No one can doubt that the Shenzhen-based battery and automaker BYD is a rising star in China's auto industry. But the stardom has been built predominantly on the hype from Warren Buffet's investment and the promise of electric cars needed to facilitate a green economy. As financial distress and technological barriers loom large, BYD's electric car ambition appears to be a distant dream.

The largest indicator of arising problems was the painful loss BYD's semiconductor subsidiary maker based in Ningbo, Zhejiang Province, recorded annually, according to a recent report by the 21st Century Business Herald.

BYD paid 171 million yuan ($25 million) for the chip producer in October 2008, as the battery maker geared up to produce motor driver for electric cars. The insulated gate bipolar transistor chip is a key component of the motor driver, a component no Chinese manufacturer has been able to make.

The acquisition was an encouraging attempt to wean BYD's reliance on expensive imports, but the risks were obvious from the start, as the chip-producer had been struggling on the brink of bankruptcy due to outdated equipment and backward technologies.

Absorbing the bad news, prices of Hong Kong-listed BYD shares nosedived nearly 15 percent in the last two weeks of November.

Analysts estimate that introducing a new set of advanced equipment and technologies for the semiconductor plant will cost $800 million, dealing a heavy blow to BYD's balance sheet whose profitability is already raising concerns.

Despite a sales boom in conventional cars, its profit margin in the first half of this year dipped from 15 percent to 9 percent year on year.

With few options available to recoup its losses and achieve the technological progress necessary, BYD expects a helping hand from policymakers.

"Government financial support is needed to tackle the technological barriers and build up charging stations," said Wang Chuanfu, founder and president of the company.