Warren Buffett may have erred in investing in copycat BYD

Article by Christian Andrei, on March 15, 2011

BYD Co. Ltd. has been regarded as the most likely Chinese carmaker to succeed at offering an all-electric car in the U.S. but its future has become murky as a third party has given Reuters and WikiLeaks copies of diplomatic cables that provide details of its unbecoming behavior. During the time when the financial crisis was at its worst, Warren Buffett invested in BYD.

It was an unexpected move for the billionaire as this foreign electric car start-up had a reputation of copying competitors and some of its franchised dealers have been found to put other companies' logos on its own vehicles. Buffett invested $232 million into BYD, taking a 9.9% stake.

In fact, pictures of Buffett shaking hands with Chairman Wang Chuanfu are displayed at the BYD showrooms, having more impact than participating in auto shows and offering more innovations.

But now, doubts are rising on the company’s wellbeing as these diplomatic cables are revealed and industry consultants and executives who have studied BYD’s operations are being interviewed. BYD was exposed to have stolen designs from rivals and then undercutting competitors on price and scrimping on safety.

In an Oct. 30, 2009 cable that was unclassified but marked for U.S. government eyes only, Guangzhou Consul-General Brian Goldbeck wrote that while BYD’s business approach of modifying other company’s car designs just enough to convince Chinese courts that it didn’t violate any patents has had some measure of success, he believes that foreign courts will not be as sympathetic.

This cable was submitted only a few days before Buffett signified his support, which boosted BYD shares. [via reuters]

Topics: byd

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

The bidding war for one of the only 20 examples -- 21 actually, but the 00 version went to a museum -- of the classically beautiful Lamborghini Reventon built and...
by - January 18, 2017
Bentley once again confirmed its plans to push PHEV into their future lineups. As a matter of fact, the Bentayga SUV will be the first to have the plugin hybrid...
by - January 18, 2017
Each time that Mini launches a new generation of the Countryman crossover, a John Cooper Works performance version is always expected to follow. When Mini unveiled the next-gen 2017 Mini...
by - January 18, 2017
Ford Mustang customers won’t be able to specify the V6 powerplant for the latest iteration of the carmaker’s pony car. This comes as the new 2018 Ford Mustang is saying...
by - January 18, 2017
The man sitting at the top of the performance division of Mercedes-Benz – Tobias Moers – cryptically indicated that the Mercedes-AMG GT4 could be really coming. Moers, chief executive of...
by - January 18, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries