BYD, Daimler to form electric-car JV in China

Daimler AG and BYD Co., the Chinese carmaker backed by billionaire Warren Buffett, will jointly develop an electric vehicle to be sold in China, the world's largest auto market.

Daimler, the world's second-largest maker of luxury cars, and BYD signed an agreement to set up a "comprehensive" technology partnership to develop electric vehicles for the Chinese market, they said in a statement dated yesterday. The carmakers plan to develop a model that will be sold under a jointly owned new brand, they said.

BYD rose the most in almost three weeks in Hong Kong trading after the announcement. The Shenzhen, China-based battery maker entered the automobile market in 2003 and may benefit from Daimler's experience in vehicle making, while Stuttgart, Germany-based Daimler plans to take advantage of BYD's battery technology to help boost Chinese sales.

"The alliance will benefit from BYD's expertise in batteries and Daimler's strengths in traditional vehicles," said Frank He, who rates BYD shares "buy" at BOC International in Hong Kong. Still, BYD's electric-powered vehicle division isn't expected to contribute significantly to company profits for at least two years, He said.

Daimler said last month it will focus on cleaner technologies to take global market share from rivals Bayerische Motoren Werke AG and Volkswagen AG's Audi brand.

China Growth

BYD rose as much as 5.4 percent to HK$66.50 and traded at HK$65.25 as of 11:39 a.m. in Hong Kong.

The company was China's sixth-biggest car manufacturer by sales last year. BYD, 10 percent owned by Buffett's Omaha, Nebraska-based Berkshire Hathaway Inc., introduced a plug-in hybrid car in December 2008 and said in January it will sell an electric car in the U.S. this year.

China's auto market grew to 13.6 million units in 2009, surpassing the U.S. for the first time. While overall passenger- car sales in the country grew 53 percent, BYD's deliveries jumped 160 percent to about 450,000 vehicles, Chairman Wang Chuanfu said in January.