James Kar's  Instablog

China auto maker, BYD Co (BYDDF.PK), partly owned by Warren Buffet's company, announced its plan to sell all-electric battery car in the US next year.  The story was reported by Wall Street Journal Aug 21 weekend edition.

The chairman of BYD Co. announced that he would use the proceeds (up to $500 million offering) from a planned new share sale ( up to 100 million) in China to help marketing the car in the US.  The company is entering into the US market with its most advanced model with 5-seated, and the car is expected to sell at slightly over US$40,000.  The chairman claimed that its customers at the beginning will be government agencies, utilities and may be some celebrities.  BYD co. is also plan to enter into Europe with a similar strategy in 2011 or later.

Note: there are some discussions of whether BYD Co. actually has the technology to put the all-electric car together.  Due to this pessimism, the stock is still not advancing to fully reflect its potential.  Furthermore, the company needs funding to market the car in the US.  Thus, BYDDF.PK is planning to sell up to 100 million new shares.  Of course, the new shares will dilute current earnings.  However, if the new offering proceeds can fund the marketing expansion into US, the potential revenue and earning may more than offset any dilution.  It takes money to make money.  If the company can generate more earning with the new money, then the potential dilution is not a concern.  The stock has been under pressure for the above reason.  Thus, if you are a long-term investor with risk capital, you may want to buy some shares.  Remember, it is a highly risky investment, but it also has an excellent return potential.