Tesla meets Chinese speed bump; BYD hopes for a turnaround

Doug young
27 August 2013.

A few interesting bits of news coming from the new vehicle energy sector, including a possible roadblock in the Chinese market for emerging US player Tesla (NASDAQ: TSLA) and new results from struggling domestic electric car maker BYD (HKEx: 1211;) Shenzhen: 002594), which look encouraging, but not too exciting. The common main theme in this latest news is, that new energy vehicle manufacturer strong Government measures to increase of the market of Bank assistance continues, although so far slow has to keep hopes for the Chinese market.

We began his life as a mobile-battery manufacturer, then expanded with a look at BYD, starting in cars and recently the new energy vehicle has placed big bets on the sector. The big bet helped attract billionaire investor Warren Buffett, acquired the 10 percent of BYD in the year 2009. His investment sparked a massive rally BYD shares, although they gave most of the gains later as they sputtered traditional car of company.

BYD shares have doubled largely more than traditional gas-powered car business, which accounts for half of sales, from their lows last year on hopes for a turnaround on its. Investors should be relieved to see that BYDs declining sales to 13 percent in the first half of 2013 to 24.2 billion yuan ($3.9 billion), reversing two years in this context. Car sales grew a healthy 25 percent, or about twice as fast by the Chinese automobile sector. These solid gains helped a 26-fold increase of its profit to 427 million Yuan fuel pump.

But despite this it is positive numbers, interesting to note, that BYD electric vehicles (EV) in the section included reflects not the hard way his report highlights every single mention of business, faced the business. BYD has strong despite earlier hopes for the business to make much greater progress with consumer buyers. Instead, she had to leave buyers of taxis and electric buses for the majority of its sales fleet.

Of this fleet buyers steadily grew, even though most of the programs are unclear whether there is any will is currently in the testing phase, and it ultimately lead to large orders, the company must make some, benefited from his big EV investment. It is probably still a little too early, the BYD current line of EVS consider a failure. But a bigger enemy than BYDs begins current technology obsolete soon. Therefore, I suspect that the company needs to make some big write-downs on its EV campaign in the next two years.

By BYD, Tesla, which began look quickly, last week for his high end car, the model S, $70,000 orders in China costs about. The company had to start most of the necessary preparations, delivers its first vehicles including the preparation of a showroom in Beijing, made this year. But now, media reports that Tesla has hit an unexpected setback by the registration of a Chinese brand name squatters.

In this case looks reminiscent of a much higher profile last year between Apple (NASDAQ: AAPL) and a bankrupt technology companies, that the rights to the name iPad. Apple went to court, to get rights to the name, iPad back and supposedly, he landed the case for $60 million.

I suspect that the Government was engaged in this case because of its high-profile and helped to bring about the solution. Tesla is much lower profile, meaning that probably the usual legal channels running through it, if Tesla wants to resolve the matter in court. Rather than face such delays its China plans, I expect the company likely with the squatter to back the rights to his name is, although it probably far less than the $60 million pays those who paid Apple for the iPad brand.

Bottom line: BYD's latest results show that it is running no time for its EV push while Tesla is expected to negotiate to regain the rights to the brand in China.

This article first appeared in the online edition of South China Morning Post and young's China business blog and was published with permission.

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