Last week we wrote about the latest hurdles facing Chinese battery firm turned carmaker BYD. With multiple court battles, poor sales figures and still very few all-electric cars on the streets of China, we’ve seen the automaker revise its sales predictions and even delay a floating on the stock market.
But as U.S. businessman Warren Buffet visits China this week with fellow philanthropist Bill Gates to encourage fellow billionaires in China to be more altruistic with their wealth, rumors are circulating that it may be Buffet’s last visit as a 10% shareholder in BYD.
While BYD’s public relations department are fiercely denying the fact, a Reuters report on Friday hinted that Buffet would use his visit to give the automaker a serious wake-up call.
BYD e6 concept
In the intervening time, BYD has worked hard to increase its market share in China with over 448,400 cars being sold in 2009. However, most of these sales were generated by its F3 Sedan, a 1.5 liter gasoline car.
BYD has not been so successful with its plug in vehicles.
Enter the BYD e6 all-electric sedan. Announced in 2009, the company claimed that the e6 would be available by the fall of 2010 in the U.S. for just over $40,000.
Specifications were extremely impressive too. BYD initially claimed the e6 would have a range of 249 miles per charge, just one mile shorter than the range of the 2010 Tesla Roaster. A 0-60 mph time of under 8 seconds and a top speed of 100 mph made many take note but the claimed recharge time of 0-50% capacity in just 10 minutes really grabbed the headlines.
Fast-forward a year, and the impressive claims have been revised several times.
BYD’s own test-fleet of 40 vehicles, now operating as taxis in Shenzhen, China have shown that the initial claims were widely optimistic. 0-60 mph time is nearer 14 seconds, range is now predicted at under 180 miles, and top speed nearer 85 mph than 100 mph.
BYD e6 electric crossover, Electric Avenue, 2010 Detroit Auto Show
While no-one has confirmed Buffet is planning to sell his shares we think it may be time for the businessman to move on.
Since his initial $230 million investment, Buffet has seen his stake in the company peak at a massive $2.5 billion. After several months of poor sales reports, abysmal sales of its F3DM plug-in hybrid and increasingly conservative performance figures for the e6, Buffet’s share is now worth just $1.6 billion.
With that kind of share price drop, we think Buffet is contemplating an exit strategy while the going is good. After all, $1.37 billion is an impressive profit by anyone’s standards.