Minority Stock Positions

BYD’s 300 Electric Buses Just the Start for Chinese City of Shanwei

(BRK.A), (BRK.B)

With air pollution in China making headlines almost daily, BYD Co. Ltd., the Chinese battery and vehicle-maker that is 9% owned by Berkshire Hathaway, is providing 300 pure electric buses to the Chinese city of Shanwei, in Guangdong Province. The electric buses are the first of what could be thousands for the city in the next three years.

BYD will be gradually adding the buses to the city’s public transportation fleet as the city sets ambitious goals for electric bus transportation for the city’s 409,000 population.

According to BYD, the city is purchasing the BYD K7, an 8-meter, 23-seat pure electric bus running on BYD’s proprietary Iron-Phosphate batteries, which give it a driving range of up to 240km on a single charge.

The battery packs are placed on the roof and floor, making it quite spacious inside. It also features in-wheel motors, which saves a lot in terms of maintenance costs, as well as one-button-start system and continuously variable transmission. The company touts the model as ideal for urban transit or as an airport shuttle.

Not Hundreds of Buses, Thousands

The city of Shanwei plans to have 1,810 pure electric buses in service by the end of 2017. Additionally, 1,200 units of 6-to-8-meter new energy buses will be used as short-distance transit buses in urban areas and shuttle buses in suburban areas between 2017 and 2019.

By 2019, the city of Shanwei will have a total of 3,010 pure electric buses in operation. It is the first city in China to make large-scale use of the BYD K7.

Berkshire and BYD

In 2008, Berkshire Hathaway bet on BYD’s potential and purchased 225 million shares, and today owns roughly 9.1% of the company.

At the time, Warren Buffett said: “”We are thrilled to be partners with BYD and the people of China. Mr. Wang Chuanfu has an extraordinary managerial record, and we welcome the opportunity to work with him.”

The move has certainly worked out well for Berkshire, as BYD’s electric buses have been hot sellers not only in China, but around the world.

In September 2015, BYD scored a massive order in the U. S. from the state of Washington. BYD won a contract from the Washington State Department of Transportation (WSDOT) for up to 800 pure electric buses.

BYD’s electric car business is booming as well, and it is now the number one seller of electric cars worldwide.

Berkshire’s stake in BYD is 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.