Warren Buffett-backed Chinese car manufacturer BYD is aiming to compete with Tesla Motors by tripling its production of batteries for electric cars over the next three years.
BYD will produce an additional six gigawatt-hours' worth of batteries per year over the next three years, said company spokesperson Matthew Jurjevich, adding that with the support of consumer demand these production increases could be continued beyond the three years of increase scheduled.
If this rate of production increase continues to 2020, BYD would be set up to challenge Tesla Motors' $5bn Gigafactory in Nevada, which is projected to achieve an annual production capacity of 35GWh when it begins operating in 2016.
Rumours of difficulties in the development of the Tesla Gigafactory have been refuted by CEO Elon Musk. The company is, however, downsizing its Chinese operations following a bungled incursion into the market which has left its distribution centres overstocked. Tesla does not currently produce battery cells, instead sourcing them from Panasonic.
Reuters cites GTM Research as estimating the electricity storage sector growing from a $128m market in 2014 to being worth $1.5bn in the US alone by 2019.
While BYD electric cars aren't luxury models like Tesla's, BYD may be at an advantage in regularly utilising Lithium Ferrophosphate (LiFePO4) batteries in their Energy Storage Systems. LiFePO4 is a Li-ion battery technology which offers a considerably longer cycle-life than the batteries Tesla uses.
In 2010, BYD came first in Bloomberg Businessweek's Top 100. Businessweek claimed that Warren Buffett, though “legendary for his dislike of tech investments”, was persuaded by Charlie Munger “to buy a 10 per cent stake in BYD for about $230m. That was in September 2008. Today Buffett's piece is worth nearly $2bn.”
BYD recently partnered with Uber, who are running 25 of BYD's e6 models around Chicago as part of a ride-sharing venture with Green Wheels.