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Auto Maker BYD Sees Rising Profit as Demand Revives

HONG KONG—BYD Co., 002594.SZ +1.47% the Chinese maker of electric cars and batteries backed by U.S. investor Warren Buffett, is set to report a significant rise in net profit for the first time in four years, as demand for its cars has recovered.

The Chinese maker of electric cars and batteries is set to report first-half earnings of 500 million Chinese yuan (US$81.1 million), up from 16.27 million yuan the previous year. Earnings are set to be released as early as Friday. That followed a more-than-quadrupled net profit of 112.4 million yuan in the first quarter. MidAmerican Energy Holdings Co., a unit of Warren Buffett’s Berkshire Hathaway Inc., BRKB +0.68% owns 10% of BYD.

Shenzhen-based BYD, which has been using sales of traditional cars and of the cellphone batteries BYD makes to fund the development of electric cars, solar panels and other green technologies, is banking on the launch of new and upgraded nongasoline-fueled car models to boost sales. Sales from hybrid and full electric cars accounted for less than 10% of BYD’s revenue from the automobile division, analysts said. The company, Warren Buffett’s highest-profile investment in China, sold just 1,700 electric cars and 700 electric buses last year.

It plans to launch new and upgraded nongasoline-fueled car models to boost sales, including a plug-in hybrid car called Qin in the second half and a full-electric car rolled out under the joint venture with Germany’s Daimler AG in China next year.

For the full year, analysts expect even higher profitability as the fourth quarter is traditionally the peak season for car sales in China. Huang Leping, an analyst at Nomura, expects the company to post a sharp rise in net profit of 1.16 billion yuan, up from 81.4 million yuan a year earlier. “The rebound is mainly driven by rising car sales, narrowed losses from solar operations and continued improvement in the handset operations,” Mr. Huang said.
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