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Build Your Dream, or Disaster? Wikileaks, Buffet & Electric Car Woes

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BYD, at Detroit auto show

BYD, at Detroit auto show

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An open policy of reverse engineering, doors that fall off and shady sales practices are hardly the things you’d expect of an automaker trying to make it into the U.S. market.

But as newly surfaced diplomatic cables published on Internet whistle-blowing site WikiLeaks show, the battery firm turned electric vehicle manufacturer backed by multi billionaire Warren Buffet could be guilty of just these transgressions and more.

Copycats?

According to Reuters, which was given access to the leaked documents through a third party, the U.S. government was sent diplomatic cables detailing BYD’s lack of respect for International patent law. One published excerpt, allegedly written by Guanzhou Consul-General Brian Goldbeck reads as follows:

“While BYD has certainly achieved a measure of success based on a business approach of copying and then modifying car designs just enough to convince Chinese courts that the company has not infringed on patents, it is far less certain that foreign courts will be as  sympathetic”

BYD e6 electric crossover, Electric Avenue, 2010 Detroit Auto Show

BYD e6 electric crossover, Electric Avenue, 2010 Detroit Auto Show

Enlarge Photo

It's hardly news to us. Early last year our own John Voelcker uncovered an article detailing just how open the firm was about its magpie-like tendencies.

It gets worse.

In Reuters’ own investigation, it cites claims from automotive parts companies against BYD in which low volume or sample orders are made for parts, only to be cancelled as soon as BYD has reverse-engineered the part to produce themselves.

Such reverse engineered parts, it is claimed, lack the refinement and quality of the original.

In some circumstances, even safety.

Unsafe?

More worryingly, cables leaked to WikiLeaks detail claims made by BYD about its five-star safety rating for its F0 car, awarded by a Chinese consumer association.  But yet the association have no recollection or record of testing BYD’s car or awarding it the maximum safety award. (For good measure, the F0 is a carbon copy of a car made by Toyota and sold in Europe as the Aygo.)

What do independent safety consultants think? One, wishing to remain anonymous, told Reuters that if doors on BYD’s latest vehicles were closed too hard they may even fall off.

Hardly ready for primetime then?

In the U.S, tougher safety requirements should prevent such malpractices from occurring. But then neither BYD’s e6 all electric car or F3DM plug-in hybrid have been submitted for official National Traffic Safety Administration (NHTSA) tests yet.

Last year, BYD publicly announced its e6 electric car was U.S. safety ready, claiming it had passed U.S. safety tests. Of course, the firm failed to disclose which tests were being carried out, or which safety body carried the tests out.  Moreover, we’ve not been able to find out either.

Misdirection?

byd auto f3dm plug in hybrid 03

byd auto f3dm plug in hybrid 03

Enlarge Photo

But the strangest practice outlined by the investigation is the reported badge grafting carried out by unscrupulous BYD franchised dealers.

As part of an attempt to raise profit, it is alleged that dealers selling BYD’s vehicles re-badge BYD clones of more prestigious cars, convincing the buyer that they are buying a genuine car European or Japanese car  and not a cheap Chinese copy.

An Uncomfortable Future

If any of the allegations outlined by Reuters are true, BYD’s future in the U.S. could appear very uncertain.

With no official safety results, only a test fleet of 10 cars in the U.S. and initial test-drives illustrating something of an exaggeration in the BYD F3DM’s range and performance, we’re not sure the all-electric e6 will even get past road worthiness tests.

We’d love to think BYD has made its own car and battery pack from scratch, but given the growing evidence against it at the moment we have to assume BYD is in for a very rough few months or even years.

IS the BYD e6 even coming to the U.S.? Apparently it is, but we’d advise you don’t hold your breath waiting for it yet.

[Reuters]

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Comments (45)
  1. There's a video and review of BYD F3DM here:
    http://www.plugincars.com/video-and-more-photos-byd-f3dm-drive-review-106859.html
    Evidently, the reviewer liked it.
     
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  2. Why is this shocking (pun intended). This is the status quo for Chinese companies. They cannot innovate so they copy. This is why American cars are very popular in China. I would never buy a car made in China, hell-to-the-no. US will be the #1 manufacture of batteries and cars thanks to Steven Chu and Obama. Thank you!
     
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  3. I support Chinese cars,especially Electric cars.
     
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  4. Chinese labours work hard but earn little money, but the products made in China are exported to rich counties in the same low price. Before the World War II, China was famous for her 4 inventions, printing, compass, paper-making and fire weapons.
     
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  5. It seems as if you still lives in the 1950’s. McCarthyism roots deep in your brain.
    Who knows if BYD is quietly getting patents and IPRs in China and the US? I will not be surprised if BYD sell a lot of their cars in the States, like the Apple stuff.
    BTW, Apple outsource their batteries for iPod, iPhone and iPad from BYD. Surprised?
     
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  6. BYD is no ordinary company
     
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  7. Electric cars would make a big contribution to our world,no matter which country it is.Warren Buffett is a great investor,and I like to support him!and support the electric cars that he has chosen!
     
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  8. well ,I mean ,it's silly to blame Chinese manufactures strictly while we can hardly survive without them . those ALL-electric cars traveling over Pacific ocean aways have to adjust mass of judgement ,but they comprised our daily life enventually . er ....it seems weird ,rihgt ?
     
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  9. Berkshire Hathaway is not foolish…They made the decision to invest in BYD due to BYD’s second-to-none battery technology.
     
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  10. As far as I’m concerned, BYD is a top high-tech Chinese company which really differs with other companies in China. It is seen as a miracle, coz it created several car sales champions in China within just 3-4 years since it first started to manufacture automobiles.
     
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  11. Lots of famous people speak highly of BYD’s new energy car…Are they all be cheated by BYD? No way…There must be some real advantages of their cars.
     
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  12. Read the article of Bradly Berman, BYD F3DM Chinese Plug-in Hybrid Is the Real Deal you’ll get to know a real BYD Electric Vehicle.
     
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  13. BYD Pure electric car with realistic home charging facilities is really amazing..Don’t you think so?
     
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  14. Have you ever had a test drive of BYD EV? Never judge a book by its cover…
     
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  15. So many Americans like Chinese food and Chinese cheap goods…Even lots of my friends go to China for shopping…Don’t understand why someone claim that they don’t like Chinese products… No China, no cheap things…But being cheap doesn’t mean being bad…
     
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  16. Wow! Looking at the previous comments it's clear that the BYD astroturfing squad has been busy! Even popular support for this company is fake....But who are they trying to fool? Clearly not the financial markets: look at the steady decline of BYD stock value here: http://www.reuters.com/finance/stocks/chart?symbol=1211.HK (or click my screenname).If Warren Buffett really still is in this dud like he claims I really wonder if he lost his touch...
     
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  17. I don’t care which country my car comes from. I just want a low-price but high-quality EV!
     
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  18. We should support company with green philosophy
     
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  19. I trust Warren Buffett.
     
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  20. Warren might be wrong, but Bill Gates can’t be wrong!
     
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  21. byd is good
     
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  22. Do you remember Who Killed American EV? Watch this movie, buy a Chinese one.
     
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  23. Warren might be wrong, but Bill Gates can’t be wrong!
     
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  24. BYD new energy technology
     
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  25. I support these companies in China. Maybe they have not developed so fast.But they still have the potential to build their own brands and will do it better,I believe!
     
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  26. Are you silly? Buying a Chinese car, rather than American one, means transfer the pollution to China.
     
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  27. I sense about 1/4 of the posts out of 25 are probably from the "5 Mao Army". Those Chinese netizens who earn 0.5 RMB/comment based on supporting any viewpoint the payer directs. Hence, "Kevin Lee" doesn't really have fat fingers, he just earned 1.5 RMB. I have 1st hand insights as someone who worked inside the deepest darkest (not highest) layers of a Chinese SOE car company for the last 4 yrs. The biggest problem the Chinese have with Li-Ion batteries is that their QC processes cannot make 300+ cells similar enough to each other so that their resistance are the same. If just 1 cell has higher resistance outside of tolerance, it will get hotter. The hotter it gets, the more resistance, and death comes quickly, as surrounding cells also get damaged, and build higher resistance, like an infection. No way to monitor each cell, so by the time you notice the 300+ pack is not performing, it's too late. Only inlet and outlet temp sensors for the cooling system are used.
    The people here commenting that consumer electronics use BYD batteries don't understand that 10 yr lifecycle for a car is not the same 3 yr dry, mostly comfortable lifecycle for a phone. I have 1st hand dealings with BYD and their victims. Post later.
     
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  28. Great article Niki! Too bad the BYD astroturfers are saturating the comment section in a desperate attempt to get the cat back in the bag. As transparent as all of BYD's fraud has been for the past two years I have to say. I reckon a quick IP check will reveal that 90% of the posts above emanate from Shenzhen, PRC?
     
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  29. This site must do something about multiple, meaningless posts from the same people. Here is the full article from Reuters: http://www.reuters.com/article/2011/03/09/us-wiki-buffett-byd-idUSTRE72848X20110309
    I know for sure a famous US supplier sent BYD a demo set of motors and HV electronics to test. That was the last they heard back from BYD. My interpretation that their bathtub Li-Ion concoction is somehow superior technology is that they were expecting to steal from A123, but A123 is selling to SAIC instead. BYD can copy the chemistry, but still won't have the technology to make the cells. Cooking pizza from a jpg. All they thought they needed was a red sauce. The NYT review of the F3 "shaking molars" in the article shows exactly what the Chinese cannot do, software calibration. It requires development and creativity. Can't just copy the SW cuz it won't work in another car.
     
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  30. Funny, same people making exact comments with no meaning over at the Reuter's article after I posted the url above. An no, they don't have to be geographically anywhere near Shenzen, nor do they need to believe what they say. It's just 10 comments for a bowl of beef noodles to them. Oh inflation, just remembered, its like 12 comments now for a bowl.
     
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  31. @WSR: You're right about the problems BYD has with it's battery technology (inconsistent quality). In fact the Wallstreet Journal questioned Buffett's battery bet for that reason over a year ago (click my screenname for the article).WSJ speculated at the time that Buffett didn't have car batteries in mind but storage capacity for his renewable energy business to solve the intermittency problem. Buffett later denied that, but if it seems if BYD fails to get (let's face it:steal) the right battery technology soon he stands to loose his shirt.
     
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  32. Nikki's article is based on nothing but pure rumors. BYD is a private company. It expanded very rapidly in the past 10 years. You can't sell cars in China without passing the government required crash test. The legal speed in China is lower (40 kph instead of 40 mph) on regular streets. Doors on BYD cars don't fall off no matter how hard you slam them. This is a verified fact. Get your facts straight Nikki, and stop being part of the rumor mill.
     
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  33. @Auto, This article is summarized from the original Reuter's special report. It is not based on rumors, but rather on hands on evaluations by knowledgeable people @IHS and NYT test drives. I know for sure most regulations in China are not passed, but bought with bags of RMB, so your statement is absolutely not true. Cars that have NCAP 64 safety ratings zip apart either from cheap steel or overcooked spotwelds. This is common knowledge to young people in China. What are your assertions based on? Mine are based on direct involvement in the subject being discussed. I was there in meetings where these type decisions were made. People drive very dangerously in China and do not obey speed limits. We met with BYD, but didn't believe their crazy claims because they defied physics.
     
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  34. So Buffet made a bad bet..it has to happen once in a while and I'm certain it's not the only.
     
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  35. The comments have been quite an education! I had no idea that the Chinese would rise to defend such a relatively obscure web article. Of course, most of the posts read like one of my SPAM email I regularly receive, so the comments are easy to locate. But it does show you what a communist regime is capable of doing to defend its pitiful manufacturing and employment practices. Thank you Chinese!
     
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  36. The comments have been quite an education! I had no idea that the Chinese would rise to defend such a relatively obscure web article. Of course, most of the posts read like one of my SPAM email I regularly receive, so the comments are easy to locate. But it does show you what a communist regime is capable of doing to defend its pitiful manufacturing and employment practices. Thank you Chinese!
     
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  37. No BYD, no way, no time. Come on Volt!
     
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  38. I've seen patently xenophobic articles before, but this one crosses the line. Dealers rebadging BYD's to fool the customers is pretty preposterous. As for "reverse engineering," such a process is entirely legal and done all the time. Requiring customers to pay an extra $500 so that the fenders are slightly diferent than Toyota's is absurd and unethical. And the claim that reverse engineering might prove unsafe is ridicuolus - reverse engineered parts are created based on a part that presumably works, and far more likely to be reliable than a newly designed part. And the knowledge that BYD has copied the style of several Toyota vehicles isn't any secret and doesn't require silly cloak and dagger nonsense from the easily-confused Wikileaks. Such a practice allows for more efficient design of the vehicle,something that should be praised, not criticized. And do you really believe that the design of any American car is not heavilly influenced by those of other automakers? Didn't you notice that the year after the Dodege minivan became a hit, all the others had a van? Why don't you call that reverse engineering? As for those "doors falling off" - get real - BYD sells tons on vehicles in China and does not have a reputation for the poor quality that you are claiming. Quit publishing unsubstantiated heresay, biased nonsense. When I think about shoddy workmanship, I'd say this article is a better example than anything BYD has put on the road.
     
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  39. Well Nikki, you certainly stirred up the trolls this time, LOL. What a fun experience to see it. You must be doing something right! Carry on.
     
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  40. Here's a good electric vehicle community with news and info: http://www.energyinyourlife.com/article.php?t=100000210
     
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  41. @WSR,
    Your assersion against BYD is based on nothing but lies. I have seen and driven the BYD F3DM & the E6 in person. Both are solid vehicles. The styling of F3 in general is nothing exciting, but both the F3DM and the E6 handled just fine. The power train of F3DM and E6 are not copies of any other company. They are truly unique BYD's own technologies. Show me what other plug-in cars out there are similar to the F3DM or E6?
     
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  42. To all the (Chinese)commentators defending BYD's criminal business practices here: keep in mind that BYD's strategy of cutting every conceivable corner only worked out for it in the short run. At this point it's problems are catching up with it in the form of lawsuits, collapsing demand because of poor quality and safety and rising cost because of BYD's opportunistic strategy of using cheap labour rather than automated production processes. It's stock value has plunged in the past 12 months and when consolidation sets in among China's 150 carmakers I don't expect BYD to be among the survivors.
     
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  43. Without being too boring, try to make a pizza from a picture. This is what BYD and other OEMs are trying to do. I'm probably the only one here who actually has been designing cars and HV products for 30 yrs. So, a little catch up is in order. The difference between "copying" vs. "benchmarking" is lost to the Chinese OEMs. You can copy the shape of a part, but without understanding, use the wrong materials, heat treatment, and not have the correct mfg tolerances. The parts will look the same, but not work the same. In 2006, the OEM I worked for thought the CAD designs they bought were going to run if they just made the parts. "Metal" is not any metal. Once, with a rubber part melting from oil, I asked the engineer what was the material, he said, "black rubber". Some rubbers are good for some oils, others will dissolve, but they look the same on CAD. See what I mean? Red sauce on pizza.
     
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  44. Now, assuming the readership here actually cares about the subject and not earning the next bowl of beef noodles at 0.5 rmb/comment: There is something very wrong about the idea of using HV batteries to supplement the AC grid. Whoever first brought that up in society probably doesn't know very much about the subject. Even a small PHEV battery @12kW-hr, good for 15km range in spring/autumn (no HVAC) costs 60k RMB. It's hard enough to make it last 10 yrs, 150k km target life. Which car owner would allow the grid to consume his battery life by allowing people to watch TV or cook with his battery? Nobody will help him replace the battery when it wears out. Does this strategy, to use parked cars' batteries to run office equipment, make any sense to y'all? Now, calm down, remove emotion, and stay technical and we'll all learn something.
     
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  45. There is something very wrong about the idea of using HV batteries to supplement the AC grid. Whoever first brought that up in society probably doesn't know very much about the subject. The Li-ion battery is a very expensive form of energy storage. Even a small PHEV battery @12kW-hr, good for 15km range in spring/autumn (no HVAC) costs 60k RMB. It's hard enough to make it last 10 yrs, 150k km target life. Which car owner would allow using up his battery life by allowing people to watch TV or cook with his battery? Nobody will help him replace the battery when it wears out. Does this strategy, to use parked cars' batteries to run office equipment, make any sense to y'all? Now, calm down, remove emotion, and stay technical and we'll all learn something.
     
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