Profits from those petrol cars, as well as from selling batteries for mobile phones and other handheld devices, can be funnelled into expensive research and development of electric cars, solar panels and other futuristic green technologies.

BYD yesterday said its first-half net profit rose to 426.9 million yuan (HK$537.8 million), well ahead of the 16.3 million yuan it earned in the same period a year earlier, helped by strong car sales and an improvement in its solar cell business.

It is too early to tell if the latest results mark the start of a sustained recovery. But BYD shares have been doing well on investor enthusiasm over the company's improving profitability and hopes that BYD could one day become China's answer to Tesla Motors, the popular California electric vehicle marker whose shares have quadrupled this year.

BYD's fortunes took a turn for the worse in 2010, when its car sales began tanking amid a series of quality issues and a slowing economy.

Last year, a much-publicised deadly fire involving one of its electric taxis hurt its share price, although an investigation found BYD's battery was not at fault.

The company responded to sales slump by slowing expansion and restructuring the company, including streamlining its distribution system and slashing the number of dealers by a third to 800.

BYD-made electric taxis began serving Hong Kong in May. The first batch includes only six taxis but the company said in March that it expected the fleet to grow to 1,000 next year and 3,000 by the end of 2015.

Shares in BYD have nearly doubled since the beginning of 2013, closing at HK$3.99 on Friday, compared with a 3.5 per cent gain in the broader market in Hong Kong this year.

"In the past, BYD made almost everything by itself, include windshield wipers and paint. That was the root of many quality issues," said Yang Zao, analyst at KGI Securities.

"Now, BYD has started to outsource and buy auto parts from suppliers, while focusing instead on making key components such as engines."