Warren Buffett - who had recently bought a 10 per cent stake in BYD - appeared grinning on an April 2009 cover of Fortune magazine behind the wheel of a BYD E6 electric car. "Buffett hasn't just seen the car of the future, he's sitting in the driver's seat," the magazine wrote.
Shares in BYD soared as investors bought into its green credentials and growth prospects, rocketing BYD founder and controlling shareholder Wang Chuanfu to the top spot on Forbes magazine's 2009 China rich list.
BYD aimed to be no less than the biggest carmaker in China by 2015 and the biggest in the world by 2025, Wang famously proclaimed.
And at the time, it looked like BYD was well on its way: the firm's petrol-guzzling F3 ranked as the best-selling passenger car on the mainland in 2009 - the year China overtook the United States as the world's biggest car market. Now, as BYD this week returns to the Detroit auto show for the fourth time, the company is back in the headlines. But instead of revving its engines, China's green car giant looks to be sputtering.
BYD's car sales - which nearly doubled from 2007 to 2008 and nearly tripled between 2008 and 2009 - grew only 17 per cent last year, according to data released last week. Shipments to dealers actually declined 15 per cent in the six months to December, after consumers ditched the best-selling F3 in favour of newer and competitively priced models from rival carmakers.
BYD, which set a goal of selling 800,000 cars last year, was forced to slash that by 25 per cent to 600,000 units in July, and by the end of the year had fallen short of the reduced target by 13 per cent with 519,800 cars shipped.
In the past two years, BYD's much-touted alternatively fuelled cars - the all-electric E6 and the hybrid F3DM - have sold only a few hundred units between them, and neither has been put into mass production.
The company's profit plunged 99 per cent in the third quarter of this year compared with a year earlier.
As of Friday, BYD's stock price had halved from a peak of HK$85.50 per share in October 2009 to close at HK$43.05, painfully shaving nearly HK$100 billion off the company's market value.
Indeed, the story of how BYD lost its pole position in the race to dominate the world's biggest car market offers a cautionary tale to other would-be homegrown champions of the industry.
Perhaps more significantly, the firm's continuing struggle to find commercial success for its flagship electric and hybrid cars may signal that Beijing's projected wide-scale rollout of green cars on the mainland is far from a foregone conclusion.
"BYD created a lot of hype in previous years that built up high expectations of continued growth, so they are kind of a victim of their own [marketing]," said Bill Russo, a Beijing-based car consultant with Booz & Co who was previously a regional executive with Chrysler.
"I guess this is part of the learning process for them. Basically what you are talking about with electric vehicles is a technology that costs more and delivers less performance. Market share success generally doesn't come from that," he said.
A century has passed since Thomas Edison's efforts to build a better battery for an electric car ended in frustration, but the challenges BYD and its rivals are grappling with today remain much the same.
Battery packs capable of storing enough power to approach the performance and driving range of petrol engines are usually either prohibitively expensive or prohibitively large - often weighing 300 to 500 kilograms.
Compared to traditional cars with internal combustion engines, the distance that battery-powered cars can travel is severely restricted by the need to stop and recharge, which can often take up to eight hours.
BYD, which made batteries for consumer electronics long before it entered the vehicle business, promised its E6 would be a game changer.
Unveiled in Detroit in January 2009, BYD claimed the E6 would be able to travel a groundbreaking 400 kilometres on a single charge. It would go from zero to 100km/h in eight seconds and its battery could be quick-charged to full capacity in an hour.
BYD said this remarkable performance was achievable owing to its unique, self-developed ferrous battery, which employs a compound called lithium iron phosphate.
Compared with other carmakers who were developing electric cars with batteries based on combinations of lithium and cobalt or manganese (like Nissan's Leaf or GM's Chevrolet Volt), the chemicals in BYD's phosphate batteries tend to be more environmentally friendly and result in longer battery life.
The BYD chemistry is also inherently more stable, meaning phosphate batteries are less prone to "thermal runaway", or spontaneously catching fire, as some lithium laptop and mobile phone batteries have done in past.
The drawback for lithium phosphate batteries is that they generally have a lower energy density than lithium cobalt ones - meaning they must be bigger to deliver the same performance, which also pushes up costs.
The cost of battery packs for pure electric vehicles range from US$600 per kilowatt-hour (kWh) to US$1,200, according to analysts. For a four-door electric car with a mid-sized 24 kWh battery, that could mean more than US$25,000 for the battery pack alone.
"If you find the right materials that can boost the overall energy density, the size of the battery goes down and you've got a smaller battery," said Vincent Battaglia, an expert in advanced energy technology at the Lawrence Berkeley National Laboratory in Berkeley, California.
Questions of how to build a better battery are not just of technological interest.
Given the worldwide push among governments seeking to grow and subsidise new green businesses, the automotive industry's "battery wars" have taken on new and significant geopolitical ramifications.
In Beijing and Washington, battery-powered vehicles are viewed as a way to protect the environment and, perhaps more significantly, boost national-level energy independence.
China's total manufacturing capacity for all battery types rose to 4.251 billion watt-hours last year, up fourfold from 1.087 billion watt-hours in 2009, according to Xiao Chengwei, a member of the expert panel of an alternative fuel vehicles programme affiliated with the Ministry of Science and Technology.
More than 11 billion yuan (HK$12.9 billion) in government and private money was invested in mainland battery production between 2006 and last year, Xiao told an electric vehicle conference in Shenzhen in November. That compares with 2.18 billion yuan invested from 2001 to 2005.
There are 16 companies on the mainland producing batteries for electric vehicles and many of the biggest ones such as BYD, Tianjin Lishen and Nasdaq-listed China BAK Battery are focused on phosphate technology.
Beijing plans to spend 100 billion yuan by 2020 to become a leading force in the global production of electric cars, and part of that scheme is boosting battery production capacity to a targeted 10 billion watt-hours by 2015.
However, the US also has big plans for its homegrown electric and hybrid car industry. Under President Barack Obama's American Recovery and Re-investment Act, Washington is issuing direct subsidies worth US$2.4 billion for plug-in hybrid and pure electric car technologies. It is no coincidence that most of these funds - about US$1.5 billion - are reserved for US makers of batteries and their related components.
"We believe that lithium ion chemistries generally are very important," battery expert Jim Barnes of the US Department of Energy's office of vehicle technologies told the Shenzhen conference.
But unlike on the mainland, whose leading battery firms so far appear to favour various phosphate technologies, Washington looks to be hedging its bets. The energy department has devoted funds to projects using a variety of lithium battery chemistries including phosphate, cobalt, manganese - and even new experiments with lead acid batteries (the kind that dominated the electric car industry more than 100 years ago).
"I am not willing to say that one chemistry is going to win over the others yet," Barnes said.
Still, analysts questioned whether US electric car battery suppliers would be able to compete effectively with Asian suppliers.
"The US taxpayer has invested a billion dollars in building out the lithium-ion battery manufacturing capacity but it isn't cost competitive with Chinese or Korean-made batteries," said Theodore O'Neill, a New York-based analyst at Wunderlich Securities who focuses on clean energy companies.
"The quality of products coming from China is very good, so I don't think there is any question that this is another market, along with solar panels and wind turbines, that it can dominate worldwide," he said.
Of course, the real quality test for any battery is how the car it powers performs in the field.
And this is one area where BYD has had an abundance of experience and feedback. One of the world's biggest field trials of electric cars for use as taxis has been running in Shenzhen since May last year.
Shenzhen Pengcheng Electric Taxi, a joint venture 55 per cent controlled by state-owned Shenzhen Bus Group and the remainder by BYD, has by now logged more than 500,000km worth of driving on its fleet of 50 all-electric E6's.
"This is good propaganda, and it promotes awareness among local residents of the need to protect the environment," said Pengcheng general manager Du Jun.
"If people never see electric cars how will they know they really work? Of course, trying to commercialise electric taxis will bring about some difficulties."
Du lists the things that could be improved with the E6. First is the cost - at 300,000 yuan, the cost of an E6 is more than three times that of a petrol-powered taxi.
A nationwide 60,000-yuan subsidy for electric cars, coupled with a matching subsidy from the Shenzhen government, brings the purchase price down to 180,000 yuan - meaning Pengcheng pays a premium of about 80,000 yuan for the electric cars.
Du calculated that, all things being equal, over a five-year period the E6's fuel savings could compensate for that premium.
But all things are not equal. "It's not like you're driving a Buick or Chrysler and can just stop anywhere and refuel. Recharging stations are relatively few at the moment and they are not always convenient to get to," he said.
Long recharging times (1.5 hours for a "medium charge" at a designated charging station and 4.5 hours for a "slow charge") mean e-taxi drivers are generally limited to one shift per day as opposed to two shifts for conventional taxis.
