SHANGHAI May 23 Chinese automaker BYD Co Ltd expects revenue from electric vehicles to rise almost sevenfold this year, in a sign the business that convinced Warren Buffett to invest is finally taking off.
Li Yunfei, deputy general manager of BYD's sales unit, this week said order momentum indicates electric vehicle sales of 10 billion yuan ($1.60 billion), equivalent to about 20 percent of 2013 revenue. Last year, such sales amounted to just 3 percent.
Sales of electric cars, buses and plug-in hybrid vehicles have been slow since BYD entered the market in 2006, using in-house technology financed by selling gasoline vehicles and cellphone batteries.
Last year, BYD sold just 1,544 e6 electric cars, showed data from the China Association of Automobile Manufacturers. But this year, BYD aims to sell more than 20,000 Qin plug-in hybrids.
"We believe that sales of our new-energy vehicles ... would exceed 10 billion yuan in 2014, which is a breakthrough for us," Li said at a promotional event in Shanghai.
BYD became globally known in 2008 when Buffett bought a 9.9 percent stake for $230 million. Two years later, sales dropped as a series of quality issues coincided with economic slowdown.
Sales of BYD's gasoline vehicles have since recovered, but their outlook - like those of other Chinese automakers - is clouded by global peers intruding in their mainstay domestic market of cars priced as low as 60,000 yuan.
Green vehicles, therefore, offer BYD a new engine of growth.
After years of stagnation, Li said China's green vehicle market is showing signs of growth thanks in part to the increased use of electric taxis and buses.
Interest has also been stirred by companies such as Tesla Motors Inc, which started selling its all-electric Model S sedan in China this year, Li said.
Also this year, the governments of Beijing and Shanghai started to subsidize private purchases of green vehicles made by domestic companies from outside of those two cities. Wuhan, Xi'an and Guangzhou cities are widely expected to follow suit.
Previously, BYD was eligible for such subsidies only in Shenzhen where the company is headquartered, a BYD spokesman said.
Such local government initiatives have helped BYD deliver more than 3,000 Qins to customers since the car's December launch, with some 8,000 awaiting delivery, Li said.
Green sales are also on the rise abroad, Li said, with orders for electric buses in North America - where BYD has a California assembly plant - as well as South America and Europe.
Overall, BYD sold about half a million cars last year of which green cars accounted for less than 1 percent, showed CAAM data.
"Sales are constrained by our battery production capacity," Li said. "If that issue is solved, sales can grow faster."
BYD will double vehicle battery production capacity to more than 3 gigawatt-hours when a new factory in Shenzhen starts making batteries in July, Li said. Total capacity will rise to 15 gigawatt-hours by the end of 2015, he added.
Shares of BYD, which have risen 8.3 percent since the start of the year, were last down 1.8 percent on the Hong Kong bourse when trading was suspended on Friday pending an announcement.
Reuters publication IFR subsequently reported that BYD is planning to sell up to $423 million worth of additional shares in Hong Kong.
($1 = 6.2350 Chinese Yuan) (Edited by Christopher Cushing)