Chinese automaker BYD, backed by U.S. billionaire Warren Buffett, continues to tumble down a rocky road.

On Wednesday, Shanghai Daily reported that BYD is expected to lay off up to 70 percent of its workforce after a decline in sales led to a net profit of only 266.74 million yuan ($41.2 million U.S. at the current exchange rate) in the first quarter of 2011. Shanghai Daily claims BYD will cut its numbers of sales-unit employees from 2,600 down to 800 by year's end and says that some of BYD's sales staff have already been dismissed. Job cuts are soon expected to reach other BYD departments.

Independent automotive analyst Zhong Shi says:
BYD had been quite aggressive in expanding production and hiring employees. But the drop in sales and profit slump have triggered higher pressure on cost and so job cuts are inevitable.
BYD's sales reportedly dropped off after the Chinese government ended purchase incentives. The Chinese automaker endured even more pain when General Motors and Volkswagen rolled in with price-competitive, entry-level vehicles. Will BYD rebound from its struggles? Or is the automaker that urges you to build your dreams running out of time?


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    • 1 Second Ago
  • 7 Comments
      Marco Polo
      • 3 Years Ago
      This should be a lesson for everyone who thinks that the PRC is a golden utopia for investment and profit.
        Nick
        • 3 Years Ago
        @Marco Polo
        Well put. As a matter of fact, it's extremely tough, tricky and quite dangerous to invest in China. They're used to naive western investors, and know how to mild them for their euro-dollars.
        • 3 Years Ago
        @Marco Polo
        Actually PRC is a great place to find business opportunity, having been involved myself in two very successful product lines for industrial use. That's profitable build and sale IN CHINA, not simply building in China and selling to America. Taxes are low, lots of talented people, and many sales prospects. The downside is really crappy IP protection (which you can address by having a strong Chinese partner who has skin in the game with you to pursue encroachment), and the occasional capriciuosness of local gov'ts. As if THAT doesn't happen in the US... The rub in China is that people are not interested in BEVs. At least not the 4 wheel kind. You'll get run over by the swarms of E-bikes, which are (theoretically) limited by law to 30km/hr (I think) and bike lanes, but dart in and out of main traffic ways with much larger batteries and motors than the law permits and MUCH higher speed. BTW, you can choose to believe John Peterson or not, but thus far he is right: they're mostly sealed lead acid and not Lithium, which is much too expensive to the average Chinese consumer, even with cheap (and frequently unreliable) Chinese cells. 53 BYD electric cars have been sold in China, as taxis, with drivers who upset by "refueling" complications. There has been one total loss fire in a BEV taxi (not sure whose brand), which got a lot of press. Also the Wilson battery (nee "Thundersky") company has had almost no success launching their taxi variant. This is probably because most of their technical claims are bogus (73kw-hr battery with a 3 hour charge time in normal, 25 minutes in rapid: BS. Also they claim a total vehicle weight of 1200kg in a Corolla-sized car, ahich is patently impossible.) Also total China Prius sales in August at my last count were 1 car (O_N_E!). Even if it's grown by two orders of magnitude, that would be less than a tenth of the sales in the US. BEV autos in China are a poor bet. You won't see a successful BEV in China unless (1) the government cracks down and requires people to buy them in lieu of ICE, (2) the government (or crude prices) drive gasoline past 0.75/liter or so, or (3) a serious battery price and density breakthrough happens (probably under $150/kW-Hr and over 200kW/kg).
      Nick
      • 3 Years Ago
      There's a cliff on the right side of the pic.
      super390
      • 3 Years Ago
      China's great rivers are fed by snow melt from the Himalayas. As the mountains heat up, there is less snow accumulation, and rain just dribbles away or evaporates instead of nourishing the rice paddies and hydroelectric power on which the people of China depend. Surely the Chinese government, obsessed as it is with anything going wrong, has examined this and recognizes it as a possibility. So if it is so afraid of economic growth being even slightly curtailed (currently at 9% annual) that it won't take any action to develop a low-carbon future for its citizens, what chance do any of us have?
      markkiernan
      • 3 Years Ago
      Sadly it is a perfect story for NOT selling EVs in China. Recession and high price. It would have been great if EVs took off in China, but I think they will, it is just a matter of 5 years or so.
      electronx16
      • 3 Years Ago
      I guess the question is not whether BYD will be able to make it's often postponed deadline for EV exports to the US in 2012 but rather whether they will still be in business by that time. Poor Buffett really drank the Kool-aid on that one...