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14 JULY (Reuters) – A California electric bus plant just north of Los Angeles resembles President Joe Biden’s vision of a battery-powered, American-made, climate-friendly future. On a factory floor the size of nine American football fields, 500 unionized employees assemble battery packs, weld frames, and install seats, steering wheels, and fare boxes to create zero-emission public transit. Converting transit buses to battery or fuel-cell power is one of the quickest ways to reduce greenhouse gas emissions from the transportation sector, which accounts for 29 percent of all emissions in the United States. However, thanks to a 2019 law crafted specifically for BYD, a unit of China’s BYD Co Ltd (002594.SZ), the business will be ineligible for billions of dollars projected to flow out of Washington in the coming months to electrify bus fleets. BYD North America spokesman Frank Girardot said the business will appeal the ruling because its Chinese parent company does not receive government assistance. “Keeping us out of the lucrative transit market is harmful for American consumers, taxpayers, and workers,” Girardot added. Even with other rivals anticipated to speed up production, taking out one of the two big participants in the electric bus market means Biden will be hard-pressed to fast electrify the nation’s bus fleet, threatening a crucial piece of the president’s climate program, transportation experts warn. “It’s extremely difficult to imagine accomplishing this massive fleet changeover anytime soon with the current manufacturing infrastructure in this country and with BYD out of the process,” said Jeff Davis, a senior fellow at the Eno Center for Transportation, which studies federal transit financing and policy. The restriction also jeopardizes one of the few examples of unionized labor in the green economy, a key component of Biden’s economic strategy, and is the latest test in the tense relationship between the US government and Chinese-owned businesses. A White House official expressed optimism about the country’s ability to ramp up production, saying that a combination of strong federal funding for zero-emission buses and support for vehicle and battery manufacturers would “build sufficient domestic capacity to support an accelerated transition to EV buses.” Biden and a bipartisan group of senators have agreed to spend an unprecedented $7.5 billion over the next eight years to replace 50,000 diesel buses, or nearly 70% of the U.S. transit fleet, with electric buses, as part of the administration’s goal to cut U.S. emissions in half by 2030. find out more BYD North America’s major competitor in the US electric bus market is Proterra Inc., situated in California (PTRA.O). To far, they have each sold approximately 1,000 electric buses in the United States. Proterra also intends to construct a domestic cell-manufacturing facility in the coming years. Click here for a FACTBOX about additional players in the sector. find out more Other bus manufacturers, such as GILLIG in the United States, NFI Group Inc’s (NFI.TO) New Flyer unit in Canada, and Novabus, a Volvo (VOLVb.ST) subsidiary in Canada, are expected to help fill the gap over time, according to Dan Raudebaugh, executive director of the Center for Transportation and the Environment. However, in terms of current e-bus production capacity, they all fall behind BYD. Long-standing diesel bus manufacturers GILLIG, NFI, and Novabus have recently begun selling hybrid, electric, and hydrogen variants of their models. Other firms, such as Lion Electric Co (LEV.TO) and GreenPower Motor (GPV.V) in Canada, REV Group Inc’s (REVG.N) ENC in the United States, and Arrival in the United Kingdom, are just getting started in the transport market. CHINA FEARS vs. ‘BUIL AMERICA’ Other environmentally friendly critical components, such as microchips, solar panels, and batteries, are manufactured in China, which the United States lacks. The topic of Chinese ownership may come up frequently as politicians seek “Build America” clauses in multibillion-dollar infrastructure spending measures moving through Congress. The parent company of BYD is listed in Hong Kong and Shenzhen. U.S. investors own 60% of the company’s stock, according to the corporation. In his most recent annual letter, Warren Buffett stated that he owns 8.2 percent of the company. BYD and Chinese rail company CRRC were targeted in an amendment to the National Defense Authorization Act after a 2019 congressional report detailed how BYD has benefited from Chinese state-owned investment funds and state subsidies to build battery cells plants that are part of the company’s supply chain. The amendment states that beginning in 2022, federal funds cannot be used to purchase passenger rail cars or buses from state-owned or state-controlled firms. “Since 2012, China has invested more than $10 billion in the electric vehicle battery business, amounting to a subsidy of roughly $10,000 per electric car, and even higher for electric buses,” according to the research. BYD North America refutes the report, claiming that as a separate business unit, it does not get direct Chinese subsidies, which are instead given to Chinese enterprises. While Democrats and Republicans disagree on many issues, they have joined forces on proposals aimed at limiting China’s economic influence. When Democratic Representative Pete DeFazio, the chairman of the House Transportation Committee, took to the House floor last month to extol the significance of an infrastructure package, he spent some of his time criticizing BYD without naming them. “We’re going to kick out two greedy Chinese businesses who make electric buses and trains out of here.” According to DeFazio. BYD PLANS TO Battle BACKBYD and its North American management are promoting their pro-union credentials as they prepare to fight to be exempted from the amendment. According to federal lobbying records, it has hired Capital Counsel, a high-profile lobbying company with extensive links to Democrats and Biden, to assist persuade lawmakers and the White House to amend the 2019 bill. Records show that Robert Diamond, who ran Biden’s New York presidential campaign, and Lyndon Boozer, who has deep ties to House Democrats, are working for BYD. In the first quarter, the firm was paid $50,000. BYD has also recruited O’Melveny & Myers, a legal firm, to respond to lawmakers’ concerns and publish a report claiming that it is not the type of Chinese state-owned business anticipated under the 2019 law. “There’s a lot of rhetoric about China stealing employment, but (BYD) is actually creating jobs and providing people with opportunities. People have prospered in their life; some are now purchasing homes, and the entire neighborhood has benefited,” said Willy Solorzano, an organizer with the Sheet Metal Workers union’s local chapter. He pointed out that the average unionized BYD employee earns $20 per hour. Leaving BYD out, according to some local transit companies, does not benefit them. “It takes the most competitive provider out of the market, which creates a collusive environment for the remaining players to raise the price,” said Macy Neshati, CEO of the Antelope Valley Transit Authority, which serves Los Angeles County and has converted almost all of its 85 bus fleet to battery-powered BYDs. Jarrett Renshaw and Tina Bellon contributed reporting, and Heather Timmons and Edward Tobin edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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