A battery, solar-panel, and automobile maker made famous by a certain Omaha-based oracle, BYD COMPANY LTD ADR (OTCMKTS:BYDDY) has seen its fair share of peaks and troughs. The company, 10 % owned by Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) subsidiary Mid-American, was flying high a few years ago on the back of its genius founder, who was pushing the limits of electric vehicles well before Elon Musk got headlines. Subsequent years saw plummeting sales and tremendous competition in its non-vehicle businesses. Now the company has seen sales stabilize in the first half of the year, but warns of more stormy weather ahead. Is BYD a dream or a nightmare?
For those unfamiliar, BYD COMPANY LTD ADR (OTCMKTS:BYDDY) — which stands for Build Your Dreams — is a Chinese battery and electric vehicle manufacturer, among other lines of business. The company is run by a man Berkshire Hathaway Inc. (NYSE:BRK.A) bigwig Charlie Munger once described as “a cross between Edison and Jack Welch,” Wang Chuan-Fu. Wang caught the world’s attention with Warren Buffett’s endorsement, and antics such as disassembling a Toyota seat , mid-travel, to better understand its mechanics.
In its first half of 2013, BYD COMPANY LTD ADR (OTCMKTS:BYDDY) saw its net income rise from 16 million Chinese yuan in 2012, to 427 million (roughly $70 million) this year. Car sales jumped an impressive 25% throughout the first half, far ahead of the industry average in China.
It’s been a slow, topsy-turvy path to recovery since 2010, when the company faced quality issues, including one incendiary taxi incident, as well as competition in other lines of business such as cell phone batteries and photovoltaic panels. Though they were responsible for half of its car revenue in the first half of this year, the company plans to phase out its gasoline vehicles in favor of electric vehicles, prompting some to consider BYD COMPANY LTD ADR (OTCMKTS:BYDDY) the Tesla Motors Inc (NASDAQ:TSLA) of China.
Still, shares plummeted on a tepid outlook for the remainder of the year. Is BYD COMPANY LTD ADR (OTCMKTS:BYDDY) bound for perennial mishaps, or is this a Tesla waiting to happen?
For Buffett and Berkshire Hathaway Inc. (NYSE:BRK.A), BYD COMPANY LTD ADR (OTCMKTS:BYDDY) has already proved to be a fantastic investment. Buffett made his stock purchases in the $2 per share range, and hasn’t sold any of Mid-American’s stake to date. Though it’s far outside the Oracle’s wheelhouse, BYD appears to remain a convincing long-run investment for Berkshire Hathaway.
BYD COMPANY LTD ADR (OTCMKTS:BYDDY)’s K9 electric buses are snapping up contracts around the world, from Canada to Amsterdam . The company provides a tremendous number of taxis to markets such as Shanghai and Hong Kong, and looks to expand in coming years.