car. setting up a new trade clash with Washington and Europe. But Beijing wants to create its own suppliers of wind. It s said that some of the customers calling for consultation are from Hong Kong.000 Yuan from 169. Mr. . Link: [finance. nearly double U. spending of $18. said the projected number of electric cars sold will reach to 2. part of a broader push by the stateowned oil giant that could give a boost to electric cars in China's huge market. the basic condition for promotion of electric vehicle in Shenzhen has been increasingly mature.66 million units. He added that electric city buses and plug-in electric buses will also be produced by 2015. deputy director of 863 major projects for energy-saving and new energy vehicles in the Ministry of Science and Technology.

company agreed to buy a stake of about 10 percent in China's biggest rechargeable batteries maker.com] Mr. the company's next goal is to expand throughout the States. BYD.com] Warren Buffett's MidAmerican Energy Holdings Co." Wang answered. "Our company is built on technological know-how.cnn. Link: [autonews. but we will do it in cooperation with BYD. Wang said an increase is "negotiable. the company's first goal isn't making a mark with its cars. Mr.China's intention. never rest. China wants to raise its annual production capacity to 500.org] Charlie Munger said it s the best company in the world and the most amazing company he s ever seen. electronics. named Chairman David Sokol to the board of BYD Co. we will be happy to increase our stake over time.S.000 hybrid or all-electric cars and buses by the end of 2011. Intercity driving is rare. Commutes are fairly short and frequently at low speeds because of traffic jams. Paraphrasing Bill Gates' ideas about the PC. after the U. is to reduce urban pollution and decrease its dependence on oil. Sokol also said MidAmerican hopes to boost its BYD stake if the chance arises. Wary as always of a technology play. 1 spot on Bloomberg Businessweek's annual Tech 100 ranking of tech's top performing companies. which compares to investments of $397 billion in China alone. 2 Apple." Link: [online. from 2. aiming to make them popular enough that they cost less for consumers. thus getting a royalty on energy usage in China: However. "If in the future there is an opportunity for us to continue to invest in BYD.org] or [thebreakthrough. BYD will be a complete energy producer. batteries.100 last year. Electric cars have several practical advantages in China. Right now it is focused on solar panels. Link: [thebreakthrough.wsj. 3) round out the top three. "We'll never. Link: [autonews. After that. BYD Chairman Chuan-Fu said he wants solar panels on every home. earns the No. So the limitations of all-electric cars are less of a problem.com] The United States is poised to invest $172 billion over the next five years.bloomberg. Link: [www.gasgoo. No. and only after that is done will it turn to .com] Bill gates gets a royalty on Computers. BYD (which stands for Build Your Dreams) has more than flourished: It even outperformed perhaps the hottest tech outfit around. and solar power equipment." he said.gasgoo. speaking through a translator. the Chinese maker of cars. in addition to creating a world-leading industry that will produce jobs and exports. Buffett asked how BYD would sustain its lead. The partnership with Berkshire Hathaway will give BYD a huge amount of clout in the USA and around the world: For the first time. Link: [money. Apple and Tencent Holdings (No. a more than four-to-one ratio on a per-GDP basis.." Wang replied.com] "How did BYD get so far ahead?" Warren Buffett asked Wang.

"Like California. we do 95% of the work internally. His engineers investigate a wide array of technologies. more sustainable future with their automobiles and renewable energy products while creating jobs and saving consumers money.autoblog. [www. and research and development for its automobiles and energy products. I welcome BYD with open arms and look forward to growing California's relationship with China to mutually benefit the environment and economy. "If we put our staff in Japan or the U. BYD's new operations are expected to add several hundred jobs to the LA's employment rolls. Link: [www. Link: [news. This puts more processes under our control and allows us to get benefits in terms of both cost and quality. seatbelts." Wang says.S. BYD manufactures nearly all its cars by itself . meaning that it wants to control electricity generation.uk] BYD s cars and solar panels are made with complete vertical integration:[/b] Everything in the cars is made and developed by BYD except for the tires and windshield This "human resource advantage" is "the most important part" of BYD's strategy.building hybrid and fully electric cars here." BYD's Los Angeles headquarters will be responsible for sales. and electronics.com] Expanding globally and opened headquarters in the USA.co. lamps.xinhuanet.com] BYD insiders revealed to Autocar that the E6 was part of the company's ambitious plans to be a 'total provider of power' in China.not just the engines and body but air conditioning. Schwarzenegger's office said in a statement. Our goal is the vertical integration of the whole supply chain. airbags. "It is difficult for others to compete. battery manufacture and the vehicles to use them. Harvard Case Study The Number of automobiles per capita in China is a fraction of the USA s. which include solar panels.com] Wang observed. Even for the design of tooling and molds required to make components.cnn." Link: [money..com] . we could not afford to do anything like this. Motor Vehicles per 1000 people: USA: 764 China: 30 Link: [www. marketing. Unlike most automakers.autocar. They are leading China and the rest of the world into a cleaner. LED lighting systems and home and grid level energy storage units through BYD's unique iron-phosphate batteries. Wang says. from automobile air-conditioning systems that can run on batteries to the design of solar-powered streetlights.nationmaster. BYD is a company of firsts.

" he told reporters at an auto forum in Shanghai yesterday without providing details.shanghaidaily.S.5 billion) investment to help car makers upgrade technologies. under a proposal expected to come before the Board of Harbor Commissioners this summer. Charlie Munger remarked that one candidate who he is particular close with was up 200% in 2009 with 0 leverage. land and low cost resources from the Chinese government "The cooperation could involve the establishment of industrial standard for electric cars as well as joint investment and production. including SAIC Motor Corp.com] Electric vehicles may get discount at harbor: The Port of Los Angeles may become the first port to offer reduced tariffs for zero-emission vehicles imported into the United States. [www.MidAmerican Chairman David Sokol. said MidAmerican is ready to assist BYD's foray into the U." MidAmerican also might invest in BYD's new initiatives in the U. South Africa." Mayor Antonio Villaraigosa said." [www. auto market in "any way we could be helpful. Australia. which include financial subsidies as well as 10 billion yuan (US$1. announced plans to move the company's North American headquarters to Los Angeles.wsj. South America BYD has backing from the Chinese Government: BYD is receiving subsidies. At one point during the Q&A.S. have poured a huge amount of funds into investment and offered various new models of green cars to meet demand. Several car makers. Link: [online.A / BRK.com] 5. The proposal was introduced last week. The reduced rates could go into effect by September. could involve solar panels and battery technology for power utilities. in addition to automobiles. "By pursuing 21st century clean technology enterprises. Plans call for offering a 15 percent discount on the wharfage rate for battery electric vehicles passing through the port. Chang'an Auto Group and BYD Auto Co Ltd. How did Buffett Find BYD: This past weekend was the Berkshire Hathaway (NYSE:BRK. when Chinese manufacturer BYD Auto Co. "BYD is a truly visionary company and the zero-emission tariff our port will offer is another great example of our strong desire to work with and attract global alternative energy companies to Los Angeles.com] BYD has recently announced plans to distribute cars in the USA.dailybreeze. both economically and environmentally. the California Ports Authority and the Los Angeles City Council..B) annual shareholder meeting. pending final approval by the harbor commission. who was also interviewed in Xian. Germany and all over Europe. Ghana. China is aggressively pushing forward a plan to speed up the development of new energy vehicles. Some people . we are building a foundation for our future. which. a questioner asked Warren Buffett about the status of Berkshire s CIO candidates.

separation from his family (his parents were forced into labor camps) and a devastating earthquake.com] Mr. but I know he is a huge believer in taking concentrated.think that the person Munger is referring to is Li Lu. Mr.gurufocus. a fund manager who turned Munger and Buffett onto BYD. While other Wall Street hotshots his age may have endured the trauma of not getting into the business schools or investment banks of their choice. he was one of the most wanted dissidents in China. Link: [streetcapitalist. Li has survived poverty. Lu personally owns at least 2% of BYD. he lives in one of those bland modern towers on the East Side. high conviction positions. If that is the case here. Li is 32 years old. I don t know anything about his investments beyond that one position.com] Alex Bossert Alex Bossert's Thoughts on Value Investing . When he escaped to America after hundreds of his fellow protesters were killed in Beijing. BYD s spectacular results must have contributed a lot to his returns for 2009 which may make a 200% for the year possible. Link: [www. which rose 400% in 2009. He wears Armani suits that he buys at a factory outlet.