BYD, the Chinese carmaker backed by Warren Buffett, has pulled off a major coup.
Yesterday it signed a partnership with Daimler, the owner of the Mercedes Benz marque, to build an electric car jointly.
The idea is that BYD will provide the batteries, and Daimler will provide its luxury car-building skills.
For a while now, it has looked as if BYD, which rocketed in value in the wake of Buffett’s investment, is more and more of a paper tiger. None of its promised electric hybrid vehicles has actually been released, and critics were sniping that its much-vaunted batteries were unreliable.
Although it has a healthy share of the Chinese market, there are plenty of allegations about how BYD may have copied designs and over-hyped itself.
The alliance with Daimler turns BYD into a major player. If the partnership does well in China, it is also not hard to see BYD batteries turning up in Daimler cars worldwide.
Daimler’s popularity will be enhanced in China through BYD’s marketing skills, and BYD’s image will benefit from being linked to a top-rate international manufacturer. It is difficult not to see the hand of Mr Buffett being involved in the deal somehow, as he safeguards his investment.