Watch out, Tesla: This Warren Buffett-backed Chinese electric vehicle maker plans US expansion

• Warren Buffett-backed Chinese electric vehicle maker BYD has plans to expand its U.S. production
• BYD sells its electric buses across the U.S., and Denver is one of its biggest customers

When President Donald Trump pushed "Made in America" week starting on Monday, Chinese electric vehicle maker BYD might not have been top of mind.

But the Warren Buffett-backed company has its sights set on expanding in the U.S. market with its Lancaster, California, production facility set for completion next month, Stella Li, president of BYD Motors, told CNBC's "Squawk Box" on Tuesday.

BYD wants to make more buses in the US  11 Hours Ago | 03:01

The facility, which employs around 700 people, will be able to annually produce 1,500 electric heavy-duty vehicles, such as municipal buses.

Li said BYD was also expanding into new product lines, such as electric refuse trucks and forklifts.

All in, BYD has already given better-known rival Tesla a run for its money: Tesla sold around 76,000 vehicles in 2016, while BYD clocked in more than 100,000 units in sales.

Li said that BYD's U.S. customer base wasn't just confined to green-focused California — the city of Denver is among its biggest customers.

"Our customer [base] is expanding into multiple [arenas] from public transit bus to the private one," she said, noting her company had orders from Facebook, Stanford University and the University of California, San Francisco.

Brent Lewin | Bloomberg | Getty Images

A BYD Co. electronic vehicle (EV) is charged at an EV charging station at the company's campus in the Pingshan district of Shenzhen, China.

Latin America was also a key developing market, she said, with BYD buses widely distributed there.

Li said her company initially faced customer resistance in the U.S. amid concerns that a Chinese company wouldn't stick around very long.

"Now it's much easier," she said, adding that attitudes changed as the company explained it was among the largest battery-makers in the world and could offer a 12-year warranty.

"Then we demonstrate the technology over and over," she said, noting that there were initial concerns about electric vehicles' range and performance, but the technology was now mature and accepted.

"Now more people view BYD as a global company," Li said.

By Leslie Shaffer

Source: https://goo.gl/sjSAUr

Analyst Expects Mobileye Shares to Zoom but Investors Be Warned

The company received a price target boost thanks to a survey indicating corporate acceptance of autonomous driving. But be careful: Mobileye is already priced for outrageous growth.

Mobileye ( MBLY) , a maker of chips used by Tesla Motors ( TSLA) and others to manage automated driving technologies, got a boost Monday based on a survey that showed fleet customers are surprisingly receptive to next-generation systems. Investors should be warned, however, that a lot of that optimism is already baked into Mobileye shares. 



Piper Jaffray raised its price target on Mobileye to $60 a share from $50, which is more than 25% above the Israeli-based company's previous close. Shares of Mobileye traded up more than 1% in afternoon trading on Monday. 

Piper Jaffray senior research analyst, Alexander E. Potter, in a note based the price boost on the firm's survey of 660 U.S. fleet and small business customers. Some 30% of respondents indicated they will either probably or definitely increase advanced drive assistance purchases in the coming three years, with larger fleet owners particularly interested. 

Potter said that fleet customers are important for adaptation of new technologies because fleets buy between 5% and 20% of new light- and medium-duty vehicles, depending on how broadly one defines a fleet. And fleet buyers, relative to consumers, tend to make decisions more grounded in rational, economic analysis than on hype, according to Potter, making them "uniquely capable of signaling the long-term viability of new technologies." 

The analyst estimated that about 40% of all vehicles produced by 2020 will have some sort of camera-based assisted-driving functionality. And while competition could eventually emerge, Potter sees little threat in the near-term. 

"While we acknowledge the ongoing debate regarding the eventual threat of competition, we also believe it will be at least a couple years before definitive data points emerge to assess the viability of competitive offerings," the analyst wrote. 

The survey results come amid a growing debate over Tesla's Autopilot features following three recent accidents, one fatal, where that company's driver-assist technology was reportedly in use. 

While a large number of companies including automakers and tech titans likeAlphabet are dabbling with self-driving technologies, many using Mobileye chips, it remains to be seen whether regulators and the U.S. tort system allow pioneers to move as fast as some would like. 

It is important to note that Mobileye stands to benefit even if the most ambitious technologies are stalled. The company provides components and software used in less controversial offerings including lane-departure prevention systems and emergency braking, and should see growth regardless. 

The bigger question is valuation, as skeptics might argue that Mobileye is already priced for the upbeat future Potter is predicting. The company today is already priced at more than 35 times last year's sales and 45 times projected earnings, metrics off the chart for auto suppliers. Shares of the company have more than doubled from lows hit in February. 

And while Mobileye can grow even if autonomous vehicles take decades to arrive, the outlook for the company is tied closely to the idea of self-driving cars. Investors who have handed a $10 billion-plus market capitalization to a company expected to generate just $370 million in revenue this year are not thinking about incremental improvements -- they are betting on a revolution. 

Self-driving cars are the future, and Mobileye at present is well-positioned to benefit from the trend. The question is how quickly the excitement from fleet drivers and others will translate into huge sales gains. Investors should proceed with caution.

Lou Whiteman

Source:https://www.thestreet.com/story/13643119/1/analyst-expects-mobileye-shares-to-zoom-but-investors-be-warned.html