(BRK.A), (BRK.B)
BYD Company has debuted its “SkyRail” monorail system in Shenzhen, China. The monorail was developed out of BYD’s five-year RMB 5 billion R&D project.
SkyRail marks the company’s entry into the multi-trillion yuan mass transit market.
SkyRail is billed as a strategic solution introduced by BYD to counter traffic congestion in cities around the world while also offering more convenient mobility to urban residents.
BYD’s 4.4 kilometer monorail line, which runs to its Shenzhen Headquarters, alleviates the traffic problems of 50,000 factory and management employees.
As a transportation solution, BYD’s SkyRail is designed to complement existing metro and bus systems to help create a layered transport network consisting of underground, roadway and elevated elements. It will become an integral part of optimized urban transport.
“Mass transit systems are an indispensable solution to alleviate traffic congestion in cities,” said BYD President and Chairman Wang Chuanfu at the launch ceremony. “As a rail transport option with relatively smaller passenger capacity, ‘SkyRail’ can complement existing public transport systems to create a layered transport system encompassing underground, roadway and elevated elements. At the same time, SkyRail provides urban residents with safe, comfortable and fast mobility while making a real difference to alleviate traffic congestion. BYD is the first privately run Chinese company to enter the mass transit market.”
SkyRail represents another strategic expansion of BYD, a pioneer in the field of integrated new energy solutions, building on its core industry expertise in battery, automobile and ECU. Today, BYD spans the IT, automobile, new energy and mass transit sectors and has developed a green portfolio encompassing solar, energy storage, EV and rail transit. BYD is well positioned to improve the daily lives of people through its innovations and technologies.
Named one of “China’s Most Admired Companies” by Fortune China in 2016, BYD has been committed to driving forward green mobility to help address the mega challenge and public concern of traffic congestion.
In 2010, the company announced its “electric public transport” strategy for green mobility, focusing on low-carbon electric vehicles as a prioritized public transport option to reduce traffic-related emissions in cities. This has now become a national strategy of China. At present, BYD’s electric vehicles are on the road in more than 200 cities in 48 countries and regions around the world.
To help address the challenges of urban transport, BYD set up a large R&D team consisting of more than 1,000 people. As the result of a RMB 5 billion (around 757 million USD) investment over the past five years, BYD successfully developed SkyRail, in an effort to provide a new solution to alleviating traffic congestion in cities and empowering layered mobility.
Traffic congestion is a major global issue. Urban residents in countries such as China, India, Indonesia and Brazil are increasingly concerned about congestion despite an increase in roads. There is high demand around the world for congestion alleviation solutions. To address this challenge, it is essential to relieve pressure on the road by moving some of the traffic to underground and elevated spaces. Therefore, it is inevitable that the development of layered rail transport is essential to transforming “cities on wheels” to “cities on rails.”
As a mass transit alternative with relatively smaller passenger capacity, BYD’s SkyRail delivers numerous benefits, including: capital expenditure 80% lower than metro, construction period two-thirds shorter than metro, excellent topographic adaptability due to higher climbing ability and smaller turning radius, reduced noise to allow travel through architectural complexes, visual integration into the cityscape thanks to transparent bridges and independent right of way, flexible management to allow for capacity between 10,000 to 30,000 passengers an hour (each way) and a high speed of up to 80km/h. It is very applicable to small and medium sized cities, heavy traffic routes, CBD’s and routes connecting tourist attractions in large cities.
Dramatic Cost Savings Compared to Subways
The electric monorail is a kind of traffic network which interconnects multiple transit backbones in the city at one sixth of the cost of a subway system.
According to BYD, the total market for monorails just in China is in the range of 3 trillion yuan ($450 billion).
BYD and Berkshire Hathaway
In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million is now worth roughly $1.77 billion.
For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.