- The Chinese have a lot of promise when it comes to electric cars, they have big ambitions and also fantastic cost advantages as they manufacture the batteries and the companies are helped by the government. Several Chinese brands have big plans for Europe, but the most famous one is called BYD, and it has launched a real ’offensive’, hoping to sell hundreds of thousands of cars on the continent every year. Why is BYD different from other Chinese companies?
- A nightmare for Tesla? Not really, not really.
- Batteries gave it a boost.
- Explosive growth followed after the crisis.
- What models BYD sells in European countries where it has been put into production:
The Chinese have a lot of promise when it comes to electric cars, they have big ambitions and also fantastic cost advantages as they manufacture the batteries and the companies are helped by the government. Several Chinese brands have big plans for Europe, but the most famous one is called BYD, and it has launched a real ’offensive’, hoping to sell hundreds of thousands of cars on the continent every year. Why is BYD different from other Chinese companies?
A nightmare for Tesla? Not really, not really.
In August in Shenzhen, the CEO of car company BYD gave a speech in Shenzhen to celebrate the release of five million electric cars. Wang Chuanfu, the head of the company, explained how BYD went from making batteries to making cars, citing that it took 13 years to produce the first million cars, then the next two million were produced in 18 months, and the next two million in just nine months. Amazing progress, but it can be attributed to a course of exceptional conditions.
BYD sold 431,000 electric cars last quarter, while Tesla sold 4,000 more. For the full year, the two companies could sell about 1.8 million vehicles. The big difference is due to the fact that BYD has much cheaper cars in its lineup overall, with prices between 30,000 and 72,000 euros.
BYD is a huge company, employing over 630,000 people according to its own figures.
BYD was founded in 1995 and made small batteries for cell phones and other home appliances, but has since diversified its business considerably. In the beginning, the small company copied the designs of Sony and Sanyo. The name BYD meant “Build Your Dream,” but Wang joked that it also meant “Bring Your Dollars” – a reference to investors who had to be persuaded to bring money.
In 2010, company executives said that by 2025, they wanted BYD to rank first in the world in the number of cars produced. That was a strong exaggeration, but BYD has not disbanded (or declined) like so many other Chinese companies, but has become one of the world’s top 10 largest car companies, selling 3.6 million vehicles this year.
There are two people who have led BYD to such success: a woman named Stella Li (53), who is called “Mrs. Outside” because she promoted the company a lot to investors and also convinced Warren Buffett that BYD had a future. Stella Li’s husband is Wang Chuanfu, he is 57 years old and is called the “gentleman on the inside”, he is an expert in battery manufacturing and very good at cutting costs.
In the early days of the automobile industry, BYD copied Toyota’s developments, but cut costs so much and so effectively that Toyota bosses came to find out how they could do it. BYD, like many other Chinese companies, also grew because the Chinese authorities provided generous subsidies and government agencies bought large fleets of cars.
Within two to three years BYD has turned its attention to export markets and would like to export 400,000 cars in 2024, and as for electric cars, BYD is doing very well in markets such as New Zealand, Israel, Thailand and Australia, i.e. markets where there is no national manufacturer with a large market share.
Over the summer, the press wrote that BYD wants to find a place to build a factory in Europe and plans to produce its first cars in 2025. Several Chinese car companies have already entered Europe, and BYD has the most optimistic plans.
Countries such as Germany, France and Spain have the best chance of receiving investment. The UK does not stand a chance due to Brexit complications. The plan is to have the first BYD cars produced in Europe by the end of 2025 (or 2026).
A small hatchback called Dolphin was introduced in June, followed by the Seal sedan starting in September. The company had been selling electric buses and trucks in the U.S., but sales suffered because of Sino-U.S. trade tensions.
Batteries gave it a boost.
BYD became a major company, winning a contract with Nokia in 2000 and in 2002. – with Motorola, for whom it became a supplier of cell phone batteries. BYD won these contracts by offering a very low price, and because automation was minimal and production processes were fine-tuned, scrap rates were extremely low.
In 2002, the company went public on the Hong Kong Stock Exchange, and in 2003 it launched its first car, called the F3, which looked very similar to the Toyota Corolla but cost about $8,000, half the price of the Japanese model.
Wang applied to car manufacturing a strategy that had worked well in the battery industry: minimal automation, a large number of employees who performed simple and clean operations and were replaced every few years to avoid raising their salaries.
In 2008, one of Warren Buffett’s men came to BYD to look at the production facilities for a possible investment, and one episode during a factory visit has since become famous, as Wang is said to have poured battery fluid (and tasted a little) into a glass, wanting to impress his visitors and prove that BYD had developed a non-toxic type of battery fluid.
Americans liked what they saw, and three months later Berkshire Hathaway, one of Buffett’s companies, bought a tenth of BYD’s stock for $232 million. With that money BYD could aim high, and in 2009 the company launched its first plug-in hybrid model, and the stock quadrupled in price so that Berkshire Hathaway’s stake was worth a billion dollars. It must be said that participation has declined in recent years.
BYD launched its first all-electric car in 2010 and continued to roll out new models after 2015, especially as Chinese authorities offered subsidies and big tax breaks to manufacturers to put as many electric cars on the roads as possible. BYD has received at least several billion dollars from the government for development.
China has another advantage: many of the minerals used in the creation of batteries for these cars are found in abundance in its territory, and in some cases, 90-95% of the world’s production of some elements comes from China.
The batteries in BYD’s latest electric cars produced in Europe are built using lithium-iron-phosphate technology, which keeps prices down because they contain no cobalt and very few rare metals.
Explosive growth followed after the crisis.
In 2018, the head of Toyota came to the BYD factory, but not to win over the crowd, because BYD originally copied the Japanese brand’s models, but to learn how the small company manages to produce products with such low costs.
In 2019 BYD was going through a crisis, sales were falling, but the company found a way out of the situation by launching the first model with a new type of battery called “Blade”, which was smaller but had more autonomy. In 2020, an all-electric model called Han was launched with a promised autonomy of more than 500 kilometers and a price tag of 30,000 diolars in China.
BYD launched several models with this new type of battery, and sales in 2022 were four times higher than in 2020. As average wages in Chinese factories doubled in 10 years, BYD began automating some processes.BYD has another advantage: many cells are assembled “in-house” rather than purchased from suppliers, giving it an important cost advantage.
BYD also has the big advantage of owning lithium mines in China, so it does not need to buy through middlemen this key element for electric car batteries.
BYD is the “queen” in China, where it owns the seven best-selling electric car models, and the company has 37% of the new electric car market, four times that of Tesla. BYD had no solution for growth other than to try to enter as many international markets as possible. The cheapest BYD electric car model in China costs about $10,000, which is unattainable in Europe, where safety standards are much more serious, plus transportation costs and taxes are added.
Since 2022 BYD has entered the market of several European countries, and compared to what it was ten years ago, the quality of the company’s cars has grown a lot, more technologies have appeared on them, a lot of work has been done on the exterior design, for which BYD has attracted European designers as well.
The most optimistic market analyses show that Chinese brands could take 15% of the European all-electric car market, and BYD could sell not a few thousand electric cars a year, but 500,000.
Whether this will actually be the case remains to be seen, especially since in Europe there are more and more voices about the inadmissibility of “flooding” the automobile market with Chinese electric cars with low prices, especially since “in their own land” they have received a lot of advantages, in particular, in the form of subsidies, tax breaks and orders from state-owned companies.
What models BYD sells in European countries where it has been put into production:
BYD Dolphin, available from summer 2023, two versions:
1. from 30,000 euros, autonomy 255 km./ battery 44.9 kW.Car length: 4.29 m, mass 1,650 kg.
2. from 36,000 euros / autonomy 340 km, top speed 160 km/h, acceleration from 0 to 100 km/h: 7 seconds.Battery capacity 60.5 kWh.Car length: 4.29 m, mass 1,758 kg.
BYD ATtto 3, available from summer 2022, from 45,000 euros.Autonomy 330 km, top speed 160 km/h, acceleration from 0 to 100 km/h: 7.3 seconds.Battery 60.5 kWh.Car length 4.45 m, mass 1,825 kg.
BYD Seal, available from fall 2023, from over 52,000 euros.
Autonomy 485 km, top speed 180 km, acceleration from 0 to 100 km/h: 3.8 s.Battery capacity of 82.5 kWh.The car is 4.80 meters long and weighs 2,285 kg.
BYD Han, available from spring 2023, from 71,000 euros.
Autonomy 475 km, top speed 180 km, acceleration from 0 to 100 km: 3.9 s.Battery 85.4 kWh.Length 4.99 m, mass 2,325 kg.
BYD Tang, available from summer 2022, from over 72,000 euros.
Autonomy 360 km, top speed 180 km, acceleration from 0 to 100 km/h: 4.6 s.Battery 86.4 kWh.Vehicle length 4.87 m.Mass 2,564 kg.