China electric vehicle manufacturer relies on Government support

I've got a lot of attention before a few days U.S. electric vehicles (EV) sensation Tesla (NASDAQ: TSLA), so it's only fair that I by writing about China's home-made EV superstar BYD-up follow-up (OTC: BYDDF;) HKEx: 1211; Shenzhen: 002594), which recently published quarterly figures, which look quite disappointing. The only things that look like something encouraging in this latest report are the fact that billionaire investor he bought that in 2008 its 10-percent stake in the company to keep Warren Buffett, still, and that BYD is lucrative. But also the gains strong support from Beijing in its programme to promote clean-energy vehicle development.

If I had to describe BYDs recent performances in a single thought, I'd say that pretty good pilot programs set up this company for its EVs but has found it difficult to translate these programs in large companies. In the last three years, BYD has announced a steady sequence of such pilot programs in a variety of markets, from Western Europe, the United States and Latin America, as well as in its home market of China. But with a few rare exceptions, we need to have one of these programs turn you into the major orders that BYD has its EV program long term profitable to make.

Everything, what say we take a closer look of BYDs latest quarterly results, to show its profit largely evaporated in the first three months of the year. The company reported a first quarter net profit of around 12 million Yuan, or just over $2 million, which was 90 per cent compared to the previous year. This is quite a small figure for a company whose Umsatz amounted to nearly 12 billion yuan for the quarter was down a more modest 9 percent.

BYD reported by 98 million Yuan it received Government grants in the quarter which means that it would have almost certainly lost money, without this support. Of course not we can subtract that amount from its total profit directly, but I think it is fair to say that the company help would have reported a loss of 50 million Yuan or more without this Government.

BYD's Hong Kong traded shares fell 2.8 percent before the report came, although some the reason the latest trading session got back on Friday. The stock has over the last year and a half, more than tripling since October 2012 on enthusiasm about the EV program actually collected anything. But I suspect that this latest disappointing result could force investors to recognize the company's electric dreams materialize are not, as hoped, and could a mark the beginning of wider selloff, the stock drop by a third or more in the next few months could see.

BYD is in the difficult position of waiting on the EV business to launch, fruits as its older battery and traditional gas-powered car companies show signs of aging. BYD earlier said it will leave the gas powered car business altogether by 2015 as the future in electric vehicles. The company also announced a major plan a year ago, to raise up to $500 million by issuing new shares in a bid to shore up its cash position.

I mostly excited about BYD everytime wrote it a new EV pilot, as such programs announced, to test the technology before larger orders are a necessary first step for customers. But the fact that we some large orders appropriate means until probably three years later on, that many of these pilot programs were not as smooth as BYD had hoped and maybe the buyer doesn't see how the technology. The not sure bode well for the future of the company, which means that BYD Government support its bottom line for the rest of this year and possibly in 2015 could depend on.

Bottom line: BYD's latest results show his EV sales are not accelerated, as fast as planned and it will support its bottom line depending on Government subsidies for the rest of this year.

This blog was originally released on young's China business blog and was published with permission.

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Wanxiang wins the U.S. Government approval buy battery manufacturer A123

Approval from CFIUS, was the last hurdle that had to be overcome in order to conclude the transaction Wanxiang, as he is known. The Federal Interagency Group, led by the Treasury Department was selling review, after members of Congress allow national security concerns to get a foreign competitor with State protection technology developed.

Wanxiang, the bankruptcy court approval of the acquisition Dec. 11 completed who said in an e-Mail yesterday, pin NI, President of the US unit Wanxiang America Corp., buying won,. Wanxiang America, the A123s purchased automotive, grid, and commercial assets for approximately $256,6 million. A123 and Wanxiang tries to placate Congressional anxiety by excluding the battery manufacturer Government shops out of the deal at Woodridge, Illinois-based Navitas Systems LLC for about 2.25 million $ was sold.
"We are pleased the Government has completed its review and has with us the go-ahead to this transaction complete," NI said in a statement. "The future is bright for A123. It is a company with extraordinary talent and potential and Wanxiang America is committed to its long-term success and the continued existence of their U.S. operations."

Thing itself sunk
The Waltham, Massachusetts-based battery manufacturer bankruptcy in October after a previous agreement with Wanxiang in the midst of Congressional Republicans allow reluctance, sale to a Chinese company sunk has been filed. A123 listed assets of $459,8 million and debt of $376 million status: Aug. 31 in court documents.

"Provided by CFIUS has nothing my opinion after changing the core technology from A123, developed" and related intellectual property "be separated fields of business can along A123s" said representative Bill Huizenga, a Republican who represent Michigan 2nd Congressional District, in an e - sent statement. "American taxpayers not technology, which in turn are used to compete against American companies should be medium", he said, adding that he in the legislation funded "sensitive technologies" for foreign companies in the future to prevent search sales by the taxpayer.
Federal grant

A123, received a federal grant of more than $249,1 million and only $ 132 million $ for two plants in Michigan, instead of a December auction where Wanxiang beat a joint bid by Milwaukee-based Johnson Controls Inc. and Tokyo-based NEC Corp.
"The Department of energy recovery Act grant for A123 was used for the construction of brick and mortar advanced battery production facilities at two sites in Michigan," Bill said Gibbons, a spokesman for the Department in one via e-Mail statement. The funding for research and development of battery technology of the company used were not, he said.

"With the purchase of these assets of the Department of energy request, which includes the equipment and devices that are part of stay paid in Michigan Recovery Act and continue to operate," generating job opportunities for American workers, Gibbons said.
Joint venture

In the context of the purchase, Wanxiang get seat in Hangzhou, China, A123s, plant in China and its stake in a joint venture with Shanghai Automotive Industry Corp., Shanghai advanced traction battery systems co. called cathode powder used in addition to the battery technology in Fisker Automotive Inc. Karma sedan.

Fisker, A123s main customer, said that it was expected the sale of the company's Michigan plant, so it plug production of the $103,000 - sedan could resume in karma.
A123, whose automotive-Geschaft delivers electric car batteries in about a dozen customers, has facilities in Michigan cities of Livonia and Romulus.

The grid business is focused on power generation, transmission and distribution while the commercial Division develops products for industries such as telecommunications, industrial robotics and power tools, according to the court papers. A123 has worked with the Government on portable power solutions, unmanned aerial vehicles, pulsed power weapons, as well as small energy cell for remote devices.
The case is in terms of A123 Systems Inc., 12-12859, U.S. bankruptcy court, district of Delaware (Wilmington).

Copyright 2013 Bloomberg

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