Build Your Solar Dreams

Over the weekend, Chinese media reported that BYD is making a huge investment in crystalline silicon (c-Si) solar cell manufacturing. The goal is to build out five gigawatts of annual capacity by 2015, at a cost of $3.3 billion. Work reportedly began last year, so this plan is very much in motion.

To put this effort in perspective, Suntech Power's (NYSE: STP  ) solar cell and module capacity is targeted at 1.4 gigawatts by mid-2010. BYD could thus overtake even China's largest solar player by the middle of the decade.

If you're not familiar with BYD, this is the battery maker/plug-in hybrid car manufacturer that Warren Buffett has called "amazing," and whose CEO Charlie Munger has likened to "a combination of Thomas Edison and Jack Welch." Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) invested in the company in late 2008 and is sitting on a massive gain.

BYD beat out a slew of industrial powerhouses to become the world's biggest manufacturer of mobile phone batteries. The company has now quickly ascended the ranks of China's carmakers, with its F3 model becoming the top-selling sedan in the country. The company aims to be the world's biggest carmaker by 2025.

Compared with that goal, leading the Chinese solar pack doesn't sound all that ambitious. The barriers to entry in solar cell manufacturing are nonexistent, so I see no reason why BYD can't challenge the likes of Suntech, Trina Solar (NYSE: TSL  ) , and Yingli Green Energy (NYSE: YGE  ) for dominance in this sector.

If I were one of the incumbents, I would be more than a little scared.

Berkshire Hathaway is a Motley Fool Inside Value selection and a Stock Advisor recommendation. Suntech Power Holdings is a Rule Breakers pick. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (3)

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  • Report this Comment On January 26, 2010, at 3:20 AM, CrikeyMikey wrote:

    I'd love to see BYD toss their hat in the ring but dominating the competition isn't going to be a cinch - I don't care who the CEO is.

    I also have to disagree you... I think the barriers to entry are getting rather high these days... Manufacturing costs are tied to scale so you need to spend a lot of money and build a big factory if you want to compete. I think that might be a textbook definition of a big barrier to entry.

    It is also uncertain what technology is the best choice. Some people (myself included) think crystal is the way to go. Others like CdTe... Other think CIGS could make a go of it. Still others think something could be done with A-Si. Nobody knows for sure. CdTe pretty much came out of nowhere and muscled into the space with authority so you have to keep an open mind. The risk of choosing the wrong technology is another barrier to entry.

    The fact that Germany is the only serious/stable market we've seen so far is another problem. Maybe BYD sees Japan, California France and Italy opening up. If so, good for them. The problem is that these markets haven't really opened up yet. 5 GW of capacity is a great goal but where are you going to sell it? Not China... Not yet at least.

    But good for BYD. Rah rah rah...

  • Report this Comment On December 18, 2010, at 10:26 PM, anmkdsarma wrote:

    What do you feel about Indian Market? JNNSM is underway with 20GW target by 2020.NVVN has awarded 37 projects.Read more about it at http://www.nvvn.co.in/Selected%20Projects%20List.pdf

    Also ADB would like to extend guarantees for bankability of solar power projects in India?Solar Power Project Developers & Banks willing to lend-ADB to Offer Guarantees for $425 Million of Solar Power Projects in India.Read more about it at http://www.bloomberg.com/news/2010-12-14/adb-to-guarantee-42...

    China Adding 500 Gigawatts of Renewable Power by 2020!Read more about this at http://cleantechnica.com/2010/12/04/china-adding-500-gigawat...

    I would like to hear more practical views so as to understand whether it makes sense or non-sense to invest in solar stocks

  • Report this Comment On November 09, 2011, at 9:55 PM, MHedgeFundTrader wrote:

    When I first bought shares in the Chinese electric car manufacturer, BYD (BYDDF) (or Build Your Dreams) in 2009 on the heels of Warren Buffet’s 10% investment, it looked like a total home run. The stock soared from $1.50 to $11, given me a paper return of 730%.

    Last year, the stock started to roll over, retracing all the way back to my cost. I called the company’s Los Angeles office, but the line was disconnected. I tried the New York office, but my call was never returned. An email I sent their headquarters in Shenzhen, China went unanswered. I even had a friend in the Chinese government make some inquires, and he told me the company wasn’t seeing anyone.

    That’s it! Off with the gloves. No more Mr. nice guy. I did what I usually do when a company I follow won’t talk to me. I fly to their headquarters and break into the facility.

    It was easier than you think. I simply pulled up to the main gate in Northern Shenzhen and told security that I was a friend of Mr. Buffet and was there to see Mr. Li. They waved me through and went scurrying to find the appropriate Mr. Li. I knew full well that in a company of 100,000, at least 10,000 had to be named Mr. Li, and by the time they figured out that there was no Mr. Li, I would be long gone. It worked like a charm.

  • Report this Comment On November 09, 2011, at 10:17 PM, MHedgeFundTrader wrote:

    When I first bought shares in the Chinese electric car manufacturer, BYD (BYDDF) (or Build Your Dreams) in 2009 on the heels of Warren Buffet’s 10% investment, it looked like a total home run. The stock soared from $1.50 to $11, given me a paper return of 730%.

    China currently subsidizes energy prices, with gasoline available for about $3.50 a gallon, or 10% lower than US prices. That means a smaller cost advantages for alternative car producers. That disadvantage could disappear during the next oil price spike. Government subsidies will also eventually have to disappear because they are too cost.

    So what are investors to take away from this? For a start, you run out and buy tsunami afflicted, beaten down Nissan Motors (NSANY). If BYD can squeeze 186 miles out of its batteries, so can Nissan, and there is already talk that the second generation all-electric Leaf will reach that target. That will eliminate the “range anxiety” afflicting current owners with their 80 mile limitation.

    As for BYD itself, the story is a little more complicated. At this share price, you are essentially getting a world class multinational lithium ion battery company with the car company thrown in for free. If the car division continues to sputter along, you can expect modest appreciation in the shares. But if the E-6 becomes the next big car of the future, the stock could go ballistic and potentially make a new high.

    The Mad Hedge Fund Trader

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