Berkshire-Backed Automaker’s Masks Denied Initial U.S. Approval
Berkshire-Backed Automaker’s Masks Denied Initial U.S. Approval
(Bloomberg) -- China’s BYD Co., the carmaker backed by Warren Buffett’s Berkshire Hathaway Inc., was denied a U.S. regulatory certification it needs to sell respirator masks to the state of California.
The National Institute for Occupational Safety and Health didn’t approve BYD’s masks for a number of factors, according to an emailed statement that doesn’t disclose details for confidentiality reasons. The agency said it notified BYD on May 4 that a contractor’s assessment of two BYD factories in China found them to be not acceptable.
California awarded BYD an almost $1 billion contract last month to supply N95 masks, with Governor Gavin Newsom saying some of the protective gear could be shared with other states facing shortages. His administration announced last week that the state would be refunded $247 million after BYD was unable to get NIOSH certification by an April 30 deadline.
BYD pivoted to mask-making early this year after the coronavirus broke out in China. It has since been ramping up output to become the world’s biggest manufacturer with a daily capacity of 30 million.
Profit from masks has propped up BYD’s earnings at a time of waning electric-car sales. Masks will bring in about 12.4 billion yuan ($1.75 billion) of revenue to BYD this year based on an assumed unit price of 1.4 yuan and estimated shipments of 8.8 billion, according to CICC analysts Chen Xudong and Huang Leping.
Shenzhen-based BYD also won an order from SoftBank Group Corp., agreeing to send 100 million N95 masks each month starting in May to the Japanese company. The contract is conditional on BYD’s masks obtaining U.S. regulatory approval, a SoftBank representative said.
BYD representatives in China declined to comment on Thursday.
©2020 Bloomberg L.P.
With assistance from Bloomberg