When the coronavirus exploded globally, BYD—China’s best-known producer of electric vehicles—pivoted, building what it said was the world’s largest mask factory within weeks.
Photo: Liu Xiao/Xinhua/Zuma PressBYD Co., a Chinese car and battery maker backed by Warren Buffett, will be able to fulfill a much-needed $1 billion mask contract with California after weeks of delays over federal certification.
Shenzhen-based BYD can now supply millions of U.S. standard N95 masks, which are designed to filter out 95% of very small particles including droplets containing the coronavirus, to California, Washington state and Japan’s SoftBank Group Corp.
A shortage of the masks emerged in the U.S. this year as the coronavirus spread across the country. BYD was able to start mass producing masks and sign large contracts with government buyers, but it underestimated how long it would take to obtain the necessary certification from U.S. regulators.
On Monday, the National Institute for Occupational Safety and Health—the main U.S. mask regulator and a unit of the Centers for Disease Control and Prevention—said BYD had obtained approval to make N95 masks on June 7—more than a month after the company had originally hoped.
When the coronavirus exploded globally early this year, China’s best-known producer of electric vehicles pivoted to making masks, building what it said was the world’s largest mask factory within weeks. BYD, whose name stands for “Build Your Dreams,” then signed big contracts to sell medical goods including N95 respirators, surgical masks and hand sanitizers.
To obtain approval from Niosh, manufacturers need to pass mask testing and factory inspections. The situation illustrates how rules designed to keep health-care workers safe could hinder getting much-needed protective equipment to them in a crisis, even when manufacturers respond quickly.
Related
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- Why Are N95 Masks So Important? (June 1, 2020)
- Regulators Deny Approval of Chinese Masks in Giant California Order (May 13, 2020)
- Low-Quality Masks Infiltrate U.S. Coronavirus Supply (May 3, 2020)
When the shortage of N95 masks hit the U.S., the demand for protective equipment for state governments and hospitals quickly outpaced the supply from typical producers such as 3M Co.
Struggling to find enough protective equipment, many purchasers struck deals with middlemen who were sometimes selling high-price masks of dubious quality.
In early April, California Gov. Gavin Newsom announced a deal that would see California get 150 million N95 masks each month from a foreign mask manufacturer. He didn’t name BYD at the time, but the company has a history of government contracts with its electric-bus business and its U.S. headquarters is in Los Angeles. The original deal called for the manufacturer to obtain Niosh approval for their N95 masks by the end of April.
BYD declined to comment Monday.
The $1 billion mask order was scrutinized by state lawmakers in April as critics questioned the opaque way the deal was cut. That intensified as the contract was extended twice in the absence of regulatory approval. California had paid almost $500 million up front in a deposit when the contract was signed. In the latest version of its contract with the state, BYD has until Friday to get Niosh approval.
Stella Li, who heads BYD’s North American business, said last week that BYD had collected a deposit from California to invest in mask-making capacity.
Ms. Li, who is based in Los Angeles, said BYD had failed its first factory audit because it lacked the correct documentation and that the company had underestimated the rigor of the regulatory process. The company is already supplying other types of masks for use in the U.S.
The Niosh approval means BYD should be able to fulfill its contracts with California, Washington state and SoftBank.
A worker makes N95 masks at factory in Mexico. N95 masks are so called because they are a U.S. standard that requires masks to be able to filter out at least 95% of very small particles, including droplets containing the coronavirus.
Photo: Tischler Carlos/Zuma PressCalifornia expects to get the first deliveries of 150 million N95 masks within a week and that more will come in “virtually every day” through the end of the month, said Brian Ferguson, a spokesman for the Governor’s office.
Washington state, which signed a $177 million contract to buy 55 million N95s from BYD, expects to receive batches of masks in the coming weeks, said Linda Kent, a spokeswoman for the state. Washington had previously taken delivery of 5.5 million respirators and was waiting to distribute them until BYD received regulatory approval.
Japanese technology investor SoftBank had agreed to buy 100 million N95 masks from BYD starting in May, contingent on the company securing Niosh accreditation.
The foray into masks has proved a fortuitous move for BYD, China’s biggest electric-car maker by vehicle sales volume. The company came to the attention of many investors in 2008 after Mr. Buffett’s Berkshire Hathaway Inc. bought a 10% stake in the then-unknown Chinese company. BYD’s vehicle-sales volumes plunged this year alongside the broader auto industry in China and around the world.
Write to Liza Lin at Liza.Lin@wsj.com and Austen Hufford at austen.hufford@wsj.com
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