After months of announcing electric car deals that have largely left me unimpressed, BYD (HKEx: 1211) has finally come up with a tie-up that looks like a move in the right direction in its uphill quest to boost its costly alternate energy vehicle program. Ironically, or perhaps appropriately, BYD, the struggling auto maker backed by Warren Buffett, was surprisingly quiet during this latest announcement, leaving most of the talking to Hertz, the US auto rental giant which is teaming up with General Electric (NYSE: GE) in this latest initiative. (English article) The initiative will see Hertz offer BYD’s E6 electric vehicles for rent in Beijing, Shanghai and BYD’s hometown of Shenzhen, with GE helping to build up an initial network of 770 charging stations. This is exactly the kind of public-private partnership that we need to see more of from BYD, whose electric vehicle tie-ups to date have mostly been with local governments and have put few if any of its cars in the hands of consumers whose mass buying power will be critical to the success of any electric car initiative. Hertz and GE bring two strong private-sector partners into this equation, no doubt with strong support from city governments, ensuring that decisions will be made on a commercial basis rather than a political one. This program also offers the advantage of scalability if it proves popular, with the national potential that only a private sector organizer could bring. If it works, I wouldn’t be surprised to see Hertz and GE eventually bring EVs by other car makers like SAIC (Shanghai: 600104) into the program eventually, and expand the program throughout China
Bottom line: BYD’s new partnership with Hertz and GE marks its smartest tie-up to date to promote its struggling electric car business, and could provide a template for future development.
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