BYD is taking its big bet on California to the next level.

The Shenzhen-based producer of electric vehicles will break ground on May 1 for an assembly plant in Lancaster, about 70 miles north of Los Angeles, to make electric buses for US and Latin American public-transportation markets. The facility will be one of only a few making electric buses in the US. Most buses in the country use diesel fuel or compressed natural gas.

Michael Austin, vice president of BYD America, said Lancaster's aggressive embrace of solar energy programs was a factor in deciding to build the plant there.

"They've been very green," he said. "They've been the solar capital of the United States for a while because they have such great solar resources.

"The state of California has led the nation in environmental action. The California Air Resources Board is renowned across the United States for setting a very high benchmark for emissions on all vehicles." He noted that all vehicles made in the US are designed to meet California's strict emission standards.

The ground-breaking ceremony will come a month after BYD won a $14 million contract to make 10 electric buses for the transit system of Long Beach, California. Under the contract partly funded by the Federal Transit Administration, BYD - which is backed by investment titan Warren Buffett - will deliver the buses in 2014. Long Beach's transit system serves about 28 million riders.

The assembly operation will be located in a defunct recreational-vehicle manufacturing plant on a 13-acre site. The purchase price and other terms of the investment weren't disclosed.

Austin did not specify how many jobs the project would create in Lancaster, a city of about 156,000 with an unemployment rate estimated at about 15 percent. He said in an interview that job creation would "depend on market demand for electric buses, with a ratio of one job created for each bus sold per year". The company aims to produce 50 to 100 buses in the first year.

Austin said the site was ideal for BYD's purposes because all the required permits already were in place. "Literally, we have a factory that is built to suit," Austin said. "It is perfect because it launches us very quickly into manufacturing, even manufacturing starting this year."

Lancaster's selection as the plant site hasn't yet been officially announced, although local media have reported it. Names of other locations that were considered weren't disclosed.

When construction on the assembly plant begins, it will come a year and half after BYD opened its headquarters for the Americas in Los Angeles, a move that investors hoped would reverse a profit drop tied to weaker China vehiclesales. Since then, however,

BYD's bottom line has been hit hard by a downturn in demand for the photovoltaic cells and rechargeable batteries that it also makes. The company posted a 94 percent drop in annual profit last year, amid a bleak solar market, but forecast robust profits for the first quarter of 2013. Revenue fell 4 percent.

Unlike Nissan's Leaf or GM's volt electric vehicles which target the commuter market, BYD's star products are fleet vehicles.

Long Beach is exploring adopting a model used in cities such as Shenzhen, where about 1,000 BYD-made buses are on the road. The buses are in service for up to 21 hours, with a range of 120 to 150 miles, then return to the garage where they receive an overnight 50-kilowatt charge from below, when public energy use generally is lower. "Even some utilities are giving them a night-time rate, so it is even cheaper to charge at night," Austin said.

Annie Ye, Chair of China Enterprise Council in Los Angeles where BDY is a member, said the Chinese company's move is "exciting and positive" for local residents.

"BYD is bringing new technology of making electric vehicles to California and that will for sure make contributions to the local environmental efforts," said Ye, adding the production of electric buses also will help local job creation.

Austin didn't provide an estimated sale price for the buses, buthe said the cost could be as much as 50 percent higher than the price of a conventional bus. Some news reports put the price of a BYD electric bus at $550,000 to $600,000 each.

"The total cost of ownership over 12 years will save a half a million dollars," when fuel savings are factored in, he said. "The more you drive your electric vehicle, the more it pays for itself, because you are saving money on fuel."

Noting that some officials had criticized Long Beach for awarding the electric bus contract to a Chinese-based firm, Austin pointed out that "this is a Chinese company that has an American entity - BYD Motors is an American entity".

"Half our investors are US," Austin said. "Our largest shareholder is Warren Buffett (a subsidiary of Buffett's Berkshire Hathaway owns 9.56 percent of BYD).

"Those buses will be built using California labor, creating California jobs to create California buses."

michaelbarris@chinadailyusa.com

(China Daily 04/03/2013 page1)