When Berkshire Hathaway (BRK.A 0.36%) (BRK.B 0.21%) CEO Warren Buffett took a 10% interest in Chinese electric vehicle maker BYD (1211 0.79%) in 2008, he probably didn't envision how the company would be making money today. BYD began making desperately-needed N95 respirators in January 2020 and now has the capability to produce 50 million masks per day, according to The Wall Street Journal.
When the epicenter of the COVID-19 pandemic shifted to the United States, and needed personal protective equipment (PPE) was scarce, the state of California placed a $1 billion order for N95 masks with BYD. Part of the deal, though, was that the company would achieve U.S. regulator certification by May 31, 2020, according to the report. The Chinese company has found that certification by the National Institute for Occupational Safety and Health (NIOSH), a unit of the Centers for Disease Control and Prevention (CDC), to be more complicated than it expected.
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The California N95 mask deal with BYD isn't dead, however. The company has received an extension to get the needed approval. Stella Li, the head of BYD's North American business, has said that she expects approval could come as early as next week, according to the report. She said that approval in early May didn't come because of documentation issues, but that the masks had passed product tests. She said the company "underestimated the rigor of the regulatory process and assumed with high confidence that BYD would secure approval."
BYD is reportedly making larger profits making masks than electric vehicles. According to the report, company financial guidance was more than 16 times what equity research firm Bernstein Research had forecast, while still selling the masks at typical market prices.
