The decision by MidAmerican Holdings, owned by Warren Buffett's Berkshire Hathaway, to invest $230 million in a Chinese battery manufacturer as the global financial system melted down in September looked all the wiser Monday.
BYD, a Shenzhen-based battery company turned auto maker, this morning rolled out the first hybrid electric vehicle for sale in China's retail market, beating both US and Japanese car companies to the punch.
The $22,000 mid-sized F3DM model by many accounts isn't the prettiest car around. And who knows how well it will do if Toyota, General Motors and Nissan launch their own hybrids in China. As reported by AP, the car can run up to 62 miles on its electric engine, and shifts to a gasoline engine when the battery runs low. The battery can fully charge in nine hours from a regular electrical outlet and in less than a half-hour at a charging station.
This is big news for proponents of green energy. But for technology gurus in Silicon Valley and Cambridge, Massachusetts, BYD's launch is one more reminder that the US manufacturing sector lags in its capacity to commercialize battery technology and that increasingly China holds the most important cards in this corner of the energy game.
Bill Moore, editor of the online magazine, EV World, put it this way:
With all the talk on Capitol Hill this week about Big 3's plans to introduce advanced, plug-in electric cars, with the CEO's dramatically arriving to testify in conventional hybrids and advanced prototype plug-in models, little if any attention was paid to the fact that America has next to no advanced automotive lithium ion battery production capacity. With the exception of a currently shrinking handful of US-based firms, virtually all advanced nickel metal hydride and lithium ion (Li-ion) production is done overseas, mainly in China, Japan and Korea.
If that persists, and the big auto makers are serious about building a fleet of affordable and reliable hybrid electric cars, then the US could find itself going from dependence on foreign oil to dependence on foreign-made batteries.
There is plenty of US brainpower being sunk into the development of high-tech batteries. Computer-chip giant Intel wants to develop a niche there. But A123 Systems of Watertown, Massachusetts, is on the ground floor in the development of technology to power the transportation sector. It emerged out of MIT in 2001 and has since won financial support from General Electric; and is teaming with General Motors and Norway's Think to make the electric car real. Still, it's a Chinese factory that produces A123's batteries.
Buffett's MidAmerican took a 10% stake in China's BYD this fall. MidAmerican said it wanted to develop storage units for solar and wind energy and to get some piece of the future mass production of battery technology for electric-powered vehicles.
Buffett tends to go for companies with solid foundations and steady growth. His investment in BYD, and the company's rollout today, might just serve as a sobering splash in the face for the US manufacturing sector and some on Capitol Hill.
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