Hogan Lovells US LLP

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www.hoganlovells.com

October 9, 2018

BY ELECTRONIC FILING PUBLIC DOCUMENT

Mr. Arthur Tsao

Assistant General Counsel

Office of the United States Trade Representative

600 17th Street, N.W.

Washington, DC 20508

Re: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual 

Property, and Innovation, Docket Number USTR-2018-0025: Exclusion Request of 

BYD North America Regarding the SkyRail

Dear Mr. Tsao:

On behalf of BYD North America (“BYD”), an American manufacturer of electric battery 

powered mobility solutions for U.S. mass transit, we respectfully submit this exclusion request 

pursuant to the publication by the Office of the United States Trade Representative (“USTR”) of 

Procedures to Consider Requests for Exclusion of Particular Products from the Determination of 

Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology 

Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 32,181 (July 11, 2018) (the 

“Exclusion Procedures”). For the reasons set forth below, a 25 percent tariff on the SkyRail 

would harm the Administration’s efforts to improve U.S. infrastructure and place an undue 

burden on U.S. cities struggling to balance growing mass transit needs and shrinking budgets. 

Accordingly, USTR should grant an exclusion from the Section 301 tariffs for this product as 

described below.

I. Introduction

BYD began as a start-up in 1995 and has grown into a global leader in electric products. 

We are not owned, controlled, or directed by any foreign government. Our largest public 

shareholder is Warren Buffet’s firm, Berkshire Hathaway, based in Omaha, Nebraska. While 
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BYD’s parent company is based in China, BYD is a U.S. manufacturing success story. BYD 

opened its U.S. headquarters in Los Angeles in 2011. Three years later, BYD opened its first 

U.S. electric mobility manufacturing plant in Lancaster, California. BYD then created a separate 

unit, BYD Energy, in Lancaster to manufacture electric vehicle battery packs and battery 

modules. BYD Energy supplies all of the electric battery modules for BYD’s state-of-the-art, 

550,000 sq. ft. electric bus manufacturing facility located nearby.

BYD has scaled up quickly during the past four years and continues to grow U.S. 

manufacturing. BYD currently employs over 1,000 people in its U.S. operations and BYD plans 

to grow its workforce to approximately 1,200 as it expands its facility to encompass increased 

manufacturing. BYD’s total investment in U.S. manufacturing over the last seven years, through 

facilities, American workers, and partnerships with U.S. vendors, exceeds $250 million.

BYD is proud that our manufacturing workers are members of SMART Local 105 (“Local 

105”), a labor union representing sheet metal, air, rail, and transportation workers. BYD and 

Local 105 recently signed an agreement in January increasing wages and implementing 

enhanced training opportunities. Commentators have declared that “[t]here is no [other] 

company that has a contract like this in the industry.” 1/

BYD invests in its community. Through an agreement with Local 105, BYD has 

committed to work toward the goal of recruiting and hiring 40 percent of our workers from 

populations facing significant barriers to employment, such as veterans. BYD has also initiated 

an effort to recruit workers from other populations that have been historically underrepresented 

in the manufacturing industry, including women and African Americans. BYD has sponsored an 

endowment at nearby Antelope Valley College to train students for manufacturing jobs in the 

technology sector. BYD and Local 105 have also worked in partnership with the college to 

create a state-of-the-art green high-technology manufacturing training program. The program 

 

1/ SMART Local Union 105, BYD Workers Ratify Unprecedented Contract (Feb. 7, 2018), available 

at: http://local105.org/2018/02/07/byd-workers-ratify-unprecedented-contract (Exhibit 1).
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will not only help BYD develop the next generation of green high-technology manufacturing 

workers for a career at our manufacturing facilities, but also enhance the region’s economic 

development opportunities by creating an elite pool of highly-skilled advanced green 

manufacturing workers. Congressman Steven Knight, among many others, has applauded 

BYD’s investments: “BYD is a company that has brought good-paying manufacturing jobs back 

to California while other companies are choosing to export those jobs to other states and 

countries. . . . We need more companies like BYD in California that are training and building up 

a workforce of skilled individuals that are prepared for the manufacturing jobs of the future.” 2/

II. Tariffs will Harm the Administration’s Infrastructure Goals and U.S. Jobs

The SkyRail monorail system offers a number of benefits over other transit options 

available to U.S. cities – benefits that would no longer be available to U.S. communities if USTR 

were to assess a 25 percent tariff against the product. First and most importantly, SkyRail is 

safer than other options. Because of the elevated fixed guideway of the SkyRail system, there 

are no at-grade passenger or vehicle collisions. More generally, SkyRail is fully compliant with 

all applicable codes and standards. The iron-phosphate batteries installed on all SkyRail trains 

mean that, in the event of a power-outage, trains can still operate to the nearest station to safely 

discharge passengers. It also means that power rails are not required in maintenance and 

storage facilities, greatly reducing electrical risk to maintenance and other transit personnel.

SkyRail can also be built faster, with far less impact to the environment and other land 

users, and with less cost that other urban transit systems. SkyRail uses small, light-weight 

aerial structures. Unlike other comparable technology, SkyRail’s aerial structure provides both 

the structural support as well as the vehicle guidance in one slender (27.5 inch wide) guide 

beam – not the intrusive “bridge” structure common to other elevated transit solutions. This 

 

2/ Charged Electrical Vehicles Magazine, BYD expands California electric bus factory, Charged (Oct. 

17, 2017), available at https://chargedevs.com/newswire/byd-expands-california-electric-bus-factory 

(Exhibit 2); Ross Naksone, Electric Buses = More Good, Union Jobs for Low-Income Californians, Blue 

Green Alliance (Aug. 1, 2017), available at https://www.bluegreenalliance.org/resources/electric-busesmore-good-union-jobs-for-low-income-californians (Exhibit 3).
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makes the footings much smaller and easier to fit into congested corridors with fewer utility 

relocations, while minimizing costly, time-consuming, and often contentious property acquisition

efforts. SkyRail also uses pre-cast structural elements – including columns and beams – which 

greatly speeds the construction process and minimizes traffic and community disruption. As a 

result, SkyRail is much less costly to construct than conventional elevated technologies and at a 

fraction of the cost of subways.

SkyRail also costs significantly less to operate and maintain than comparable bus and 

rail rapid transit lines. SkyRail is smaller, with lower vehicle operating costs and significantly 

reduced energy consumption. The aerial structure itself is nearly maintenance-free, with no 

rails to inspect and maintain. The guide beams utilize long-life, pre-cast concrete construction. 

SkyRail vehicles operate in a clean, controlled environment and are much easier to maintain. 

Through our experience with service of the SkyRail solution in other locations around the world, 

the maintenance regimes and inspection requirements are known and very straightforward. All 

of the on-board equipment is readily accessible, and proven, transit grade components are used 

throughout.

SkyRail is also better for the environment. SkyRail offers a completely integrated, zero 

emissions, highly energy efficient power supply and distribution system. The energy created 

through on-board regenerative braking is stored in wayside batteries and high power capacitors 

to ensure that the regenerated energy will be saved and passed on not only to other vehicles 

operating on the line, but also to the passenger stations and, if needed, to the electric power 

grid. The power substations and stations can be equipped with solar panels and energy 

controllers to maximize energy efficiency.

As a result of these and other factors, similar elevated straddle type systems that are not 

as technologically advanced as SkyRail already are covering their operating and maintenance 

costs through fares and advertising revenues alone, thereby minimizing or eliminating altogether 

the need for ongoing public outlays at the Federal level. As a result, SkyRail can greatly 
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contribute to the Administration’s goal of improving U.S. infrastructure and do so at a much 

reduced cost to U.S. taxpayers.

Tariffs on SkyRail will also harm future U.S. jobs. BYD has already purchased more 

than 150 acres of land in Lancaster, CA and developed plans for 2M sq. ft. of manufacturing 

space. The plan is to build SkyRail in this space, but first BYD needs to develop momentum 

and a market for the SkyRail product. In addition, even for the first projects, all columns and 

track beams will be fabricated locally in the United States.

III. The Product is Only Available from China

BYD understands that monorail systems using lithium iron-phosphate batteries like 

SkyRail are only available in commercial quantities from China.

IV. The Product is Neither Strategically Important nor Related to “Made in 

China 2025”

Monorails are not covered by the Made in China 2025 program highlighted by USTR in 

its Section 301 report. In fact, they are not even mentioned in the report. 

V. The 10 Digit Subheading of the HTSUS Applicable to the Product 

Requested for Exclusion

The 10 digit subheading of the HTSUS applicable to the product at issue here is 

8603.90.00.00: Self-propelled railway or tramway coaches, vans and trucks, other than those of 

heading 8604: Other.

VI. Identification of the Particular Product and Ability of CBP to Administer the 

Exclusion

BYD proposes that a monorail with the following dimensions be granted an exemption: 

length (end car) 14,526 mm, length 11,880 mm (mid car), width 3,165 mm and a rooftop to top 

of running surface height of 3,020 mm with rechargeable iron-phosphate on-board batteries.

VII. Physical Description of the Product

The physical specifications of the SkyRail are provided at Exhibit 4.
Craig L 

Jared 

is 

essel 

IIX. Quantity and Value of the Product over the Last Three Years 

The quantity and value of imports for 2015-2017 were as follows. Of note, the SkyRail 

has not yet been sold in the United States. 

Quantity Value 

2015 0 $0 

2016 0 $0 

2017 0 $0 

************** 

Forthe reasons explained above, we urge USTR to grant an exemption or 

monorail equipment from the Section 301 tariffs. Failure to do so would hurt the 

Administration's effort to improve U.S. infrastructure. 

Respectfully submitted, 

HOGAN •VELLS U LLP 

Counsel to BYD North America 
Exhibit 1


Exhibit 2




Exhibit 3


Exhibit 4