BYD Plant in Bulgaria

This just in, BYD (BYDDF:US) will start a 50-50 joint venture with Bulgarian energy company Bulmineral.  The plant will be located 50 km west of Sofia, in Breznik.  Production will focus on electric buses for Europe, the Middle East and Africa, but will also include cars, batteries, and LED lights.  Estimates put the investment at around €135m, adding 150 jobs.  Bulmineral’s CEO Alexander Usachev is quoted saying that the first sample should be ready by February 2013.  At full capacity, the plant will produce 40-60 buses a month.

Nothing staggering, but an interesting development nonetheless.  BYD is the second Chinese car manufacturer to establish a production base in Bulgaria.  At the beginning of 2012, the plant of Great Wall Motor (2333:HK), China’s 10th largest automaker, went online in Bahovitsa.  As far as I know, the plant in Bulgaria does only final stage assembly.  Probably, the same can be expected of the BYD plant.  Great Wall Motor started with a capacity of around 2,000 cars per year.  But that’s expected to rise to 50,000 by 2014.  Currently, the first 3 models are on display in the city center of my hometown, Plovdiv.  I am curious to hear comments from owners, but haven’t met any yet.

BYD is the famous and controversial 2009 Buffett (or rather Munger and Li Lu) investment.  Back then, he purchased 10% of the company through MidAmerican at $1 per share.  Shortly after, the price went up tenfold, prompting “informed” investors to pile on, only to decline back to $1.5 in less than a year.  Now, BYD trades at $2.5.

Apart from Buffett fame, the company is known for its innovative energy storage solutions.  Munger has famously referred to founder CEO Wang Chuanfu as

a combination of Thomas Edison and Jack Welch – something like Edison in solving technical problems, and something like Welch in getting done what he needs to do.  I have never seen anything like it.

It is the only company I know of that makes huge batteries for storing energy from power plants.  It also makes the batteries and plastic parts for many mobile phones.  But, it is probably best known for its fully electric cars and buses.  Its e6 model ran a long-term test as Shenzhen taxis.  The electric buses were first introduced in 2010 in Changsha and have since made appearances in Hong Kong, Los Angeles, Colombia, Chile, Denmark, the Netherlands, Spain, and other countries.  What distinguishes BYD’s electric vehicles is, of course, the battery pack.  The company clams ranges of 150 miles for buses and 250 miles for cars.  Also, it boasts a quick charge feature that loads up 40-50% of the battery in something like 30-40 minutes.

I looked at the company back in 2010.  It was trading around $6-7 at the time and I found no justification for such a price, not knowing anything about electric cars and battery technology, nor about its stellar CEO.  At the current price, it is worth another look.