Volkswagen Goes to China to Get Back in the Electric Vehicle Game

Last fall, billionaire Warren Buffet’s company, Berkshire Hathaway, bought 10% of a Chinese company called Build Your Dreams, or BYD, for $230 million. BYD makes a bunch of things; cell phone batteries, mobile phone hand-sets, cheap computers and cars. Not just any cars, though. BYD makes electric cars.

According to Fortune Magazine, Buffet and his partners “think BYD has a shot at becoming the world's largest automaker, primarily by selling electric cars, as well as a leader in the fast-growing solar power industry.” Listen up, Detroit!

It is ironic that this comes the same week that GM is expected to declare bankruptcy. One can't help but wonder what might have happened had they continued with the EV1 development 10 years ago rather than killing the program.

As of April of this year, BYD had begun selling a plug-in hybrid, the F3DM, that can go 62 miles on a single charge, putting it ahead of GM, Nissan and Toyota. And at $22,000, it costs significantly less than the eagerly anticipated Chevy Volt or Toyota Prius Plug-in hybrid.

Buffet isn’t the only one looking at BYD as a winner. Last week Volkswagen, the third largest car maker in the world, signed a memorandum of understanding with BYD to work together "in the area of electric mobility" and vehicles that use li-ion batteries. They announced the MOU earlier this week, with a statement which indicates that VW is looking become a leader in the electric vehicle business:

Volkswagen also said in the statement that it has shown an electric car prototype to BYD, which could possibly indicate that the German carmaker would either build or buy an inexpensive assembly plant in China to build the electric car, which could be later showcased in this year's motor show in Frankfurt.

Volkswagen has earlier signed a letter of intent with Sanyo to make battery packs for electric vehicles, but with BYD's expertise in lithium-ion batteries, the European carmaker now wants to make batteries for cars that will run for 120 miles on a single charge. - domain-b.com

Dr. Ulrich Hackenberg, Member of the Board for Technical Development at Volkswagen, said that "Volkswagen will consistently expand its successful 'BlueMotionTechnologies'. Hybrids and electric vehicles will play an increasingly important role, of course. Particularly for the Chinese market, potential partners such as BYD could support us in quickly expanding our activities."

The announcement comes on the heels of another German automaker, Daimler, announcing their own foray into the world of electric vehicles by taking a 10% stake in Tesla Motors.

And then there’s the BMW Mini E which just started leasing for $850 a month. The company plans to take all 500 vehicles back after a year to gather data. Sounds a lot like the old days of the EV1, when taking them back ended up meaning crushing them, but with all the momentum toward electric vehicles, it seems an unlikely scenario.

It is more likely that consumers will have their choice of hybrids, plug in hybrids and all electric vehicles from car makers in the U.S., Europe and Asia. We could have had those choices for the last 10 years. Now they can’t come a moment too soon.