There’s going to be a shindig Monday in Los Angeles.

Charles Munger, Warren Buffett’s right-hand man, and the mayors of Los Angeles and Shenzhen, China, will be on hand to celebrate what has been billed as a huge win for Los Angeles: the grand opening of the U.S. headquarters of electric-vehicle maker BYD Co. Ltd. in downtown.

But is there really much to celebrate?

The Chinese company has seen its profits tumble over the past 18 months, its timeline for hiring employees in Los Angeles has been stretched out by years and plans to enter the U.S. market with an electric car have been likewise delayed.

“This is a company that’s in trouble. Their profits are way down, revenue is way down” said Scott Doggett, an associate editor with Santa Monica auto information site Edmunds.com. “I have to think that means they’re going to have to retreat from some of their more ambitious plans in Los Angeles and the U.S.”

It’s quite a comedown for a company that in April 2009 had one of its electric vehicles pictured on the cover of Fortune Magazine next to Buffett holding a power cable.

The famous billionaire brought BYD to worldwide prominence when he invested $232 million in the company, which boasted plans to enter the U.S. market with an electric car this year.

L.A. city officials also thought they had scored a coup when a $5.2 million subsidy package convinced BYD to build its U.S. headquarters here.

But now, amid a still sluggish U.S. economy and the slow adoption of electric cars, the company appears to have broader but more modest goals. BYD is now highlighting plans to sell not only cars but solar panels, battery systems and LED lights in the United States.

City officials claim not to be concerned about the company’s performance or its delayed plans to enter the U.S. car market. Instead, they are happy to cite attention BYD has brought to Los Angeles.

“It has spurred many, many, many conversations, and frankly more than just conversations, with other electric-car companies and firms in the renewable energy sector who also plan on relocating to Los Angeles,” said Matt Karatz, deputy mayor for the Office of Economic and Business Development, who declined to be specific about the conversations.

Humbler ambitions

BYD announced plans for an L.A. headquarters in April of last year, just a few months after posting record profits of $559 million for the 2009 fiscal year. Since then, the company’s profits have skidded. Its earnings of $42.8 million in the first half of this fiscal year were down 75 percent from the same period in 2009.

Micheal Austin, vice president of BYD America, blamed shrinking profits on the end of a Chinese government subsidy that had boosted sales of the company’s gasoline-powered vehicles.

But analysts point to other troubles.

Earlier this year, Reuters reported that diplomatic cables released by Wikileaks showed U.S. officials in China believed BYD might have problems outside of China because of a practice of copying designs from other companies.

What’s more, some Chinese consumers haven’t been pleased with BYD’s cars, said Tim Dunne, director of global automotive coordination for J.D. Power and Associates in Thousand Oaks.

“Some of the quality and satisfaction experienced by customers wasn’t up to their expectation,” Dunne said. “Word of mouth in China, either person to person or over the Internet, travels very quickly, so I think they were probably affected by that.”

BYD also hasn’t seen many customers for its electric vehicles. Doggett, the Edmunds analyst, said the company has sold only a few hundred electric vehicles in China, which doesn’t bode well for its U.S. plans.

“It’s pretty pitiful. They’ve had terrible success with electric vehicles in their own market,” he said.

Indeed, the timeline for introducing an electric car here has shifted from this year to next – and even later. Austin said BYD will sell to governments and rental car companies next year but not to consumers until 2013 at the earliest. BYD is not alone in its troubles.

Over the past several years, a handful of Chinese auto makers, including Great Wall Motor Co. and Nanjing Automobile Group Corp., announced plans – not yet fulfilled – to bring electric cars to the United States. Doggett said the companies were caught up in a boom and set overly optimistic goals.

“It’s hard not to look at record revenues and terrific sales and not expect them to just continue on that trajectory,” he said. “I can’t help but think at this point that they’ve been humbled very substantially this year.”

‘Energy company’

Austin said it’s not a sign of trouble that BYD likely won’t be launching its electric car for consumers next year as the time line has been pushed back because there aren’t enough public electric-vehicle chargers.

Fleet buyers install their own charging stations, he said, but regular buyers will need to see more public chargers before going electric.

“We looked at the infrastructure and said, unless we want to be in a niche market, there’s no point,” he said. “We had to recalibrate. Why throw marketing dollars at consumers when the infrastructure isn’t ready?”

Austin also downplayed the importance of vehicles, electric or otherwise, to BYD’s American ambitions.

“I see us as an energy company. Electric vehicles are just part of the portfolio,” he said. “Our new headquarters will be the springboard into the U.S. for all those products.”

Indeed, the company plans to use its 30,000-square-foot building on South Figueroa Street for executive offices as well as showroom space for electric cars and other BYD products, including home solar panels and batteries to store solar power for use at night.

The plan is eventually to sell those products through independent BYD dealerships. Austin said one such dealership is already operating in North Carolina, and one or two could open in the L.A. area over the next six months.

“The centers become more like the Apple Store,” he said. “It’s educating customers: ‘Sure, you can buy an electric vehicle, but have you thought about charging it using solar panels on your roof?’”

But vehicles aren’t just part of BYD’s portfolio, they’re the dominant part. The company started as a battery maker but about 50 percent of its revenue in the last two years came from cars, with only about 10 percent from batteries and solar panels.

And its L.A. headquarters is a former car dealership on a stretch of South Figueroa that is home to numerous auto lots.

Subsidized labor

Despite the company’s struggles, Karatz said Los Angeles is excited to have BYD. The company has already done what city leaders hoped it would: generate interest in the city from other businesses focused on clean technologies. The city doesn’t concern itself with the company’s operations.

“As far as assumptions that their interest or appetite for growth has been muted, I don’t have those discussions with them,” he said.

Still, the city offered a taxpayer-backed incentive package to BYD worth about $5.2 million over five years – $7.6 million if guarantees on the headquarters lease are included – which was largely premised on the company producing jobs, not just buzz.

A city-issued press release in April of last year announced that BYD planned to hire 150 employees by the end of this year. The city Community Development Department later revised that estimate to 46 employees by the end of this year and 100 by the end of 2013.

Now, BYD is opening its headquarters Oct. 24 with about 20 employees; Austin said he hopes to have at least 30 in the L.A. office by the end of the year, with about 150 in three to five years.

Hopes that the company would bring a manufacturing plant, and many more jobs, to Southern California seem to have cooled.

Before BYD announced its L.A. headquarters plan, city officials from across the region had lobbied the company to bring not only its U.S. headquarters to Southern California, but also to build a manufacturing plant.

Among the cities that had talked to BYD was Lancaster. R. Rex Parris, mayor of the high desert city, said talks with the company have been stalled since early this year.

“It’s certainly been put on the back burner,” Parris said. “That has more to do with the stock price of BYD. They’ve had some internal difficulties.”

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