California Dreaming: How a Chinese Battery Firm Began Making Electric Buses in America

June 22, 2015

This case tells the story of the effort by BYD, a Chinese company founded in the 1990s as a battery manufacturer, to produce fully electric buses in Lancaster, California. The story involves a tie-up between BYD (short for “Build Your Dream”) and the State of California. It underscores the heady optimism that has accompanied the dramatic growth of Chinese direct investment in the Golden State.

But the story of this venture was not, in fact, an easy one. As early as 2008, BYD had aimed to enter the US electric vehicle market, but the company faced a series of challenges and complex situations. These soon dampened the firm’s initial fervor and high expectations, which persisted even as the company opened its US headquarters in 2011. Many Chinese firms, including BYD initially perceive the US business environment and political climate to be similar to the Chinese landscape. Often, these assumptions prove to be flat-out wrong. BYD quickly encountered an intricate ecosystem of US business interests, advocacy groups, government agencies, and skeptical independent news outlets, not to mention a thicket of regulations. And BYD struggled to navigate these challenges from the outset.

This case study offers a detailed account of the factors that threatened to turn BYD’s California dream into a potential nightmare. But ultimately, the case is not a story of failure. Instead, BYD’s story offers a cautionary tale about the pitfalls and complexities that confront ambitious Chinese investors in the United States.

In addition to available public sources, this reconstruction of BYD’s California story is the result of interviews over a period of several months with people involved in various aspects of the deal, including municipal leaders.