SHANGHAI - BYD Co, the Chinese automaker part- owned by Warren Buffett's Berkshire Hathaway Inc, surged on its trading debut in Shenzhen on Thursday amid speculation it may benefit from government funding for electric-vehicle development.

BYD gained 41.39 percent in the city to close at 25.45 yuan ($3.93). That compares with a 1.46 percent gain in the benchmark CSI 300 Index and a 45.64 percent jump for Sailun Co Ltd, the other stock that debuted on Thursday in Shenzhen.

Related readings:  BYD's profit plummets as industry sales drop  BYD's new shares open to subscription  BYD lowers IPO income hopes  BYD April car sales down 11% Y-O-Y

China may announce a plan early next month to invest 100 billion yuan to help companies develop vehicles powered by alternative energy, China Quality News reported on its website on Wednesday. BYD started selling its F3DM plug-in hybrid to corporate and government customers in December 2008, making it the world's first mass-produced plug-in hybrid car. "BYD will be one of the first companies that will benefit from incentives like this," said Vivien Chan, a Hong Kong-based analyst at SinoPac Securities Asia Ltd. "Investors' bet on the incentives is helping pushing up BYD's shares."

On Wednesday, BYD reported an 84 percent plunge in profit for the three months ended March. Declining sales and higher expenses dragged net income to 266.7 million yuan from 1.7 billion yuan a year earlier, according to BYD.

"It may have gone through its worst-performing period," Chan said. Companies that had their initial share sales in Shanghai and Shenzhen this year have declined by an average of 14 percent since their first day of trading, according to data compiled by Bloomberg.

BYD's auto sales have slowed this year as the government removed incentives that spurred purchases of cars with engines smaller than 1.6 liters, such as its F3 sedan. The carmaker raised 1.35 billion yuan in a share sale in Shenzhen to fund research and expand its manufacturing facilities.

The company plans to introduce the new G6 car model this year and appoint dealers in the US for its E6 electric car, Stella Li, BYD's senior vice-president, said on June 17. The automaker is aiming to match last year's sales in 2011 and sees growth resuming at the start of 2012, Li said. BYD delivered 519,806 cars in 2010, compared with a forecast of 600,000 units.

Chinese billionaire Wang Chuanfu founded BYD as a lithium-ion battery maker in 1995, before expanding into automaking in 2003 with the purchase of Xi'an Tsinchuan Auto Co. MidAmerican Energy Holdings Co, a unit of Buffett's Berkshire Hathaway, bought 9.9 percent of BYD in September 2008 to tap rising demand for clean technology. The carmaker has lost 66 percent of its market value since and has declined 40 percent this year, compared with a 2.7 percent drop for the benchmark Hang Seng Index.

BYD's vehicle sales declined for 10 straight months through May as the popularity of its F3 sedan waned. Sales of the F3 dropped 30 percent to 97,300 in the first five months, ranking it behind Volkswagen AG's Lavida and Jetta and General Motors Co's Excelle in China, according to the China Association of Automobile Manufacturers.

Bloomberg News