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China’s BYD Promises to Take Over the US Car Market.
For years now, I have been chronicling in exacting detail my quest to buy an all-electric Nissan Leaf automobile as the ultimate hedge against rising oil prices (click here for “Getting Something for Nothing” at http://www.madhedgefundtrader.com/february-8-2011-3.html ). The crude price spike arrived right on schedule, with gasoline prices topping $4/gallon in San Francisco last week. My local Nissan dealer assures me that the car I ordered a year ago, along with my substantial $75 deposit, will be delivered in May.
Then I received a scratchy, badly echoing telephone call from the Southern Chinese manufacturing mega city of Shensen. My friend had just driven BYD’s (Build Your Dreams) (BYDDF) new E6 all-electric sedan, and he could not sing its praises loudly enough (click here for their website at http://www.byd.com/company.php ). The car has a 200 mile range, versus the 100 miles for the Leaf. That is made possible by a 60 KwH battery, compared to the 24 KwH battery in the Leaf. Yet the E6 will be offered in the US for $40,000, close to the non-subsidized price for Nissan’s new vehicle.
The great barrier to competitiveness for electric cars has always been the cost of the batteries, which now run at $1,000/KwH. So $24,000 of the cost of the $38,000 fully loaded Nissan Leaf is just to cover the 600 pound lithium ion battery. However, by executing a globally integrated manufacturing model, BYD has been able to lower its costs to $500/KwH. This involves making its own chips, directly owning lithium mines, and operating in low wage countries like China and Eastern Europe. I guess this is what happens when a battery company builds a new car from the ground up, instead of a traditional car manufacturer.
BYD plans to launch mass marketing of the roomy, five passenger E6 in the US by the end of 2012. Safety specifications have already been satisfactorily upgraded to meet rigorous American standards. BYD is quietly setting up its own US dealer network. The cars will initially be offered to fleet users, and then the consumer market. It also will roll out a range of all-electric buses, which no one is currently producing here. The company’s goals are anything but modest. It plans to become the largest car maker in China by 2015, and the largest in the world by 2020, surpassing the behemoth Toyota Motors (TM).
I rode Warren Buffett’s coattails into this stock in 2008, taking a position after he bought 10% of the company for $230 million (click here for the piece at http://www.madhedgefundtrader.com/june_26__2009.html ). Buffett’s partner, Charlie Munger, describes CEO Wang Chuan-Fu as a combination of General Electric’s (GE) legendary manager, Jack Welch, and inventor Thomas Edison. After that, the stock rose tenfold.
It has since given up half the gains. The stock has suffered from the general malaise towards Chinese stocks since the government began its war against inflation a year ago, raising interest rates and tightening bank reserve requirements no less than eight times. Investors are also concerned that BYD’s rumored secondary share issue, needed to finance its massive expansion plans, could weigh heavily on the stock.
Shares with such enormous earnings potential at this price look like a bargain to me. If I had to name one company that could appreciate 1,000% in the future, this is it. But I don’t know when. So this would make it a candidate for burying it in a long term portfolio, rather than a short term trading vehicle.
And what of my Nissan Leaf? What happens to its value if BYD delivers on the E6? How about knocking it down by more than half? I’m starting to wonder if instead of getting the lead on cutting edge technology of the century, I got the booby prize.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Idiot.
Lol!!
I AM CHUMBADUMBA!
My 1963 Comet has gotten 22 mpg for 48 years now. Talk about paying your own way.
That's around the world in....17500 days! (approx.) What a Haley's Comet that is.
I want a dual fuel Hummer that runs on coal dust (for driving to Greenpeace meetings) and whale oil (a biofuel, for driving to Sierra Club meetings).
where are the usual links.....
Tesla is working on a battery that will provide an equal range to a much more reliable car.
Two things:
First, why would anyone trust ANY Chinese company after the shenanigans at CAGC and others?
Second, why subsidize Chinese slave labor? I'd rather ride a bicycle.
New Jersey think tank examines flammability of lithium batteries.
http://www.youtube.com/watch?v=wjmnVOjBjMk&feature=related
You can be sure high quality Chinese lithium car will not catch on fire because we tested this model using self immollating budhists prior to shipping.
... whose diet constists purely of melemine!
Flash forward to 2013: Madhedgefundtrader pulls up to meet a potential new client in his yellow Commie electric E6 wearing a flashy new designer suit from Target. Bwhahahahahahaha!
I told you our standard of living is
going straight to hell....
With color coordinated purple shirt and tie from the Justin Bieber Collection.....
bwahahahahahahahaha...
Their corporate website is not compatible with Google Chrome...
BYDDF? BuyYonDipDumbFuck?
Madhedgefundtrader:
They might promise to do that, but they'll do worse than the Yugo.
China is not known for any quality manufacturing, nor for their ability to improve to Japan's (or US's) levels. You might as well take a barely functioning Yugo GV and turn it into a hybrid. You'll get the same lack of quality.
Obviously you either have a gay lover at the company or you are long its stock! Buying a Chinese shit box would be the absolute height of idiocy. Have you ever seen an ATV or dirt bike made in China? What a pile of crap those things are. Renewable energy needs to be developed, but not by these ChiComm bastages.
We don't need any of their shitty cars. Take a good look at their safety records for a moment. I am their cars of WMD.
Well, I'd buy one but I calculated the amplifier needed to meet out the sound of a V8 would require 30Amp/hours.
what there is a teabagger in that stock?
I don't know what it is, blindness or wishful thinking or both. Americans are wedded/welded to the easy solutions: the 'easy side of easy'.
Nobody can give up something! That's unAmerican: it stands in the way of the idiotic progress narrative.
Just punch a dirty fucking hippie in the face, plug in a cheap China battery and everything will be alright.
Pay attention, children: it's not the power supply to the carz themselves, IT IS THE TOTAL ENERGY COST OF THE ENTIRE AUTO- RELATED ECONOMY!
Autos and the materials they are made from, auto factories and materials, highways and highway materials, housing and housing materials, destinations and destination materials, fuel and fuel production costs, finance and finance 'profits' (finance's power of taxation), government and government infrastructure costs.
Add to this the energy costs of labor and the food required to support labor.
Every single segment of 'Automania' is leaking money, not earning a profit and stealing from the other segments. THIS IS WHY WE HAVE A FINANCE CRISIS, NOT BECAUSE WARREN BUFFETT IS OLD!
For example: state and local governments are broke. Why? Because of the large and expanding costs of providing services over massively increasing geographic areas without any corresponding increase in revenue forom these areas. Government costs cannot be lightened with some Chinese- made batteries! Good fucking grief!
Neither can any of the other costs. The WHOLE SHEBANG is bankrupt, not the just the gas tanks in a handful of carz.
The TOTAL SYSTEM COSTS of an auto- first economy is bankrupting EVERYTHING ELSE. PERIOD.
This is simpler than ECON 101, it is arithmatic 101.
RIGHT NOW PEOPLE HAVE A CHOICE, THEY CAN DRIVE OR THEY CAN EAT/HAVE A JOB.
/rant off/
Thank you Steve. And for those of you who can appreciate reality read Steve's blog:
http://economic-undertow.blogspot.com/
Print and circulate!
The Governator drove a GM H2H Hydrogen Hummer.
He, Lutz and Wagner retired while GM debt and shareholders went bust as GM became Government Union Motors.
Meanwhile, you could lose a bumper, car or life from gaping Interstate Highway potholes...
Anybody who drives a GM car, must be destined to end up on Henry Ford's assembly line. He can have a car of any colour...provided it's black... That's in essence American capitalism for you...as it's panned out over the last century...Now it's time to turn that page...
You've just said it so clearly : the premises of a deconstructive, post industrial, qualitatively sustainable, green economy; where king CAR is replaced by public transport and locally fed eco-systems economies. Brave new world. Which must first destroy or let implode under its own fallacious , greedy, paranoid, avaricious, current hyper consumer, Oligarchic, inflation crazy, kleptocratic US economy. Let it implode and lets build on its ruins the new model. May the heavens hear the cry of the new revolutionaries...
Will your grass hut have a guest bedroom?
Why do you care?
Clearly, way too many people are unable to differentiate the message from the messenger, confusing what will be with what is wanted: yeah, if you're running on hopium (and against human history) they click your heels together.
Since the Bstds are not selling something they have tons of, I would rather SLIT my wrists than buy a Chinese anything.
Fk em.
The great barrier to competitiveness for electric cars has always been the cost of the batteries, which now run at $1,000/KwH. .... BYD has been able to lower its costs to $500/KwH.
Only one problem with this.
Car batteries typically have 1-2 KWH contents. When did car batteries shoot to $500 a shot?
Try putting 500 conventional car (lead/acid) batteries in a car. You have to use batteries that have a power/weight ratio that is tolerable.
That said, I believe that the electric car is a good idea, but not until battery technology makes a quantum leap or even better, some other storage technology, like capacitors, are perfected.
I like:
Chevy Cruze
Honda Fit
Land Rover Range Rover Supercharged
GIANT TCR Advanced SL
ultimate green solution certainly isn't an electric vehicle
i suggest a horse, with optional buggy
biodegradable
requires no mining except for metal for fasteners on buggy, and metal outer rims
go fast version available with two horses
impress your friends and stop wave of smugness enjoyed by stupid ev owners
I love the idea, but good luck finding a parking place. Plus, I hope your state allows horses access to public roads, much less rules pertaining to the practice. If you are in NY you are GTG, and its no wonder..
never doubt Archimedes's lever. It's those who miss use it who are to blame. But that's human nature...no getting away from it.
and available under 10,000 US dollars
We are five years away from a fast recharge electric grid network on regional (not national) basis plus slow battery recharge overnight from standard 220V sockets at home in Europe.
I can smell the coal burning.
This will make GE (grid maker -network owner - and Congress "booster") giddy.
Legions of Millenials will go to sleep guilt free charging their iPads, Leaf's, Volt's, with visions of "green" dancing in their head.
A rotary dial phone used 12 volts and would last 30, 40, or more years.
An electronic typewriter used ~40 watts and would last over 20 years or more with a little care and maintenance.
The current cell phone and computer lasts 3 years, maybe, use 65-110 watts, are loaded with toxic metals and chemicals to produce and then they go in the landfill.
We are beyond delusional to think we are green.
I'm so glad we're "sustainable" now...
Rotary dial phones used "12 volts"? First, volts are a measure of electric potential, not work or energy. "My car used 60 feet" is about as intelligent and meaningful a statement.
Cell phones that use 65 watts? Are you insane? Have you ever held a 40-watt bulb in your hand after it's been turned on for, say, five minutes? Have you ever pressed one against your head?
Judging from your arguments, the answer to the latter is "yes".
I think it is 12v D.C. when ringing or talking.
The 65 watts or more was a computer - cell phone chargers and phones vary but more like .55 milliamps or 6 volts.
You are missing the point or not addressing my point.
We are much less "green" than we used to be.
But how many years have you been five years away?
This is new shit, like the Ipad 2 following up on Ipad 1 within months, only to have Ipad 3 hot on print...That's how hot is the technology spiral in electrical batteries...mark my Groucho Marx word!
Didn't you read what he wrote" Warren "eating at the unlimited, govt. financed" Buffet is involved so Obama will make sure you buy these cars by providing subsidies, tax breaks, mandates, etc. at the Federal/State/Local/Municipality level.
It's amazing we have solved the battery problem for 2,000lb vehicles but techies from throughout the world were constantly scrambling to every outlet in Austin to charge their smartphones during South by Southwest.
Buffett should be considered a war criminal. That is a war on any non-union taxpayer.
Warren Buffet is Rhett Butler in ..."Gone with the outsourcing wind"...He's pure american bull. He is untouchable as icon.
Peak lithium, anybody? Not to mention the environmental disaster of mining the minerals required for hybrid batteries. Not to mention the conventional oil used in making tires, plastic, vinyl, paint, and other materials used in hybrids, as well as the shipping process for all points of production.
Hybrids and EVs = Solution Fail.
So you will be charging your Leaf using electricity generated from..(?)
How "green" is buying a car made of plastic and batteries filled with toxic metals and chemicals?
Is electricity really that cheap?
Wouldn't small diesel engines that generate electricity and serve as a backup drive motor be more practical?
Oh wait, we are talking about appearances, style, and making $$$ not being practical. Never-mind.
We've all heard about the mythical 90 mpg water carbeurator Ford bought and buried, right?
Well, it seems Ford so far refused to bring its 62/75 mpg Ford Fiesta Diesel to America while entrepreneurs were doing such...
http://jalopnik.com/#!397712/diesel-ford-fiesta-smokes-prius-gets-625-mpg
http://www.ehow.com/print/how_7319733_import-ford-fiesta-diesel.html
Phhht! How about +100MPG in 1986!!!
http://www.100mpgplus.com/
Jayzus.
You need that bullet hole. Put aerodynamic low-weight plastic around a motorcycle drivetrain in a spaceframe, and you will easily achieve 100mpg a quarter of a century ago.
Comply with the Nanny-state laws today, and you have trebled the weight of your 100mpg shit-box. Otherwise, it is still as unsafe as ever to crash.
I'm happy as can be to pay US$1.50 per litre, for 18 litres/100 km consumption - really, petrol is the cheapest part of running a car. if some prick runs into me, I and my family have a much greater chance of surviving, or not ending up in a wheel-chair.
Call it insurance. Call it looking after my family. I ride a deadly treadly. I have ridden a motorcycle. I would not put my entire family on either. I do put them into the car.
Petrol prices are inconsequential. We in Australia pay US$1.50 per litre, which at 3.7854 per US gallon equates to US$5.67 per US gallon. This is inconsequential for my gas-guzzling SUV.
You should really construct a risk/impact probability analysis of high-mileage personal transportation, and draw your own conclusions.
You may well be surprised......
LOL. $40,000 for a Chinese car? What's the market? Bankers? Thanks for useful information, it's on par with your other stuff.
With the coming economic crash, I wish them luck selling a $40,000 car.