Milestone: Chinese Automaker Signs Up for BYD Batteries for Hybrids

byd-logoThe latest hint about China’s role on the road to more affordable hybrid and electric cars comes courtesy of BYD this morning. The Chinese battery giant and newbie automaker that won investment from Warren Buffett’s Berkshire Hathaway firm last year, has snagged a battery supply deal from an undisclosed but major China-based auto manufacturer — the first domestic automaker to sign up for lithium-ion batteries from BYD — according to a new report from Gasgoo. Reportedly the car company plans to use the batteries for its upcoming hybrid vehicles.

BYD’s new Chinese automaker deal (Gasgoo says BYD declined to name the customer because of “professional secrecy”) offers an example of potential green car powerhouses taking shape in China as the country’s automakers increasingly seek to get in on the ground floor of the nascent alt-fuel vehicle market. Legacy auto giants headquartered in North America and Europe may dominate the mature market for internal combustion vehicles, but the race for plug-in vehicles offers a comparatively level playing field.

China has the capacity to give electric cars a strong push towards the mass market, in part by helping to drive down prices with higher production volumes — China has the world’s second-largest car market and analysts from Frost & Sullivan expect hybrid and electric vehicles to start accelerating into the mainstream there next year — as well as new government incentives for plug-in vehicles.

BYD’s deal comes less than three months after the company joined Toshiba and Sanyo in Volkswagen’s battery mix, winning a commitment from the German company to explore options for collaboration. But this latest news and the models shown at this year’s Shanghai auto show (automakers introduced more than 20 hybrid designs) suggest there will likely be plenty of deals to be had at home.

“We’ve been growing 100 percent for the last 5-6 years,” BYD investor and adviser Li Lu said a few months back at the Fortune Brainstorm Green conference during a roundtable on battery technology. “And I have no reason to believe we will stop.” However BYD hardly has a lock on opportunities in the advanced vehicle and battery market, in China or anywhere else. “In the end,” he said at the conference, it will be about making the economics and “nuts and bolts of plain old manufacturing” work. “There is no secret sauce.”

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