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 |  Mar 10 2011, 11:07 AM

Of all the Chinese automakers, BYD (or Build Your Dreams) has been pegged for several years now as the one to bet on. A battery company turned car manufacturer, BYD was the first from China to display at the North American International Auto Show in Detroit, holding a press conference and making claims that have yet to come to fruition.

But more important than all this was a major investment by the Oracle of Omaha, Warren Buffett himself. It wasn’t so much the money, pouring $232 million into BYD, as it was the psychological factor with Buffett known for making the right decisions when it comes to money.

If continued delays and broken promises might not be enough to see Buffett back out, new WikiLeaks cables obtained by Reuters might. In the cables Guangzhou Consul-General Brian Goldbeck comments on the possible intellectual property rights infringements carried out by BYD. “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.”

A report by U.S. government officials on the company was even titled, “BYD seeks to ‘Build Your Dreams’ — based on Someone Else’s Designs.”

Other questionable business practices include partnering with foreign automakers only to steal their part designs, ordering initial shipments of parts only to then cancel, while reverse-engineering and then mass-producing them for wider use in BYD’s own vehicles. And to make matters worse, the new parts are often of shoddy, or even unsafe, quality.

Other leaked cables include info that BYD lied about a five-star safety rating for its F0 car – itself a mirror of the Toyota Aygo.

And in what could be seen as an admission of its copycat designs, other info points to BYD dealers actually selling cars with the logos of other automakers – telling unaware consumers that the car is in fact the real thing.

But perhaps the biggest reason for Buffet to back out lies with BYD’s battery technology which reportedly fails to live up to expectations. One cable quotes an embassy official who, after a visit to BYD headquarters, reported that only 100 F3DM electric vehicles had been sold due mostly to the battery life and performance that, “falls considerably short of expectations.”

In previous reports a Berkshire Hathaway exec told Reuters that the reason for the investment was entirely about BYD’s battery technology and not the ability to build a car.

[Source: Reuters]