January 12, 2009 / 11:36 PM / 11 years ago

AUTOSHOW-BYD car business secondary to battery tech-investor

* MidAmerican to keep investing in wind, other projects

* Sees opportunity amid credit crunch

* Hopes Obama administration to support R&D for clean coal

By Chang-Ran Kim and Kevin Krolicki

DETROIT, Jan 12 (Reuters) - BYD Co’s (1211.HK) prospects in the auto industry were secondary to its lead in battery technology when MidAmerican Energy decided to take a stake in the Chinese company, the head of the utilities firm said on Monday.

MidAmerican Energy MDPWN.OB, a unit of billionaire investor Warren Buffett’s Berkshire Hathaway Inc (BRKa.N), surprised financial markets in September with an agreement to purchase 10 percent of little-known BYD for $230 million.

That led many to second-guess their initial doubts about BYD’s chances in the auto industry, where the 13-year-old Hong Kong-listed battery maker is looking to make inroads with BYD-branded electric cars using its own batteries.

“The only part that played into (the investment decision) was the battery technology,” MidAmerican Energy Chairman David Sokol told Reuters in an interview on the sidelines of the Detroit auto show. BYD shared the floor with General Motors Corp (GM.N), Toyota Motor Corp (7203.T) and other industry giants for the first time.

“Whether or not they can manufacture their own cars isn’t that relevant to us, because we see their real expertise is in the development of the batteries, the motors, the control systems for that,” he said.

“That’s not to say that they can’t make a nice car, but a lot of people can make a nice car. The breakthrough from our perspective is their battery technology.”

BYD is aiming to launch a plug-in hybrid model, the F6DM, and the E6 all-electric car, in the United States and Europe in 2011. [ID:nN11290446]

It has no sales target, but said at the auto show it would plan to produce the cars in the United States when volumes reached appropriate levels.

SEES OPPORTUNITY

Sokol said his company remained interested in raising its stake in BYD if the opportunity arose, noting that MidAmerican had initially wanted a larger share but was held back by the Chinese company’s chairman, Wang Chuan-fu.

“BYD has been a profitable company, so Mr Wang was sensitive to how much of the company he was selling. We’re hopeful that as opportunities present themselves, we’d be able to increase that in future,” Sokol said.

Elsewhere, Sokol said MidAmerican would continue to invest in and develop wind and other energy-generation projects, seeing an opportunity to step ahead of the competition due to lower credit availability for others.

“We’re blessed to be owned by Berkshire, which allows us to reinvest our capital. We’re hoping that the opportunity will be better because we know a lot of people don’t have the capital to continue,” Sokol said.

“I think you probably will see a slowdown industry-wide just because, with capital scarce and the price of capital higher, the ability to put budgets in place will be difficult for some,” he said.

Sokol said he hoped there were near-term opportunities for investment after it lost a bid last month to take over Constellation Energy Group Inc CEG.N, which agreed to sell nearly half of its nuclear power business to Electricite de France SA (EDF) (EDF.PA) for $4.5 billion. [ID:nN17508126]

He declined to elaborate.

Sokol also hoped that the Obama administration, which will be sworn in next week, would support research and development in clean-coal-fire generation, which he said was crucial for lowering carbon dioxide emissions.

“The reality is that 50-plus percent of the electricity consumed in the United States and more in many other countries is created from combustion coal,” he said.

“You don’t just shut that off without shutting the lights off, so it’s enormously important that R&D take place. Hopefully this administration will include those aspects.” (Reporting by Chang-Ran Kim, Kevin Krolicki, editing by Leslie Gevirtz)

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