China's BYD Selects Los Angeles as Automaker's North American Headquarters

By Scott Doggett April 30, 2010

BYD-e6-at-2010-Detroit-Auto-Show.jpgBy John O'Dell and Scott Doggett

Los Angeles Mayor Antonio Villaraigosa, California Governor Arnold Schwarzenegger and BYD Chairman Chuanfu Wang stood on the steps of Los Angeles' City Hall this morning and announced that BYD Auto, China's fastest-growing automobile manufacturer, will establish its North American headquarters in downtown L.A.

BYD, which stands for Build Your Dreams, is one of the first carmakers to come out with an electric-drive vehicle in recent years, introducing the F3DM dual-mode electric vehicle to the world in December 2008. BYD began offering the vehicle, the world's first mass-produced plug-in gas-electric hybrid, to the public in China this week.

Soon, the company will officially launch the e6, a battery-electric vehicle with a claimed range over 200 miles per charge.

"Installing a U.S. headquarters in Los Angeles well prepares us for distribution of our product throughout the United States and sets the stage for release of our all-electric crossover vehicle, the e6," Wang said.

BYD, which is also known for solar manufacturing, consumer electronics and environmentally-friendly energy storage chemistries, has the backing of respected billionaire investor Warren Buffett. His MidAmerican Energy Holdings Co., the utility division of his Omaha, Nebraska-based flagship Berkshire Hathaway, has a 9.9 percent stake in the Hong Kong-traded company.

Probably not coincidentally, the BYD line of vehicles is being shown starting today at Berkshire Hathaway's annual shareholders meeting to a worldwide audience of more than 10,000 shareholders.

Detroit Dreamin'?

Today's announcement regarding BYD's site of its North American headquarters is an important step in attracting green businesses to the City of Angels. It comes less than a month after Santa Monica, Calif., EV-maker Coda Automotive disclosed that it was in talks with the city about building a battery assembly facility on a 20-acre site within 5 miles of L.A.'s financial district.

And, the development comes only two weeks after BYD announced a partnership with KB Homes to build low-energy homes in the California city of Lancaster that would be equipped with solar panels and batteries. Wang said the company aims to cut the cost of solar panels by 10 percent a year to make them more affordable to the general public.

BYD spokesmen said the company expects to hire 150 people throughout 2010 and 2011 as it rolls out its fleet of vehicles to California markets first before expanding throughout the country. Eventually, if it continues to expand, BYD could employ up to 2,000 people in Los Angeles, Wang said. That expansion would likely include at least the partial assembly of vehicles.

"California's market-friendly energy and environmental policies are playing a vital role not only in making California more energy secure but also in bringing companies like BYD to our state," Schwarzenegger said.

"Like California, BYD is a company of firsts. They are leading China and the rest of the world into a cleaner, more sustainable future with their automobiles and renewable energy products while creating jobs and saving consumers money. I welcome BYD with open arms and look forward to growing California's relationship with China to mutually benefit the environment and economy," he said.

The headquarters for BYD will be located near the city's financial district on the site of a former automobile dealership. BYD has signed a long-term lease agreement and expects to take occupancy in the fourth quarter of this year.BYD-F3DM.jpg

Multiple Uses

BYD's green-energy technologies will be on display at its new headquarters and will feature its vehicles, solar panels, energy storage systems and advanced LED lighting products, Wang said. The building will also house BYD's research and development arm that will develop current versions of their popular vehicles selling in China for the U.S. consumer market.

Left, the F3DM plug-in hybrid.

BYD Senior Vice President Stella Li said Villaraigosa and First Deputy Mayor Beutner "personally made Los Angeles stand out among any other city as the optimal home for BYD North America, and I expect that other companies in China and throughout the world will come to the same conclusion that this city is the best place to build a green business."

This year, BusinessWeek ranked BYD as the eighth most innovative company in the world and Fast Company ranked it as the 16th most innovative company globally. It was the only automaker to make Fast Company's top-50 list.

BYD sold nearly 450,000 vehicles in 2009, up 170 percent from a year earlier. This year, the company expects to reach 700,000 in vehicle sales. BYD employs 130,000 worldwide in offices including the Netherlands, Denmark, Hungary, Romania, Japan, South Korea, India, Taiwan and Hong Kong.

BYD's decision to set up shop in the U.S. comes as no surprise. The company said long ago that it wanted to have a presence here.

The operation should provide a boost to the Southern California economy and the scores of auto parts makers - most of them small businesses - that call the region home.

Wake-up Call

It also should serve as yet another wake-up call for U.S. automakers. China expects to be the world leader in EV production and is going to aggressively market its electric-drive vehicles around the globe.

Companies without competitive products will suffer, badly, as demand for alternatives to internal-combustion-engine vehicles continues growing.

Chinese automakers like BYD know what Japan's automakers achieved in the past 40 years - largely with growth in North America at the expense of the domestic car companies - and there's no doubt that companies such as BYD want to be the Toyotas and Hondas of the 21st Century.

China's made no bones about the fact that they want to be number one in the EV world and you can't do that without pushing product into the U.S. market.

BYD is the first but by no means will be the last Chinese automaker to come to the U.S. The fact that they are backed by Buffett obviously gives them a leg up in approaching the U.S. market and building relatively rapid acceptance in the U.S.

The big challenge right now will be in producing cars that can meet the quality demands of the U.S. market at price points U.S. consumers will welcome.

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