By Todd Woody, October 29, 2013
BYD’s eBus, shown in Los Angeles, can run 155 miles on a charge and has led to contracts with transit agencies in Los Angeles and Long Beach.
LOS ANGELES — THERE’S a newcomer to this city’s auto row. Compared to the shiny showrooms displaying the latest Mercedeses and Toyotas, the Chinese carmaker BYD’s outpost in the shadow of downtown skyscrapers looks rather forlorn.
Just two of its models — a red electric sport utility vehicle and a brown gasoline-powered sedan — are on view in an otherwise empty storefront.
But it’s the pair of 40-foot-long battery-powered buses parked across the street that is driving the company’s ambitions to become the first Chinese automaker to break into the United States market.
BYD this year became the first Chinese vehicle company to open manufacturing sites in the United States, building an electric bus assembly plant and a separate battery factory in Lancaster, a desert community 75 miles north of Los Angeles.
The $30 billion company beat American competitors to win contracts to build electric buses for transit agencies in Los Angeles and nearby Long Beach. BYD is also pursuing deals to supply electric shuttle buses to rental car agencies, amusement parks and Silicon Valley technology companies.
In New York, the Metropolitan Transportation Authority began a two-month road-test of BYD’s battery-powered eBus in September.
“Buses are on the street and highly visible, so it’s a good way to get our name out there and build our reputation,” said Brendan Riley, BYD’s vice president for fleet sales, at the Los Angeles showroom.
“Once transit agencies work with BYD and understand BYD is going to take care of them with their bus fleets, we’ll get them to try our electric cars,” he added.
BYD first came to Americans’ attention in 2008 when the billionaire investor Warren E. Buffett bought 10 percent of the company, convinced that it would dominate China’s electric car market.
Founded in 1995 as a mobile phone battery manufacturer, BYD has grown into a conglomerate that makes cars, buses, energy storage systems, solar panels, LED lighting and phones. Like other Chinese automakers, BYD has benefited from loans from state-owned banks and contracts to supply its electric vehicles to Chinese municipalities.
The company has sold electric cars in China since 2008 but is moving cautiously into the American market. Mr. Riley said BYD was mindful of Chinese cars’ reputation for poor quality and of Hyundai’s disastrous United States debut in 1986, when the South Korean company began selling a poorly built compact car that ruined its reputation for years.
“We do not want to have missteps,” said Mr. Riley.
To that end, this year BYD began selling a small number of its e6 electric S.U.V.’s in the United States, but only to corporate fleets. The company has also placed the e6 with companies as demonstrator models. It has no plans to export its gasoline-powered models to the American market.
The $52,000 e6 is powered by an iron phosphate battery that BYD says gives the car a range of 186 miles on a charge, compared with around 75 miles for most other electric cars available in the United States.
“You don’t really want to bring a car into a market that is not properly supported,” said Mr. Riley. “When you sell cars into fleets you can co-locate engineers and parts.”
BYD has sold the e6 to taxi fleets in China, Britain and South America, and Mr. Riley expects it to pursue a similar strategy in the United States.
For now, the company’s challenge is proving it can manufacture its $800,000 eBus in the United States and meet federal standards for durability and safety. It recently suffered a setback when a bus being tested at a federal facility in Pennsylvania suffered cracks in its frame. And in October California officials fined the company $99,245 for violating state labor laws; the company said it would appeal the ruling.
The first buses, which have a range of 155 miles on a charge, are set to roll off the Lancaster assembly line later this year to fulfill contracts with transit agencies in Los Angeles and Long Beach.
California has adopted regulations that will require 15 percent of municipal bus fleets to be powered by low-carbon alternative fuels. That prompted the Los Angeles County Metropolitan Transportation Authority in June to award BYD a $20.7 million contract to supply up to 25 electric buses.
Richard Hunt, the agency’s head of bus procurement, said the range and size of the eBus and the fact that BYD had deployed more than 700 of the vehicles worldwide persuaded Los Angeles to take a chance on a relatively unknown Chinese company. To hedge its bets, the agency placed an initial order for five vehicles and will evaluate them before buying additional eBuses.
“These are expensive vehicles, and we don’t want to make costly mistakes,” Mr. Hunt said. “But we do think electric buses are the way to go for the environment.”
Though the eBus costs roughly twice as much as a conventional diesel bus, Mr. Riley of BYD said the eBus could pay for itself in three years because of savings in fuel and maintenance.
A Long Beach Transit spokesman, Kevin Lee, said his agency was receiving $7.4 million in government grants to offset the $12.1 million cost of 10 eBuses it ordered. He said the lower operating cost of the electric bus and its ability to run all day on a single charge persuaded the city to take a chance on BYD.
Mr. Lee noted that the bus’s 324 kilowatt-hour battery — for comparison, the e6 S.U.V. has a 61.4 kilowatt-hour battery — and its ability to return electricity to the grid mean it could be a rolling generator of power in blackouts.
BYD’s Southern California factory also represents a foothold into another potentially lucrative market: energy storage.
California, for instance, will require the state’s big utilities to operate 1,325 megawatts of energy storage to help balance the power grid as more sources of renewable but intermittent energy come online.
In a partnership with the home builder KB Home, BYD has developed home battery systems to store electricity generated by rooftop solar panels, and it plans to package its bus batteries into huge units capable of storing large amounts of electricity.
“We really see California adopting this technology sooner than anyone else,” said Mr. Riley.