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Chinese Outlook for Electric Cars Rosier, Says Nomura

China’s wealthy consumers are falling in love with electric vehicles.

So says Japanese investment bank Nomura in a note following a tour of Chinese companies involved in the electric vehicle business. Nomura found rising demand for both plug-in hybrid electric vehicles, like Chinese auto maker BYD Co.002594.SZ +0.70%’s Qin hybrid car, which can run on either gasoline or battery power, and for pure electric cars such as Tesla Motors Inc.TSLA +8.81%’s Model S.

A visitor looks at a BYD E6 electric car on display at the New Energy Auto Expo in Nanjing, China in March.

As a result of high demand, both companies are experiencing supply shortages for batteries, Nomura wrote, noting that customers are waiting at least two months to get their hands on BYD’s Qin.

While BYD’s outlook is rosier than in the recent past, sales remain modest. Despite a $232 million investment from Warren Buffett‘s Berkshire Hathaway Inc.BRKB -0.31% in 2008, BYD has struggled for years to get China to adopt electric cars. The company said in March that it hoped to sell 20,000 electric vehicles in 2014, a big increase from some 2,000 sold last year. “New energy vehicles still have a long road ahead before mass adoption,” Nomura adds. “Hence, they are not a threat to traditional gasoline vehicles in the foreseeable future.”


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