Electric car maker BYD is looking to open its North American headquarters and an auto assembly plant in Los Angeles County, according to sources familiar with the matter.
The efforts by the Chinese company, which generated big buzz since Warren Buffett invested nearly a quarter-billion dollars in it two years ago, have touched off a scramble by area cities vying for its business. While BYD’s offices would likely be modest in size, the assembly plant could top 1 million square feet and create hundreds of jobs.
“It would be a tremendous boost to our economy and economic growth and prosperity,” said Tony Bell, spokesman for Los Angeles County Supervisor Michael Antonovich. The supervisor has met with BYD executives both in China and locally over the last year to woo the company.
Other officials who have either talked with BYD executives or are aware of the company’s intentions include Mayor Antonio Villaraigosa’s new jobs czar, Austin Beutner, and Bill Allen, chief executive of the Los Angeles Economic Development Corp.
An announcement on the selection of a headquarters office could come within the next few months, with the decision on the assembly plant coming later, perhaps by the end of the year, according to sources.
Officials with BYD declined to comment.
BYD Co. Ltd. is one of the world’s biggest rechargeable battery manufacturers and also makes consumer electronics. Despite entering the auto market only seven years ago, its BYD Auto unit is already the fourth largest car maker in China. The company makes electric, hybrid and gasoline vehicles, and it sold 450,000 units in China last year, or slightly more than new Hyundai sales in the United States last year.
The company’s BYD F3 four-door sedan, which sells for less than $10,000, is a top selling compact in China.
It also makes a plug-in hybrid that went on sale in December 2008. But it’s the BYD e6, an all-electric vehicle said to have a nearly 200-mile range on a single charge of its lithium-ion batteries, that has generated the most buzz.
At Detroit’s North American International Auto Show in January, BYD made headlines with an announcement that it wanted to enter the U.S. market as soon as this year with its BYD e6. Other reports said it also wants to sell the plug-in hybrid here.
Analysts have been closely following the company since 2008 when it sold a 10 percent stake to mogul Warren Buffett’s Berkshire Hathaway Inc. for $230 million. It has been reported that L.A. billionaire Charles Munger, Buffet’s longtime partner, was the driving force behind the investment.
Southern California makes sense as a headquarters location for the company, according to analysts. It’s the biggest auto market in the United States and recently has seen an explosion of so-called “green tech” firms either directly or indirectly involved in the production of electric and other alternative energy vehicles.
Tesla Motors Inc., a Palo Alto company that makes a high-performance, all-electric roadster, maintains its design studio in Hawthorne. Tesla also is looking to locate a car manufacturing plant in the county, with Downey and Long Beach vying for the much publicized facility. What’s more, Honda’s North American headquarters are in the county and Toyota has a large corporate presence in Torrance.
“Just its pure size as a market and the warm climate make it an ideal location for an electric car company. As one of the hubs of car culture, innovation thrives in areas like that,” said Bruce Harrison, an automotive analyst for research firm IHS Global Insight.
However, officials who have met with BYD said it is possible that the headquarters and plant could be located outside the county, though they did not say they were aware of any other places the company might be looking.
Munger’s secretary said he would not comment for this article. Berkshire Hathaway did not respond to requests for comment.
Long Beach, Los Angeles and Lancaster are cities that have been vying for the company’s attention, according to sources.
It appears that the offices and manufacturing facilities could be located in different cities, with Lancaster negotiating to have the auto plant located in the Antelope Valley community.
Joe Cabral, the city’s communications manager, said it was working with Antonovich’s office to “make sure we bring BYD here,” though he declined to comment on the company’s space requirements or the talks.
“Negotiations are sensitive,” he said.
Los Angeles also is pushing hard to get the company to move within its limits and is said to be offering incentives for the company to come; such a success would be a coup for Villaraigosa, who has promoted the development of a “clean tech” corridor starting with a 20-acre site near downtown. A plan to locate a light-rail car assembly plant there fell apart last year when the Italian manufacturer AnsaldoBreda pulled out of the deal at the last minute.
Robert “Bud” Ovrom, the city’s former deputy mayor of business development, confirmed the city’s priority interest in BYD. He said the effort is being headed by Beutner.
“Austin made it crystal clear to his people that he really wanted to figure out what we could do,” said Ovrom, who is currently general manager of the Department of Building and Safety.
Beutner declined to comment, except to say, “Part of servicing private sector employers well is holding the nature of our conversations in confidence. And the right time to share is when we have something to share that we’ve accomplished.”
Meanwhile, BYD has toured space in Long Beach. It considered leasing a vacant 28,000-square-foot car dealership there, where it would have located a marketing center and offices, according to broker Jodi V. Meade of CB Richard Ellis Group Inc., who represents the owner of the 4.5-acre property.
Meade gave BYD officials a tour of the space earlier this year, which other sources said would have been adequate for the company’s headquarters. However, BYD passed on the site.
“They wanted to be near the port. I thought that was a good play,” Meade said. “What they had told me was, although they liked the building and the size requirements worked, they needed to be in L.A. because the city of Los Angeles is incentivizing them to do so,” said Meade, director of the western region of CB Richard Ellis’ Automotive Properties Group.
BYD’s broker, Ben Stapleton, who heads the national clean technology group for Jones Lang LaSalle Inc., declined to discuss details of his assignment, except to confirm his involvement. Long Beach officials did not comment.
Although all new jobs are prized in a recession, manufacturing jobs are particularly coveted. Los Angeles County lost 54,000 manufacturing jobs – 12 percent – just in the last two years.
Larry Kosmont, an L.A. economic development consultant, said that BYD would be a big coup for the county and any city that lands the firm. Kosmont said BYD would offer high-paying jobs in a growth industry.
“So, they would get the high priority from a city’s economic development agency,” he added.
Kosmont said that BYD will likely be offered a mix of local, state and federal tax benefits from any city seeking to secure it. Among the benefits could be sales tax credits and rebates, and business investment tax credits.
“If these cities are smart, they have someone crafting a proposal that would be very competitive. That’s what I would do,” Kosmont said.
BYD is based in Shenzhen, a city of nearly 9 million residents just north of Hong Kong that is the second busiest port in mainland China; Shanghai is first.
Its all-electric BYD e6 is “a rudimentary, basic electric vehicle,” according to automotive analyst Brett Smith. But the car has made the firm a pioneer in the field because of the five-door hatchback’s mass appeal. It could sell in the United States for about $40,000, according to reports.
“BYD certainly has, while not an enormous amount of experience in electric vehicles, a very good proven track record. They certainly have the faith of pretty strong investors in this country,” said Smith, director of the Automotive Analysis Group for the Center for Automotive Research.
Indeed, the Berkshire Hathaway connection has separated the company from other fledgling alternative energy car makers. “Warren Buffett is a very serious guy so if he’s investing in BYD you have to take anything that might be coming from that company seriously,” said Harrison, the IHS analyst.
The addition of BYD to the local green technology marketplace would separate the county from other metropolitan areas attempting to become the new Detroit.
Besides Tesla, electric car maker Coda Automotive is headquartered in Santa Monica; battery maker Quallion LLC of Sylmar plans to open a manufacturing plant in the county that would build rechargeable batteries for electric cars; and Balqon Corp. makes small electric trucks at a Harbor City plant.
The impact isn’t lost on county boosters, including Allen of the Los Angeles Economic Development Corp. While he wouldn’t answer questions about BYD, he said in a statement that his organization had developed an excellent relationship with the company’s management and had made “great progress” in addressing the issues that would factor into BYD’s decision.
“It would represent a huge win for our region’s economy,” he said.
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