Warren Buffet is breaking his own rules.

The rules -

1. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.
2. You should invest in a business that even a fool can run, because someday a fool will.
3. And perhaps most famously, Never invest in a business you cannot understand.

Munger, 85-year old, vice chairman of Berkshire Hathway, advised Buffet, 78-year old, to take up the new venture and Buffet agreed, despite the fact I don’t think he knows Chinese or electric car technology. I may be wrong.

Buffet does, however, know the future. And, he may not have much left in his. Electric cars is what he is betting on for those who will take over his business. Hathway bought up 10% of BYD with an investment of $230 million.

BYD are the initials of the company’s Chinese name. It was started in 1995 in Shenzhen, China.

Wang, a chemist and government researcher raised $300,000 from relatives, rented about 2,000 square meters of space, and started making rechargeable batteries to compete with imports from Sony and Sanyo.

By the turn of the millennium, BYD had become one of the world’s largest cellphone battery makers. BYD makes mobile-phone handsets and parts for Motorola, Nokia, Sony Ericsson, and Samsung.

Wang went into the automobile business in 2003 by buying up an almost defunct Chinese state-owned car company. Though he knew almost nothing about making cars … well now, Warren Buffet is his friend. The BYD sedan called F3 is the bestselling sedan in China, beating out the Volkswagen Jetta and Toyota Corolla.

BYD has a plug-in electric car with a backup gasoline engine. The company is ahead of GM, Nissan, and Toyota.

And, did I say that Warren Buffet is interested?

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The nation that leads the world on energy will be the nation that will lead the world in the 21st century— or at least that’s the clear message emanating from the White House.

Investing in the technology and energy of the future, President Barrack Obama unveiled a $2.4 billion dollar boost for electric vehicle development in the US and urged the industry to help reduce the nation’s reliance on other nations for its energy needs in the form of oil imports. (And increase dependency on Japanese batteries, one asks?)

Innocent and so very green ...

Speeching at the unveiling of the green package, Obama talked about how the German’s were leading the world in solar power and Spain producing 30-percent of its energy from windmills.

The aim of the package is obviously to encourage more green vehicles on the road— there’s a target for a million eco-friendly vehicles on US roads by 2015. Not content in giving the green movement a thrust from the production side alone, President Obama also declared a $7,500 dollar tax credit to consumers willing to buy plug-in vehicles.

Split up into $1.5 billion to manufacturers who produce highly efficient batteries and $500 million for firms that produce other components, this is all about creating future roads with zero-emissions. And maybe some green jobs?

Image by simeon_barkas

Japanese carmakers, Honda Motor Co. and Nissan Motor Co. are still going green. All the while, GM and America’s car makers have their hands out.

In separate events -

Nissan announced it was redesigning its Cube subcompact in hopes of moving in on the Japanese fetish for small cars that save on the miles. Nissan will sell the car around the world, not just in Japan as before. North America will see the car in spring of ‘09 ad Europe will see their version later in the year. The price – $14,000ish.

Meanwhile – Honda is debuting a gas-saving drive support system for its hybrid Insight coming out next spring also. With the flip of a switch, the driver can:

1. switch to Econ mode to ease the burden on the engine,
2. extend the time of the “idling stop,” which halts the engine when the vehicle stops,
3. incorporate a function that turns down the air conditioning,
4. boost the efficiency of “regeneration”.

The Insight’s speedometer will indicate fuel conservation – green for high efficiency and blue for high fuel consumption. Problem that those in Japan can identify with – blue is green.

Honda knows that fuel-saving cars and low inventory are the keys to staying competitive.

The company also knows that saving fuel is saving our environment and producing cars on demand doesn’t tax other global resources as well.

Honda’s President was interviewed – excerpts:

“Compact cars like the Jazz (known as the Fit in Japan) remain stable in the region, but we are having a hard time selling larger vehicles.” Duh?!

“…the rise in crude oil prices will have long-term implications for us. Accordingly, what we should do now is develop more inexpensive, fuel-efficient vehicles.” Why wait till the economy is a mess?

“It is equally important to improve the lineup of energy-saving vehicles. We will go into an offensive mode highlighting hybrid vehicles.”

Honda knows that making cars friendlier to our environment and less taxing on our resources is a long term solution. America’s Big Three! Are you reading?

Image courtesy of Clint M Chilcott

Toyota is doing its part to make a mint, um, decrease the impact that its cars have on the world’s fossil fuel resources. By 2010 the automaker wants 1/10th of its sales to be hybrid vehicles. Toyota had not set a target date to reach one million units until now. Presently, the car maker sells 450,000 hybrids a year and wants to more than double that figure within two years.

A fully redesigned Prius hybrid is expected out next spring as well as a second hybrid vehicle. Toyota not only wants to keep its lead in the hybrid market, but expand it.

Toyota not only wants to win, but win big.

Beijing is getting serious about clean air during the Olympics. The city has removed one half of all government vehicles from the streets of Beijing. The move eases congestion, reduces emissions and saves resources for a greener Olympics, which start 8-8-08. “The government wants to take the lead in guaranteeing smooth transport during the Games,” said a transport official.

The move is more aggressive than an initial plan to ban just 30% of all government cars starting on July 1st. Happy, of course, are the Beijing cabbies. Business is good and traffic is far less congested as they haul around their fares. Beginning on July 20th, Beijing will ban 70% of all government vehicles until September 20th. Altogether, some 210,000 vehicles are expected to be sitting in garages. That number is in addition to the half of 3.3 million cars that will be parked on 0dd-even days. The 12 million commuters in the city can expect some 4 million more to crowd onto buses and other public service vehicles. To meet this demand, some 2000 buses and three new metro lines will be added or extend their operating hours. A 4-day trial period last year showed that it works.

Now, if the city really wanted to save money and do something about hot air, they would try to reduce the number of people that create congestion in the government bureaucracy by 70%, too. And, if that works, help us out here in the U.S. please.

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There’s got to be a better way. There’s got to be a better way. Repeat after me. There’s got to be a better way. At least two more ‘better ways’ have taken a step forward in the past couple of days.

Germany’s Robert Bosch GmbH has agreed to work with South Korea’s Samsung SDI Co to develop the next-generation batteries for hybrid cars. Bosch is the world’s top parts maker and Samsung is, um, Samsung. In a 50-50 joint venture, the two giants will spend some $500 million over the next five years to improve on the lithium ion battery for hybrids, then sell them to GM, Ford Motor, Hyundai and any other takers.

In short, they will spend the next five years chasing Toyota and Nissan. Toyota is working with Matsushita Electric and Nissan has formed a partnership with NEC Corp.

The goal – bring down the costs of the hybrid car battery and in turn bring down the overall costs of the more eco-friendly cars. Presently hybrids go for as much as $5000 more than their gasoline counterparts, they are better on the environment but not the wallets of consumers. That’ll change.

Meanwhile, Honda Motor Co is even farther ahead with the launch of the Clarity hydrogen-fueled car for lease in the United States.

Source: Nikkei (sub req)