INTERVIEW-China's Xinri says sales up 20 pct, eyes 2011 IPO 03 Sep 2009 15:16

* Expects sales to grow 20 pct this year

* Eyes a Shenzhen IPO in 2011

* To sell 5 million units in 2013

By Michael Wei and Kirby Chien

BEIJING, Sept 3 (Reuters) - Chinese electric bicycle maker Jiangsu Xinri E-Vehicle Co Ltd expects its sales to grow nearly 20 percent this year, and is aiming for a public offering in 2011.

Although consumer spending has slowed, Xinri's sales would likely rise to 1.9 million units this year from 1.6 million in 2008, because of an increase in popularity of the electric vehicles, its deputy general manager, Gavin Hu, told Reuters.

"The electric bicycle, which is energy-efficient, environmentally friendly and economical, has been gaining popularity everywhere, especially in China," Hu said in an interview.

Xinri, which posted sales of 3 billion yuan ($439.2 million) in 2008, also exports to Canada, Japan and other countries in Asia and Europe.

In order to meet a growing demand for the relatively new vehicle, Xinri, which purchases batteries from BYD Co Ltd <1211.HK>, is planning to build two more plants to further boost production.

"The target we set ourselves is to sell 5 million units in 2013," Hu said.

The company, founded in 1999, now has more than 3,000 employees and operates two plants, in Wuxi and Tianjin, with over 5,000 shops across the country.

More than 1,000 companies compete in China's highly fragmented electric bicycle industry. Total sales of the electric vehicles rose to 21 million in China last year, according to data from an industry group, China Bicycle Association.

The Wuxi, Jiangsu-based firm has met representatives from more than 40 investment banks to discuss its potential initial public offering (IPO) in the Small and Medium Enterprise Board in Shenzhen, Hu said.

"There is a higher premium in the SME board as people generally consider that smaller firms enjoy stronger growth potential," he said.

Hu declined to give a figure on the size of the share offering, only saying it is still under negotiation.

"If there is a need, we will consider an IPO on a large scale," he said. ($1=6.830 Yuan) (Reporting by Michael Wei and Kirby Chien; Editing by Ken Wills)

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UPDATE 2-China's BYD says Buffett wants to raise stake 31 Aug 2009 17:01

* BYD expects to sell electric car in US in 2010

* BYD keen on mainland A-share listing, maybe in the next yr

* Multinational automakers in talks to buy BYD batteries

* Shares close up 8 pct in weak HK market

(Adds details and analyst comments)

By Joanne Chiu

HONG KONG, Aug 31 (Reuters) - U.S. billionaire Warren Buffett intends to raise his stake in Chinese electric car and battery maker BYD Co Ltd <1211.HK>, BYD's chairman said on Monday, sending shares in his company up 8 percent.

MidAmerican Energy Holdings, a unit of Buffett's Berkshire Hathaway <BRKa.N>, bought 10 percent of BYD for $230 million or about HK$8 a share last September, sparking a massive rally in the stock. [ID:nN26317503]

"MidAmerican has always intended to raise its stake in BYD because it believes BYD has good prospects in the development of renewable energy, but we are still considering (whether to sell more)," BYD Chairman Wang Chuanfu told reporters on Monday.

BYD, Hong Kong's largest listed auto stock, also said it expects to sell its e6 electric car in the United States in 2010, a year ahead of schedule.

"BYD shares are not cheap at the current price level, but since the company's strategy is in line with Beijing's policy, and with the support of Buffett, the market is willing to pay a premium for that," said Ben Kwong, the chief operating officer of KGI Asia.

China's government has been encouraging local automakers to focus on more fuel efficient models and environmentally friendly technologies.

BYD shares rose 8 percent to close at HK$48.6 on Monday, more than six times what MidAmerican paid and valuing the company at about $13 billion. The benchmark Hang Seng index <.HSI> fell 1.9 percent.

AMBITIOUS PLANS

BYD has ambitious plans for its hybrid and rechargeable electric vehicles, aiming to sell as many as 9 million units by 2025 to take on heavyweights like General Motors [GM.UL] and Toyota Motor Corp <7203.T>.

It launched a gasoline-electric hybrid electric car, F3DM, in China last year and expects to sell its all-electric car e6 to the United States in 2010, a year earlier than its original 2011 target. BYD says the e6 is capable of driving 400 kilometres (249 miles) on a single charge.

"e6 will be launched in the United States by the end of 2010 and they are now being tested under U.S. regulations," Wang said.

The electric cars will be sold in Shenzhen first in the fourth quarter of 2009 and will gradually expand to other cities in China, he added.

BYD has sold about 100 F3DM cars to governments and corporates and plans to sell to individual customers starting in September.

It sold a total of 180,000 vehicles in the first half of the year, up 1.5 times from a year ago, which helped nearly double its net profit to 1.18 billion yuan ($173 million) for Jan-June.

BYD said it now hopes to exceed its 2009 sales target of 400,000 vehicles.

For result statement, please click http://www.hkexnews.hk/listedco/listconews/sehk/20090830/LTN20090830046.pdf

CHINA LISTING

BYD is keen on a stock market listing in mainland China and may look to do so in the next year, Wang said.

The company has previously said it planned to issue up to 100 million A shares on the Shenzhen stock exchange to raise capital for development projects [ID:nHKG366024].

The issue could be worth HK$4.6 billion ($594 million) based on its share price on Monday.

BYD, which began life as a maker of rechargeable batteries in Shenzhen in 1995, is in talks to sell its batteries to multinational car makers including Volkswagen <VOWG.DE>.

"Batteries are our core products and we are willing to supply them to companies in the same industry," Wang said. ($1=HK$7.751=6.830 yuan)

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BYD

 * BYD Company Ltd <1211.HK> said on Thursday that the China 
Securities Regulatory Commission had granted approval and 
MidAmerican Energy had completed its purchase of 225 million new 
H shares holding 9.89 percent of the company.

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INTERVIEW-UPDATE 1-BYD aims to sell 700,000 vehicles in 2010 27 Jul 2009 13:56

Aims to sell 75 pct more vehicles in 2010 from 2009 target

* To invest in new energy model bus and coach manufacturing

* BYD expects 2025 vehicle sales to reach 8-9 mln units

* Shares up 8.5 pct in broader market up 1.3 pct

(Adds company statement and share price)

By James Pomfret and Joanne Chiu

SHENZHEN, July 27 (Reuters) - China's BYD Co Ltd <1211.HK>, a battery maker that aspires to be a leading electric vehicle producer, has set its 2010 vehicle sales target at 700,000 units, quadruple its sales in 2008, a senior executive said on Monday.

BYD Auto, a unit of the rechargeable battery maker partly owned by Warren Buffett's Berkshire Hathaway <BRKa.N>, sold 170,000 vehicles in 2008 and aims to sell 400,000 units this year, according to Henry Li, general manager of BYD Auto's export arm. Li said vehicle production capacity will double every year for the next few years and that he expects vehicle sales to reach 8-9 million units by 2025.

The company also expects half of its total vehicle production capacity will be exported by 2025.

"Exports will account for a minimal portion (of sales) of several thousand to 10,000 units this year," said Li.

"This is because of the financial crisis overseas; we are focused on domestic growth," he told Reuters in an interview.

BYD has developed rechargeable electric vehicles that it hopes will eventually compete with the likes of General Motors [GM.UL], Renault <RENA.PA> and Toyota Motor <7203.T>.

The company also said late on Sunday evening that it will buy a bus and coach maker, Hunan Midea Coach, for 60 million yuan. It will invest and develop a production base with annual output of about 400,000 units of vehicles and components in the Hunan Environmental Industrial Park.

For company statement please read http://www.hkexnews.hk/listedco/listconews/sehk/20090726/LTN20090726010.pdf

Shares in BYD, which began life as a maker of rechargeable batteries but now also makes mobile phones and automobiles, rose 8.5 percent in a broader Hong Kong market up 1.3 percent.

The stock has more than tripled in 2009, outperforming a 40 percent jump on the benchmark Hang Seng Index <.HSI>.

Berkshire Hathaway invested $230 million last September for a 10 percent stake in BYD in a move seen as a stamp of approval for the firm little-known outside of China and Hong Kong, analysts said.

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China BYD to raise 2.85 bln yuan in Shenzhen listing 24 Jul 2009 09:48

HONG KONG, July 24 (Reuters) - Chinese battery and electric car maker BYD Company <1211.HK> expects to raise 2.85 billion yuan ($417.3 million) via a placement of not more than 100 million A shares, and said it would seek shareholder approval of the plan on Sept 8.

The proposal involves the listing of renminbi-denominated shares on the Shenzhen Stock Exchange, it said in a statement issued late on Thursday. The proceeds will be invested in the production of lithium ion batteries, expansion of an automobile parts and accessories unit, and the second phase of a solar battery manufacturing project.

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ANALYSIS-Automakers seek battery ties as cars go electric 17 Jul 2009 12:32

Car, battery makers team up to secure competitive edge

* Electric cars to lower bar for entry into auto sector

* Batteries to be core tech but hurdles remain to car-making

By Chang-Ran Kim and Kiyoshi Takenaka

TOKYO, July 17 (Reuters) - Rechargeable batteries could become the core technology for the auto industry if pure electric cars enter the mainstream -- a prospect that has carmakers racing to team up with battery makers.

Auto executives say that with fewer moving parts, easy-to-assemble electric cars may also lower the bar for entry into the cut-throat autos industry and make battery manufacturers the unlikely competitors for car giants.

"I've said for years that Toyota's rival will be Hitachi," said Kenichiro Senoo, a professor at the Research Center for Advanced Science and Technology at the University of Tokyo.

"Or that in 2016, you'd be able to buy a car assembly kit in Akihabara," he said, referring to Tokyo's famous electronics shopping district.

Already, China's battery maker-cum-automaker BYD Co <1211.HK> has entered the scene, bad news for automakers whose expertise lies in the complex task of fitting together thousands of components into a safe and reliable vehicle. Some see the shift to electric cars turning the auto industry into something resembling the PC sector, where Intel Corp <INTC.O> and Microsoft Corp <MSFT.O>, which supply key devices across PC brands, take the lion's share of the industry profit. Firms such as Panasonic Corp <6752.T> and Hitachi Ltd <6501.T>, which have the core technology to make batteries, could be the Intels and Microsofts of the auto industry of the future.

Japanese electronics conglomerate NEC Corp <6701.T> plans to raise around $2 billion and use some of that money in growth areas such as lithium-ion batteries, a source and the Yomiuri newspaper said on Friday. [ID:nT291536] [ID:nT288861]

LINKING UP

Lithium-ion batteries are seen as the most practical option available now for electric vehicles as they have the higher energy density required to feed the electric motors that power the car instead of an engine.

To avoid being sidelined, top automakers are looking to tie up with battery giants to have a say in developing batteries that still face cost and safety hurdles for commercial viability.

Most hybrid cars use nickel-metal hydride batteries, which store less energy.

Early movers such as Toyota Motor Corp <7203.T>, Nissan Motor Co <7201.T> and Mitsubishi Motors Corp <7211.T> have set up joint ventures to produce batteries with Panasonic, NEC and GS Yuasa Corp <6674.T>, respectively.

"When we were doing the research for electric vehicles (EVs), we believed we needed to have the core battery technology in-house," said Andy Palmer, senior vice president and head of product planning at Nissan, which wants to be the world's first automaker to mass-market zero-emission electric vehicles in 2012.

"That was a strategic decision we chose to make. If Nissan is right ... and zero-emissions is the future, then we've ensured that future by having that technology."

The Nissan-NEC venture is looking to sell its lithium-ion batteries widely in a move some say resembles an open structure that Intel succeeded with.

Not to be left behind, Volkswagen AG <VOWG.DE> has sealed non-equity battery partnerships with Japan's Sanyo Electric Co <6764.T> and Toshiba Corp <6502.T>.

Europe's top automaker said in May it would explore options for a third partnership, with China's BYD, which already has the endorsement of Warren Buffett's Berkshire Hathaway <BRKa.N>. [ID:nLP324277]

Daimler AG <DAIGn.DE> now has a 6 percent stake in Tesla Motors Inc, a California start-up that has used its battery technology to create high-performance sports cars under its own brand. [ID:nLD686182]

In danger of falling through the cracks is Honda Motor Co <7267.T>, which formed a late venture this year with Mitsubishi Motors partner GS Yuasa limited to batteries for hybrid cars.

Honda has dismissed electric cars as a short-range compromise, betting instead on hydrogen fuel cell vehicles as the zero-emission option to ultimately replace today's cars.

Absent from the growing list of tie-ups are U.S. automakers General Motors, Ford Motor Co <F.N> and Chrysler, which have little cash to spare.

Toyota is going even further by researching, without the involvement of partner Panasonic, an advanced battery that it hopes would beat lithium-ion batteries in performance and cost.

Panasonic, for its part, is in the process of acquiring Sanyo, while SB LiMotive, a battery venture between South Korea's Samsung SDI <006400.KS> and Germany's Robert Bosch [ROBG.UL], is buying U.S. battery maker Cobasys. [ID:nSEO55008]

BUMPS AHEAD

While batteries could take centre stage in the world of electric cars, it's not all doom for automakers. The rigorous testing involved in ensuring safety is an area where battery makers trail automakers.

"I think electronics makers can probably make cars if they buckle down to it," said Mitsuru Homma, executive vice president of Sanyo, the world's largest rechargeable battery maker.

"But electronics companies are miles behind automakers when it comes to awareness of safety and product liability concerning vehicles, and the technological know-how on the whole process of auto-making. Some things are best left to the experts," he said.

Succeeding in the auto industry also requires brand power, competitive sales channels and services, and expertise in parts integration, analysts said.

That probably means few battery giants, which also include South Korea's LG Chem Ltd <051910.KS>, Hitachi and A123 of the United States, are likely to go down the same road as BYD.

"If consumers are happy with that level of crudeness, then maybe BYD has a chance," a top executive at a Japanese automaker said.

"But there's something to be said for building a sophisticated, fun-to-drive car, and that takes experience." (Additional reporting by Nobuhiro Kubo; Editing by Valerie Lee) ((ran.kim@thomsonreuters.com; +81-3-6441-1804; Reuters Messaging: ran.kim.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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China's BYD plans Shenzhen share issue 16 Jul 2009 08:27

HONG KONG, July 16 (Reuters) - Chinese battery and electric car maker BYD Company <1211.HK> said it planned to issue up to 100 million A shares on the Shenzhen Stock Exchange to raise capital for development projects.

The company said on Thursday the cash raised would be used to fund lithium-ion and solar battery production and the expansion of automobile products and accessories.

BYD said it would seek shareholder approval for the listing plan in a meeting to be held on September 11, but gave no further details.

BYD originally proposed a Shenzhen or Shanghai listing in January last year but delayed the plan due to the weak performance of the A share market in 2008.

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• MAY 27, 2009

Volkswagen Eyes China Venture

Auto Maker Weighs Deal With BYD on Lithium-Ion Battery Technology

By CHRISTOPH RAUWALD and NORIHIKO SHIROUZU

Volkswagen AG said it is exploring options for teaming up with China's BYD Co. on hybrid and electric vehicles powered by lithium batteries -- highlighting auto makers' efforts to secure battery supplies for alternative-energy vehicles.

The companies are exploring the possibility that Shenzhen-based BYD would supply a lithium-ion battery technology it developed for plug-in hybrid and all-electric battery-powered cars, people familiar with the negotiations said.

Volkswagen, based in Wolfsburg, Germany, would be the first major automotive partner for BYD, which moved into the spotlight last year when a company controlled by investor Warren Buffett invested $230 million in the Chinese car maker, mainly because of BYD's cost-effective technology.

BYD -- one of the world's biggest producers of cellphone batteries and a fledgling, fast-rising auto maker in China -- caused a stir in December by launching a plug-in car ahead of more-established foreign rivals.

"Hybrids and electric vehicles will play an increasingly important role," Ulrich Hackenberg, VW's executive board member for technical development, said in a prepared statement. "Particularly for the Chinese market, potential partners such as BYD could support us in quickly expanding our activities."

View Full Image

Bloomberg News

BYD makes plug-in hybrid and electric-battery-powered cars. Above, the contacts used to recharge a BYD auto.

BYD also is talking to Ford Motor Co. and another European auto maker about similar arrangements, the people said. The status of those negotiations wasn't clear.

"We are always in discussions with many suppliers as a standard course of our business, but we have nothing to share at this time," said Whitney Small, a Ford spokeswoman in Bangkok.

Concerns over gasoline shortages and climate change have prompted a global race to commercialize affordable electric-battery cars and plug-in hybrids that get most of their power from batteries.

A big obstacle is insufficient industry capacity to produce lithium-ion batteries, which is pushing auto makers like VW to team up with multiple lithium-ion battery suppliers. Aside from BYD, Volkswagen has signed letters of intent with Sanyo Electric Co. and Toshiba Corp., both of Japan. Volkswagen's premium Audi AG brand last year agreed to cooperate with Sanyo on developing lithium-ion batteries, saying the new technology should be ready for large-scale production in 2012.

Getty Images

Concerns over gasoline shortages and climate change have prompted a global race to commercialize affordable electric-battery cars and plug-in hybrids that get most of their power from batteries.

While lithium-ion batteries are widely seen as the technology that will ultimately power most plug-in cars, the batteries' use has been hindered by a relatively high price, limited durability and safety concerns. BYD says it has largely resolved those issues by turning to a safer, more cost-effective technology: iron-phosphate-based lithium-ion technology.

Lithium-ion batteries produced in China are generally about half the cost of such batteries made in Japan and the West. Costs may rise as Chinese auto makers invest to improve their technology, however.

Germany's Daimler AG last week announced it will buy a 10% stake in Silicon Valley electric-vehicle start-up Tesla Motors Inc. for "a sum in the double-digit millions of euros." Daimler and Tesla already were moving to integrate Tesla's lithium-ion battery packs and charging electronics into the first 1,000 electric versions of Daimler's tiny Smart two-seater. As part of the closer relationship, Daimler and Tesla will intensify development of battery systems, electric-drive systems and individual vehicle projects.

Write to Christoph Rauwald at christoph.rauwald@dowjones.com

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MidAmerican Energy, BYD Partner on Battery Storage Initiative

May 27,2009

Most of the excitement related to BYD (BYDDY.PK) has centered on the remarkable advances the company has made in applying its proprietary battery technology to electric vehicles such as the e6 model which I wrote about earlier this month. BYD’s innovations in battery technology have made widespread adoption of electric vehicles likely for the first time.

According to a recent blog post by Marc Gunther, Berkshire Hathaway (BRK.A) subsidiary MidAmerican Energy now plans to utilize the same battery technology to store power generated from renewable resources such as solar and wind power. Mr. Gunther has covered BYD in the past for Fortune Magazine and was the main source for an article I wrote in April regarding BYD.

Positioning MidAmerican for Cap and Trade

MidAmerican Energy’s Chairman David Sokol is on record in a Washington Post editorial opposing the Obama Administration’s “cap and trade” approach to dealing with climate change. Sokol’s arguments center on the reality that cap and trade will amount to a tax on consumers regardless of mitigation efforts the government might take to issue tax rebates to low income consumers to offset higher energy prices. Sokol also expressed his views on the subject in a CNN interview:

Here is a link to the video.

Regardless of his opposition, Sokol appears to understand that some form of cap and trade will be implemented based on political realities and he has taken steps to prepare MidAmerican for this reality. As Warren Buffett noted in his recent letter to shareholders, MidAmerican is the largest producer in the nation of energy generated through wind power. Over $1.8 billion was spent in 2008 alone on investments in wind generation capability.

However, as Sokol noted in the video, one of the main problems with wind and solar energy is that power can only be generated when the wind is blowing or the sun is shining. Technology is needed to store the energy that is produced for later use.

Leveraging BYD Battery Technology

Based on Marc Gunther’s blog post, MidAmerican will soon harness BYD’s battery technology to tackle the storage problem:

“We’ve never really had storage capability on utility systems,” Sokol told me recently, by phone. “Given the progress BYD has made on the technology of batteries for electric vehicles, the question is, how do we ramp that technology up so that we can use it for multiple purposes in the utility world?

“Probably the most obvious is the ability to store intermittent renewable resources, such as wind or solar,” Sokol said.

Gunther reports that MidAmerican will soon implement the battery technology in Portland on a limited scale while BYD will do the same on a larger scale in China:

This fall, MidAmerican will build a 2 megawatt storage facility using BYD batteries at an existing substation in Portland, Oregon, where it operates the local utility, Pacific Power. BYD, meanwhile, is building a bigger storage facility in China, and plans to build a third one in a still-undisclosed location on in southern California. That’s about all I can tell you because BYD is reluctant to talk about its research.

The 2 megawatts of battery storage in Portland will allow MidAmerican to test BYD batteries to see how well they charge, what control systems are needed to discharge the electricity and to analyze their reliability and cost. “It will let us do a fair amount of testing to understand the economics of a 100 or 200 megawatt storage facility to back up wind,” Sokol says.

Based on BYD’s success applying their technology to electric vehicles and dramatically extending driving range, it is reasonable to expect that the same technology could be used in the manner that MidAmerican and other utilities require in order to economically harness wind and solar power. The utilities that are best positioned for the new cap and trade regime will be those that generate power from sources that do not result in carbon emissions.

Regardless of Sokol’s doubts about the viability of cap and trade as a public policy, he is positioning MidAmerican well for the new reality. That’s what Berkshire Hathaway shareholders would expect from a man reported to be at the top of the “short list” to eventually succeed Warren Buffett as CEO of Berkshire Hathaway.

Disclosure: The author owns shares of Berkshire Hathaway. MidAmerican energy is a subsidiary of Berkshire Hathaway. Berkshire Hathaway owns shares of BYD.

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BYD & Volkswagen sign MOU

Volkswagen (VOW XE) said it has signed a MOU with BYD (1211 HK – HK$32.90) for a partnership
in the area of hybrid and electric car powered by lithium batteries as the management of Volkswagen
believes hybrid and electric vehicles will pay an increasingly important role in the future, especially in
China market. The German carmaker is the first major industrial partner for BYD. In March, BYD’s
chairman unveiled that his company was in talks to supply batteries to carmakers in Europe and US, but
he did not name them. Lithium-ion batteries are widely recognized as the technology that will ultimately
work, but it has been hindered by limited durability and over-heated concern. BYD believes it has
largely resolved the problems through its more cost-effective technology called iron-phospate-based
lithium-ion batteries.

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Battery maker remains `unattractive' after share sale

19/05/2009

Morgan Stanley yesterday raised the target price of BYD Company (1211) by 70 percent to HK$16.5, but still maintains an "unattractive" evaluation on its stock performance. BYD president Wang Chuanfu on Friday sold all his 11.2 million H shares in the company for HK$280 million, or HK$25 each, about 10 percent below the market price. He still holds 27.8 percent of the total issued share capital. "Wang's share disposal was carried out at the behest of Chinese regulators and not due to any concerns over the company's future development." Bank of China International analyst Frank He said. "The company is still awaiting central government approval to sell 225 million shares to Warren Buffett's MidAmerican Energy." Buffett last year said he would buy a 10 percent stake in electric vehicle maker BYD - a deal which is still in process. BYD said it is scheduled to launch its first all-electric car, the E6, in the second half. "We think intensifying competition in handset components and batteries will put great pressure on BYD's margin outlook in what is a fragile market. We retain our Underweight rating." said a Morgan Stanley research report out yesterday. Morgan Stanley said while BYD's move to solar batteries and industrial power storage businesses may offer long-term growth potential, these plans are in their early stages and expected to contribute hardly any immediate revenue in 2009. "The share price has almost doubled since April 2009 and the stock now trades at P/E multiples of 41 times for 2009 earnings against our estimate. We see the current valuation as demanding. "We believe the near-term catalyst for the stock will be battery shipments to European and North American automakers... we reiterate our "sell" rating for BYD," He wrote. The stock dipped 0.60 percent to end at HK$26.80 yesterday.

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The Sun Shines on Solar Stocks

May 1,2009

By Robert Curran

By Rob Curran and Geoffrey Rogow

The Obama administration wants to recreate President Kennedy’s “space race” in pursuit of alternative energy, and some solar-power and electric-car battery stocks are already rocketing higher.

Shares of lithium-battery makers GS Yuasa of Japan; BYD of Hong Kong; and U.S.-listed lithium producer Sociedad Quimica y Minera de Chile have all more than doubled since their lows around the time of Obama’s election victory. To technicians, that kind of momentum means the stocks are in “strong uptrends.” Caveat emptor: corrections are likely to be extreme, too.

BYD, which is Warren Buffett’s alternative-energy play, has started producing and selling its own hybrid electric vehicle in China for about $22,000 a pop. GS Yuasa supplies Honda Motor with batteries for its electric car.

The beauty of investing in battery companies is the investor doesn’t have to bet on which — if any — electric car will eventually catch on, however.

Obama’s goal to put 1 million plug-in vehicles on the road in the U.S. by 2015 is gravy for companies that are already selling their batteries for more prosaic uses such as mobile phones. There will likely be many false starts in the race toward a “green” car, but a lot of battery power will be expended in the race.

Meanwhile, solar-power companies, one of the hot plays of early 2008, are having another hour in the sun. Both the Market Vectors-Solar Energy ETF and Claymore/MAC Global Solar Energy Index ETF have both halved, then nearly doubled
so far this year. And those are broad ETFs, not single stocks.

Long term, however, technicians note both ETFs and much of the sector is still in the midst of a strong uptrend.

“It’s one of the few areas in the market people can dream about real and big growth,” said Phil Roth, chief technical strategist with Miller Tabak. “There is almost nothing with that kind of growth and the hot money will gravitate to it.”

Pacing the sector is industry leader First Solar Inc. The maker of solar-power harnessing panels and cells is up 23% for the week after the company reported its first-quarter net income more than tripled on surging revenue
Wednesday.

“The stock has almost doubled off the lows and its all-time high was $300. There’s no reason it shouldn’t pass that in the next couple years,” said Roth.

“With the first quarter quite possibly marking the bottom of the industry’s first-ever down cycle, there was no sign of those troubles in First Solar’s stellar results,” said Raymond James analyst Pavel Molchanov. “To summarize our thesis on First Solar: The addition of solid utility-scale project development capabilities to the world’s lowest-cost (solar cell maker) … for a potent combination.”

As investors in the “commodities theme” and indeed the solar sector discovered to their detriment in 2008, “hot-money” sectors can cool off fast. Investors eager to participate in the latest space race should remember that not all U.S. or Russian rockets made it to the moon.

Here's the Story on Berkshire's Munger

MAY 1, 2009

By SCOTT PATTERSON

Warren Buffett is synonymous with Berkshire Hathaway Inc., getting credit for billions of dollars in big deals that have made him an icon to investors around the world. But on the one day a year when he faces his shareholders, at his side will be his longtime partner, Vice Chairman Charles Munger.

On Saturday, the partners will take their decades-old act back to the stage in Omaha, Neb., telling thousands of loyal shareholders that they see huge opportunities amid the financial crisis that drove Berkshire to its worst performance since Mr. Buffett took it over 44 years ago.

Charlie Powell

BOOK VALUE: Berkshire Hathaway's Charles Munger reads businesses well -- and, as a bibliophile, he goes through several books a week.

The two men, Mr. Munger, 85 years old, and Mr. Buffett, 78, speak frequently and confer about most deals, but there are differences. Mr. Munger is laconic; Mr. Buffett loquacious. Mr. Munger leans Republican; Mr. Buffett tilts Democratic. Mr. Munger will pay hefty price tags for businesses; Mr. Buffett likes safe, dirt-cheap stocks.

Mr. Munger's views have pushed Berkshire into some surprising directions. Several years ago, Mr. Munger learned of an obscure Chinese maker of batteries and automobiles called BYD Inc., which hopes to create a cheap, functional electric car.

A Chinese tech company is nothing like the shoe and underwear makers Berkshire had been buying. But Mr. Munger was enthusiastic, less about the technology than about Wang Chuanfu, who runs BYD. Mr. Wang, Mr. Munger says, is "likely to be one of the most important business people who ever lived."

Mr. Buffett was skeptical at first. But Mr. Munger persisted. David Sokol, chairman of Berkshire utility MidAmerican Energy Holdings Co., paid a visit to BYD's factory in China and agreed with Mr. Munger's assessment. Last year, MidAmerican paid $230 million for a 10% stake in BYD.

"BYD was Charlie's idea," Mr. Buffett said. "When he encounters genius and sees it operating in a practical way, he gets blown away."

Mr. Munger also was an advocate of Berkshire's $4 billion investment in Iscar Metalworking Cos., an Israeli maker of metal-cutting tools, in 2006. The investment was relatively pricey, especially given Mr. Buffett's preference for cheap companies. But Mr. Munger convinced his longtime partner that Iscar was worth the cost.

The deal helped pave the way for other large investments by Berkshire in companies outside the U.S. Results on the two investments haven't been reported.

The men share a view that the U.S. financial system will change, and criticize past excesses. "People were horribly overpaid for just pouring on leverage," Mr. Munger said. The two investors have repeatedly warned about the systemic risks posed by the abuse of leverage and derivatives.

More

• Check in with the MarketBeat Blog throughout the weekend for updates from the Berkshire Hathaway shareholder meeting.

Mr. Munger thinks regulators may significantly curb the amount of leverage, or borrowed money, that banks can use. That will drive down pay at Wall Street firms, since traders won't be able to make as many big, leveraged bets. This could benefit Berkshire, with its cash hoard of $24.3 billion at the end of 2008. "There's going to be new rules in the game," he said. "For someone like us, that's going to be very interesting."

Saturday's meeting comes after the worst year in Berkshire's history, when it lost 9.6% in book value per share, a common metric it uses to track its performance. It marked the biggest decline since Mr. Buffett took over the company in 1965, when it was an East Coast textile maker, and turned it into an investing powerhouse. Berkshire's shares have fallen 36% since September.

The two investors say they expect Berkshire to return to form in the near future, and they continue to collaborate. They speak on the phone at least once or twice a week from their respective offices -- Mr. Buffett in Omaha, Mr. Munger in Pasadena, Calif.

"Charlie understands the essence of a lot of businesses probably better than people in those industries do," Mr. Buffett said. "He gets right to the point of it quicker than anyone I've seen.

Mr. Munger grew up in Omaha and joined the U.S. Army during World War II, serving as a meteorologist in Alaska. After the war, he earned a degree from Harvard Law School and became an attorney at a California firm.

He also became a serious investor. He met Mr. Buffett in an Omaha restaurant in 1959. After working together on a number of investments for many years, the two joined forces full time at Berkshire in 1978, when Mr. Munger became vice chairman.

One of their early deals is one of Berkshire's best-known brands. In 1972, Mr. Munger helped persuade Mr. Buffett to participate in a joint purchase of See's Candies, a California boxed-chocolate maker, for $25 million. While the price seemed steep by some measures, the deal was wildly successful, producing more than $1 billion in pretax earnings.

Without such investments, it isn't likely that Berkshire could have grown as large as it has, says Whitney Tilson, manager of T2 Partners LLC, a New York money manager that owns Berkshire stock. He says: "Munger helped Buffett appreciate some of the higher-quality investments that lead to multibillion-dollar outcomes several decades later."

Financially, Mr. Buffett has done better. He boasts a net worth of $37 billion in 2008, according to Forbes magazine's list of the world's wealthiest people, putting him at No. 2 in the world behind Microsoft Corp. founder Bill Gates. Mr. Munger placed 522 on the list, with a net worth of $1.4 billion.

Mr. Munger has won the respect of Mr. Gates, who sits on the company's board. When the Justice Department accused Microsoft of abusing monopoly power with its Windows operating system in the late 1990s, Mr. Gates says he sought out Mr. Munger for legal advice. He also consulted Mr. Munger when considering how to set up his charity, the Bill & Melinda Gates Foundation.

"Warren wouldn't have done nearly as well without his help," Mr. Gates said in an interview.

Write to Scott Patterson at scott.patterson@wsj.com

Autoshow - China BYD in talks to supply US, Europe firms

SINGAPORE, April 20 (Reuters) - Moody's Investors Service on Monday cut its ratings outlook on Singapore's three banking groups to "negative" from "stable", saying the global recession would hurt earnings and asset quality.

DBS Group <DBSM.SI>, United Overseas Bank <UOBH.SI> and Oversea-Chinese Banking Corp <OCBC.SI> are currently rated "Aa1" for both long-term debt and deposits, equivalent to the AA-plus rating assigned by rivals Standard & Poor's and Fitch Ratings.

"The negative outlooks of DBS, OCBC and UOB reflect the fact that the deepening global economic downturn could have a protracted impact on their asset quality and earnings," Moody's Vice President and Senior Analyst Christine Kuo said in a statement.

But Moody's also said the three Singapore lenders had strong franchises and healthy credit profiles, and benefited from a "very high level of support" from the Singapore government.

"Consequently, even in a severe downside scenario, we would expect the banks' financial strength ratings to remain above average and their debt and deposit ratings to be solidly positioned within the Aa-rating band," Kuo said.

Singapore last week reported its economy contracted a record 11.5 percent from a year earlier in the first quarter and said gross domestic product could shrink as much as 9 percent for the whole of 2009.

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China Sets Electric-Car Plan

By NORIHIKO SHIROUZU

BEIJING -- Nissan Motor Co. is expected to agree to help set up an electric-car program in a major Chinese city, in an unusual partnership between the Chinese government and a foreign company to further Beijing's efforts to develop environmentally friendly automobile technology.

Under the deal, which could be signed as early as Friday, Nissan would work with China's Ministry of Industry and Information Technology and the government of Wuhan to cooperate on a pilot electric-vehicle program in the central Chinese city, according to people familiar with the matter.

Nissan is expected to provide free electric vehicles to Wuhan and to help develop a network of vehicle-charging stations, the people said. It isn't clear how many cars or how much money the project involves.

AFP

Nissan is partnering with China to start an electric-car program in Wuhan. The company is making a global push for its electric cars, like the Nuvu, above.

Nissan and the industry ministry are also expected to sign a memorandum of understanding to jointly explore ways to make electric vehicles popular in China.

The planned agreements are part of China's efforts to promote vehicles powered at least partly by batteries. China's government is encouraging its own auto industry to shift to such electric vehicles, believing auto makers can use the technology to narrow the gap with bigger foreign rivals. Beijing last month unveiled an auto-industry plan to create capacity to produce 500,000 "new energy" vehicles, such as all-electric battery cars and plug-in electric hybrid vehicles by 2011.

Wuhan, which has a population of nine million, is among 13 cities recently chosen by the Chinese government for a pilot program to boost use of new-energy vehicles. Those cities -- which also include Beijing, Shanghai and Chongqing, the country's biggest municipalities -- are supposed to provide subsidies for purchases of all-electric battery cars, plug-in hybrids and hydrogen-fuel-cell cars. They are expected to collectively put 60,000 new-energy vehicles in service in four years.

The industry ministry believes China could learn from Nissan, an experienced advocate of electric propulsion, which has plans for a big global push for its line of small battery cars, starting in 2010. By that year, the company is expected to start marketing a compact all-electric battery car to corporate-fleet customers in the U.S. and Japan. People familiar with the planned Nissan agreement said the joint effort could be extended to more cities, such as Beijing.

In China, Nissan plans to launch the same compact battery car as early as 2011 and is considering building factories to produce batteries and the entire car in China -- something Nissan wants to accomplish over the next few years to "be cost competitive," according to a senior company executive. Some auto makers believe that by 2020, 10% to 20% of China's passenger-auto sales will come from electric cars, plug-in electric hybrids and other new-energy cars.

The planned Wuhan program is expected to be patterned on a program currently being implemented in Nissan's home prefecture of Kanagawa, just south of Tokyo. Kanagawa plans to install 1,000 charge stations by 2014. Kanagawa Gov. Shigefumi Matsuzawa is expected to deliver a speech Friday at an electric-vehicle forum in Beijing, where the Wuhan plan is expected to be announced.

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com

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• MARCH 31, 2009

BYD Is in Battery-Supply Talks

Chinese Plug-In Car Maker's Chairman Looks to Put Its Technology in U.S., European Cars

By NORIHIKO SHIROUZU

BEIJING -- Fledgling auto maker BYD Co. is in talks to supply its batteries to car companies in Europe and the U.S., Chairman Wang Chuanfu said in an interview.

A deal could solidify BYD's growing prominence in the electric-car market after it surprised the automotive world by launching a plug-in car in December, ahead of more established foreign rivals.

Mr. Wang, BYD's top executive and founder, and other BYD officials declined to identify the companies the Chinese company is negotiating with. Mr. Wang said BYD is negotiating with one U.S. auto maker and two in Europe about supplying lithium-ion batteries it produces in Shenzhen, where BYD is based. Companies including Toyota Motor Corp., General Motors Corp. and Nissan Motor Co. have chosen battery suppliers for their electric cars, but others are still talking to various companies or haven't announced who their suppliers are.

Bloomberg News

BYD hopes to sell to other car makers the same batteries it uses in its F3DM plug-in hybrid, which it began selling on a limited basis in December.

Mr. Wang said the batteries it is considering supplying are the same ones used in its F3DM sedan, a plug-in hybrid that BYD started selling in December to Chinese fleet customers, such as state-owned enterprises and government agencies. The F3DM's limited release hit the market about a year ahead of a similar car, also initially for fleet customers, being planned for late this year by Toyota. BYD plans to start selling the F3DM to consumers in June.

A deal to supply its batteries to other car companies could put BYD -- a battery producer that began selling cars in 2005 -- in competition with battery companies with similar technology, such as A123 Systems Inc., a closely held company based in Watertown, Mass. A123 Systems couldn't be reached for comment.

Mr. Wang said BYD's ability to produce lithium-ion battery cells at relatively low cost, in part because of its choice of technology and inexpensive Chinese labor, gives the company an advantage over other battery makers. Last year, a company controlled by investor Warren Buffett invested $230 million in BYD, chiefly because of BYD's cost-effective technology.

Concerns over gasoline shortages and climate change have prompted a global race to commercialize affordable electric-battery cars and plug-in hybrids like the F3DM that get most of their power from their batteries. Those efforts have been limited largely by immature battery technology.

While lithium-ion batteries are seen as the technology that will ultimately work, their successful use has been hindered by relatively high price, limited durability and safety concerns. BYD says it has largely resolved those issues by turning to a safer, more cost-effective technology called iron-phosphate-based lithium-ion.

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com

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BYD yearly net profit down 36.6 pct.

    March 30 (Reuters) - Year ended December 31, 2008 
    (in million yuan unless stated) 
    Shr (yuan)               0.50      vs 0.79 
    Net                      1,021.25  vs 1,611.71 
    Revenue                  26,788.25 vs 21,211.21 
    Company name             BYD Co. Ltd. 
    NOTE - BYD <1211.HK> is engaged in the research, development, 
manufacture and sale of rechargeable batteries, liquid crystal 
display and other electronic products. 
    The calculation of share earnings is based on the weighted 
average of 2,050.10 million shares in issue during the two years. 
    Total dividend for year is nil vs 1.3 yuan in 2007. 
    The figures are prepared in accordance with Hong Kong 
Financial Reporting Standard ("HKFRS"). 

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Nokia says has stopped using phone subcontractors

HELSINKI, March 26 (Reuters) - Nokia <NOK1V.HE>, the world's top cell phone maker, has stopped using subcontractors in the assembly of its phones due to the faltering demand for mobile handsets, a spokeswoman for the company said on Thursday.

"In engine making we have fully stopped (using subcontractors)," said a spokeswoman for the company.

In 2008 Nokia outsourced approximately 17 percent of manufacturing volume of mobile phone engines, which include the phone and software that enable its basic operations.

Nokia's key subcontractors have been Foxconn <2038.HK>, China's BYD <1211.HK>, Jabil Circuit <JBL.N> and Elcoteq <ELQAV.HE>.

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