Chinese battery giant BYD has become a global electric vehicle manufacturer, surpassing Tesla in sales and building the world's largest car carrier. The secret of its success lies in mastering the core technology of batteries, low-cost manufacturing, timely transformation and support.
In 2007, when BYD unveiled a new purple car with uneven paint and poorly closed doors, American executives scoffed. Nowadays, no one dares to laugh at it anymore.
At the end of last year, BYD's global sales of pure electric vehicles surpassed Tesla. It is building factories in Brazil, Hungary, Thailand and other countries, and is preparing to expand into Indonesia and Mexico. Its export business to Europe is expanding rapidly, and its market share is expected to surpass that of the Volkswagen Group.
BYD's sales have increased by about 1 million units in the past two years, of which more than 80% have been sold in the Chinese market. This is a rarity in the global auto market, with the last time the U.S. market saw similar growth was back in 1946.
Shenzhen-based BYD has made the most of China's strengths in electronics and has become a model for how Chinese automakers can catch up with and surpass international giants. It has benefited from China's aggressive push for electric and plug-in hybrid vehicles, which now account for 40 percent of the Chinese market and are expected to exceed 50 percent next year.
Due to the Trump-era tariffs, BYD does not currently sell cars in the United States, although its buses are available in the United States.
BYD is a leader in the export of electric vehicles and has built the world's largest car carrier to transport its vehicles. The first "BYD Pioneer 1" has set sail from Shenzhen with 5,000 electric vehicles and is expected to arrive in the Netherlands on February 21.
As the competition between China and the United States intensifies, BYD also faces more scrutiny. Tesla CEO Elon Musk has warned that China's EV exports are gaining momentum and could "destroy most other companies in the world" if no barriers are erected.
The rapid growth of BYD and other Chinese automakers in Europe has prompted the EU to launch an investigation into China** subsidies, which could lead to the imposition of tariffs. BYD's annual report shows that from 2008 to 2022, it received a total of $2.6 billion in aid, not including other forms of support, such as requiring taxi companies in BYD's hometown to buy only BYD electric vehicles.
BYD declined to comment on the subsidies, but said in a statement that the BYD Pioneer 1 was a milestone in its expansion of the international market and the promotion of the global new energy vehicle industry.
China's current auto production capacity is more than twice its market demand, leading to a fierce domestic war, especially between BYD and Tesla, resulting in huge losses. One of BYD's latest models, the Seagull, starts at just under $11,000.
The real estate crisis and *** have made Chinese consumers more cautious in spending, but BYD's lower production costs have made it better equipped to cope with slowing sales and industry reshuffle.
BYD Chairman Wang Chuanfu founded the company in 1995 to produce batteries for consumer electronics companies such as Motorola. But he always dreamed of building cars.
In 2003, BYD bought a factory in Xi'an that produced gasoline vehicles, but it became famous for manufacturing faulty cars in the early days. In 2006, the repair area of a factory was full of new cars that needed to be reworked.
As the Chinese market soared, BYD's sales grew. In 2008, Warren Buffett won with 2The $300 million acquisition of nearly 10% of its shares not only injected capital into BYD, but also enhanced its global popularity. In the same year, Wang Chuanfu promised to start exporting pure electric vehicles to the United States within two years.
But at that time, the high cost of electric vehicles and the short range of electric vehicles forced Wang Chuanfu to abandon his plan to enter the American market. In 2011, he reflected on his emphasis on electric vehicles, arguing that automakers should focus on gasoline-electric hybrids, and said that China's electric vehicle market has great potential.
By 2012, China's car production had caught up with demand, and consumers had become more discerning. As multinationals offer more stylish models, BYD's car sales and share price**. Industry executives and analysts are questioning BYD's future.
But Wang Chuanfu made two risky decisions and succeeded.
In 2016, he hired renowned Audi designer Wolfgang Egger, who in turn recruited hundreds of bold automotive engineers who revolutionized BYD's model design.
Wang Chuanfu also found ways to replace nickel, cobalt and manganese, commonly used in rechargeable lithium batteries, with cheaper iron and phosphate. But early batteries using this cheap chemical drain fast and needed to be recharged even for short trips.
In 2020, BYD launched a blade battery to make up for most of the range gap with nickel-cobalt batteries, but at a fraction of the cost. In the same year, Tesla began producing and selling a large number of cars in China, and the electric car boom swept the country. BYD quickly grabbed market share with cheap battery chemistry and Egger's new design.
Tesla has also started using lithium iron phosphate batteries in lower-priced models. BYD still mainly sells models with a lower range and a shorter range, while Tesla mainly sells models with a higher range and a longer range.
Swiss bank UBS found last year that the BYD Seal electric hatchback sedan costs more to manufacture than the slightly smaller size Volkswagen ID. made in Europe3 35% lower. Part of the cost savings came from cheaper lithium iron phosphate batteries, but the main reason was that BYD produced most of its own components.
BYD has its own "city within a city" in Shenzhen, with airport-style monorails transporting employees from 18-story company apartments to BYD's office buildings and R&D labs.
Liu Qiangqiang, an engineer at BYD, said his auto development team had more than tripled since he joined the company from General Motors 15 months ago.
It's fast-paced," he said.
A year ago, BYD abandoned its self-driving technology. But when Huawei and Xiaomi launched cars with considerable self-driving capabilities, BYD moved quickly. Wang Chuanfu announced in January that BYD has 4,000 engineers working on assisted driving technology and will invest $14 billion in the technology.
BYD also has a continuing advantage over Tesla: Wang Chuanfu decided in 2011 to develop a plug-in hybrid vehicle, which now accounts for nearly half of BYD's sales.
Li Jingyu, a salesman at a BYD dealership in Shenzhen, said many families buy hybrids as their first cars so they can drive back to their hometowns during the Spring Festival. Most villages in China now have charging facilities, but not enough for the flocking drivers who flock to visit relatives during the Chinese New Year, Mr. Li said.
People are just worried," he said, "about the waiting time." ”