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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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Q: What do MHFT and Supermoon have in common?
A: More than typical lunacy.
BYD Promises to take over the US car market like the 1948 Tucker, eh?
Many broken fatal promises from utopian Sino Soviet tyrannies litter history.
Animal Farm: Lie with a pig and catch their disease.
Not only are electric prices from overtaxed utilities rising as GE Mark I Fukushima TEPCO reactors fail and pollute the world, peak lithium supplies polluting and risky, the only fleets likely to purchase uneconomic $40,000 cars with a limited range of 200 miles, Nissan leafs or GM Volts, are profligate governments now out of money, or limousine liberal dreamers that leased the 50 mile GM Electric Car and then made Michael Moore style movies about mean oil companies and their automotive lackeys supplying demand.
Hint: Railroads and utilities still burn fossil fuels, solar and windpower still uneconomic and insignificant after billions of government tax credits and edicts destroying free markets.
When will dreamers realize central planning, whether by corporate monopoly or government force, does not work?
BYDDF targeting 1 from previous high of 11.25 in October 2009...
http://stockcharts.com/freecharts/gallery.html?s=byddf
http://www.greenpacks.org/2009/05/28/could-lithium-be-the-new-pollutant/
http://www.ewg.org/tap-water/chemical-contaminants?file=contaminant&cont...
http://www.youtube.com/watch?v=39K36Rw7LYc 9:06
http://en.wikipedia.org/wiki/Tucker:_The_Man_and_His_Dream
And since when is electricity free? The cost of upgrading the electric grids in this country to serve millions of motor vehicles would be astronomical by itself, all so we can burn fossil fuels in a plant, rather than directly, and more efficiently, in the auto's internal combustion engine.
As an electrical engineer, I look at your comment with some skepticism. Why would grids necessarily need to be upgraded? The load on cars would presumably occur overnight, when you're not using your oven, washer, dryer, A/C as much. I worked out the numbers once, and I'm not going to bother doing it here, since you probably wouldn't understand anyway, but 240V @30A = 7.2 kWh/h charging, so to put in 24 kWh of charge would take a little over three hours.
all so we can burn fossil fuels in a plant, rather than directly, and more efficiently, in the auto's internal combustion engine.
This is wrong on so many levels. First, at a plant, many things can be optimized that cannot be done at the engine level, such as heat, turbine speed, etc. Coal, which is the worst of the fossil fuels in terms of efficiency, generates around 30%-35% electric power for the energy consumed; the typical IC engine only generates 20% power. Second, and much more important, in an IC engine, idling at a stop light, or sitting in traffic on a highway - very common in the Greater Toronto Area where I live - you are getting 0% efficiency, since you are still burning gas and going nowhere. In my town (a suburb north of Toronto), just to get the three miles to the highway, I have to pass by 12 stoplights, which means I have to stop for at least 4, and usually 6. That works out to at least 10 minutes of going nowhere while burning gas. An electric car will use a tiny amount of charge in that period (lights, radio, etc.). Third, any energy used in gaining momentum on an IC car is lost in heat to the brakes; on an electric car, some of it is recaptured.
Electric cars have drawbacks - cost, weight, range - that make them unsuitable for many applications. However, for urban drivers with predictable commutes, they can be a sensible alternative.
i got no patience for someone who pulls out credentials and proceeds to give a biased and incomplete analysis. if you're going to get past the emotional appeal (you big smart engineer, you), better consider some of the less fortunate factors...
35% (power plant) * grid losses * motor losses * (mechanical losses + electrical loss in car)), so .35 * .85 (50 hp of average efficiency) * .9 (10% mechanical and I^2R losses in car) and .94 (6% (generous grid loss) ), you get about 25% at the car with everything running perfectly. don't forget that everything about electric cars is worse in cold weather. how you gonna stay warm for the rest of your commute, or keep the batteries at an ideal output temp? lets take about 5% for that too, and arrive at about parity with an IC powered vehicle.
an IC engine consumes fuel in proportion to power output, subject to admittedly less efficiency at low output, so sitting at that traffic light is not that much of a problem. the braking is admittedly wasted as heat, but once you're on the highway, that's done.
next consider that the advanced materials, mining and manufacturing are very energy intensive, not to boot pollute a whole lot, whereas old cars recycle with all that paid.
then conclude, like that stupid market, that the only way to make electric transportation in a car work is with subsidies, or put another way, energy or wealth from another source.
the problem is the paradigm, rubber wheels on a aerodynamically crappy single vehicle the can move at best one ton at 40mpg does not compare with rail transport which can do one ton at 400mpg.
don't even get me started with the global warming junk-politics-as-science scam...
an IC engine consumes fuel in proportion to power output, subject to admittedly less efficiency at low output, so sitting at that traffic light is not that much of a problem. the braking is admittedly wasted as heat, but once you're on the highway, that's done.
You obviously don't live in a big city like I do, nor use logic like any intelligent person I know. You admit yourself - an IC engine consumes fuel in proportion to power output, subject to admittedly less efficiency at low output - and from that statement draw the conclusion: so sitting at that traffic light is not that much of a problem. What the hell does that mean? In stop and go traffic, which is the rush hour norm here, you spend most of your time moving forward from a complete stop at low speeds, and then stopping again. With an IC engine, most of that gas is wasted; with an electric engine, very little is wasted. In case you're unaware, most electric engines work at the same efficiency, regardless of RPM, unless most IC engines.
Now, maybe you live 1/2 mile from the nearest off-ramp, and you spend most of your drive time on open freeways, without traffic or other hindrances. As I said, explicitly, electric cars are not right for every application. However, for many people in North America, once electric cars achieve even partial economies of scale compared to IC engines, I think the economic advantages of electric cars will become apparent. Please note I never suggested that electric cars be subsidized.
Your final two bizarre comments re: rail transport and the AGW scam are a mystery to me, as I never mentioned either.
arrogant... your bias is still showing.
but not most of your gas
so you're basing your case on 10 minutes at 10 hp average? maybe gridlock LA has it worse, but not the vast majority of people who drive. stop and go traffic at low speed, if you drive that way through the entire tank (which almost no one does) would be thoroughly wasteful, but otherwise, proportionally less of a problem. in other words, a proportional decrease in efficiency, but still not enough to disqualify IC propulsion. how's that logic for ya?
if the economic advantages of electric cars were apparent, implicit subsidies (there are many if you have ANY interest in looking) would not be necessary. there would be very little discussion except about how fast they took over the market, PAST TENSE. the fact is, the entire roadway system is a fossil fuel subsidy based on automotive transport, which leads back to the point, where i concluded...
that e-cars are the right answer to the wrong question, and that's why they are going nowhere so fast. i'll return to the major point now - to replace even the proportion of the fleet that is used as you suggest would consume far more energy net than would be saved. maintaining the existing fleet and carpooling, etc would be vastly more efficient, but alas, not so SEXY. making new e-cars uses more additional energy than is saved by using current IC technology.
sadly there are many who believe in the same way regarding the economic advantages of corn ethanol...
if oil IS running out, the cost benefit equation could change, but at that point we'd be lucky to have a farming infrastructure; automotive type personal transportation would likely fall far down the list of priorities with people starving.
sorry to go so far afield and not keep my thoughts centered on responding exclusively to yours, but there are other relevant considerations (of course fossil fuels are mainly undesirable because of AGW, forgetting global oil politics, externalized costs, etc), none of which appear to interest you. you want to convince people, do a better job hiding the selectivity with which you present data.
read some other comments on this thread, bright guy. you've got an uphill battle arguing your point on facts and merits - regardless of my own sad logic and subgenius intellect...
i suspect thinking in the big picture is not so familiar to you.
I thought Better Place had the solution to the charging problem.
shit, America does not even make silerware anymore...its bad enough that everything we have to buy is made in china......but i will never buy a car made by the communist chinese.
Deja Vu... I recall hearing the same shit back in the 70s, about buying Japanese.
You don't care about your fellow nationalist's (I used this word to convey all elements of the spectrum) jobs (and probably overlook your own), no, it's over some CONDITIONED knee-jerking crap like "communists." My how TPTB must laugh at such stupidity: they could give a shit; all they want is a stable game that will allow them to control things (if they really gave a crap about political ideologies then the grand capitalists, controlling the US govt, wouldn't be backing up those tin-pot dictators all over the world).
That stated, I'm not sure that I'd want to be hanging on to a lot of stuff that's identifiable as "Property of the people of China" when we can no longer (attempt to appear to be able to) pay our debts... That and the fact that the transportation meme is dying (why, perhaps, much was sold off- as is usually the case with all decaying industries- sell off to some poor sucker before the bottom drops out).
How about a capitalist chinese living in Shanghai shangri-la luxury who pays his employees 30-45 $/day to work 10 hours non stop, living in urban, overpopulated high rises. Well nearly...54 hour weeks over six days. 9 h /day plus 1 hour lunch break (this includes overtime which works out at 45 $/day).
By the way these are leading edge technology rates where management wants to bring in the best, the hungriest, to their production lines!
It was $30 a month back in the 80s. Doctors to unskilled labor. $45 a day is big money over there. That's middle class wages.
Yep, China is moving in some sectors! The social escalator works for the 20%...
Um...dude...how are you hedging oil prices rises when you overpay by $10-$15K for an electric vehicle? Case in point the Hyundai Accent retails for 1/2 the price of a Nissan Leaf and yet makes about 35MPG according to what I've read. You would have to use the leaf for 10 years before you break even on the investment, at current gas prices.
Why buy new?
My 21 year-old Toyota Corolla just recorded 37.5 mpg! (I track fuel mileage with every fill-up) Even when it was mixed driving (mostly now just highway) I'd get at least 33 mpg (worst ever was just under 29mpg).
The biggest bang for the buck, as pertains to the BIG PICTURE, would be to get truck mileage up a couple of notches: a much higher percentage increase in comparison.
Then allow more diesels! My Jetta gets 45 to 50mpg on the highway, cost $12,000 used with 60,000 on the odometer, and it TSHTF I can run the fucking thing on bio-diesel.
Turbo diesel direct injection cars are rolling out for the US market. Audi and VW primarily.
The hyundai sonata has a 2.0 L turbo 4cyl gas engine and it gets 30+ highway, plus its fun to drive. The new kia optima is getting the same turbo 4 cyl.
I had a 95 Corolla stored in my Garage. I pulled it out to clean the garage and three people stopped in. Battery was dead, Water in the gas, Dinged and interior a mess. It was sold in a day for about a 1/3rd of what I paid for it That was last year. (15 years old) .
I once calculated the payback on buying an older economy car vs the $40,000 new electric models at $5.00 a gallon and realized this is just another scam. Besides a Corolla can have a engine tossed in it every 100,000 miles or so for a few grand. Until they get battery powered cars into the mid to lower teens, this is just a niche that the upper 5% can play in that is similar to a hand job. It satisfied for a few seconds but leaves one felling somewhat empty. :-)
I wonder if 15G is low enough anymore for most people.
In Manila the majority of taxis are (not by scientific measure :-) ) Corollas. Boy do those things get beat (and keep on going)! I'd gone plenty fast in cars, and been in some pretty wicked situations, but nothing compared to one taxi driver's trip: I think that he was trying to impress us in order to get a big tip (that annoyed my wife [Filipina], who let the guy know what she thought about that!); I swore that if I was looking for a get-away driver he'd be the one that I'd hire (and I'm a very good driver).
I continue to marvel at how good of a transportation car it is. Miss my Saabs though: no looking back on the old paradigm...
My Honda Civic, with a stick, got 40 mpg hwy consistently.
Polar bear murderer
but on gaaaaaaaaaaaaaaas...old hat pollution fossilised USA.
And where does your electricity to charge your electric car come from?
The Nissan leaf is now promoting a model in Europe with a 500 km (320 miles) autonomy. Scheduled for release late 2011, early 2012. The Opel Ampera that was shown at 2011 Geneva car show has same announced performance. So there is choice now with this landmark autonomy. Price.....hummm//
The barrier for electric cars is not so much the distance you get off a charge but instead the time it takes to get that charge. It would not matter if you only got 100 miles per charge if you could simply pull over and refill the batteries in a few minutes instead of hours. A 200 mile distance is no real improvement if it still takes several hours to charge. The Tesla is advertised as having a 200 mile range...but when it was test driven on the TV show Top Gear, it couldn't even make it around the 1.5 mile track at full throttle before running out of juice. These 200 mile estimates are based on driving in optimum conditions...and driving like a cautious grandmother.
The other problem with electric vehicles is our aging electric infrastructure. Shit, you have brownouts in large metropolitan areas during hot summers with all the air conditioners running. Imagine if a large part of the population started plugging their cars in during peak hours?
CHaRi MUNGER
How can anyone junk this?! It's brilliant!
May I suggest a better investment? How about VESPA... When gas prices hit $5.00 a gallon and Bernanke has succesfully killed the middle class, this is about what the majority will be able to afford. Last time I checked, incomes were on the downward march for the bottom 90% of Americans. So given these statistics I don't see where the big audience will be for a $40,000 dollar spec that can't even get out of its own way.
http://www.uncrate.com/men/images/2009/01/vespa-gts-300.jpg
How people can always just assume the "build it and they will come" mentality is beyond me, and in These days? Yeah, there will be a flood of people being able to refinance their current upside-down position on their SUVs... I somehow doubt that the US govt is going to do a cash for chinkers program... though I wouldn't rule out the Chinese govt from stepping in to do so; and imagine the conundrum that That would present- buying cars from communist China so that we're less dependent on oil! (would make for a fun debate in Congress!)
My bicycle was probably getting several thousands of miles per gallon. And to boot, when I was able to take advantage of commute trip reduction I was actually MAKING money off of it! Sigh... straddling two worlds now means that my toes have to be moved longer distances, and with oil...
From the BYD E6 broshure:
Curb weight kg[lb.] 2295[5060]
openwheel11...I think you missed the point so please let me translate?
"please buy this shit so I can dump it"
+40,000!
Good luck with that BYD car here in the US. It is already over a year late. There is no magic bullet in battery technology, laptops and other portables have driven the margins out of them years ago.
Have you been to the BYD factory and seen the cars and how they are assembled? I have, several times. Quality is appalling compared to what the US consumer is used to. The most used tool on the production line is a mallet. The Consumer Reports review on the car will be very interesting if it ever makes it to our shores.
Test drove it with the family and noticed a slight draft in the cabin..other than that ran like a dream
http://outdoors.webshots.com/photo/1177152389058690800nocOmq
Let's see how well it operates after three years. Most of the Chinese shit I've purchased doesn't last much past the warranty.
I trust them to make non-essential parts, e.g. plastic pellets for vacuum forming, foam rubber, fabric...
Wait, I'm not sure I trust them for that, either.
Oh, and LOL the test drive. That will probably operate for a lifetime if maintained properly.