Introduction
BYD , a global powerhouse in electric vehicles, is reshaping the automotive industry with its innovative technology and rapid expansion.
Tesla has been raining at the top of the world of electric cars, but he can count his days as a top dog.
A ruthless price war among local brands shakes China’s top EV market.
If Tesla hadn’t had a 20-30% price cut, sales would likely have fallen last year. And there’s a car maker especially at Tesla who ran for his money. Warren Buffett is supported by With 2.4 million new insurance policies in 2023, the Chinese automaker led China with an 11% share.
I think anywhere in the history of automobiles is enjoying such explosive growth in such a short time.
How Chinese EV Giant BYD Is Taking On Tesla
BYD has grown into this power package. I look at the monthly ranking list and always top it.
In 2023, BYD produced more than 3 million new energy vehicles,
including plug-in hybrids and battery-electric, with Tesla producing more than 1.84 million units.
BYD is almost ridiculous as it is far ahead of China’s Tesla. Ii was rejected by Elon Musk, and the Chinese automaker was not taken seriously by its rivals.
In the past, foreign brands had most of the Chinese market share, but now they are Chinese brands.
These high-quality vehicles from Chinese brands pose a serious threat with their ambition for global dominance.
Exponential Export Growth and Dominant Domestic Market Share
In 2023, BYD’s exports jumped 334% (242K units to 70 countries). Dominating 40% of China’s EV market, they’re now eyeing Australia, Japan, Europe, and possibly the US.
CLSA predicts BYD will be among the world’s top 5 automakers by 2026, entering the top 10 this year.
Bild Your Dreams was originally started in 1995 by Wang Chuan Fu and Shenzhen China.
As a 90s cell phone battery manufacturer, BYD’s initial success came from a low-cost strategy that easily outcompeted others.
After building a successful company and providing customers such as Motorola and Nokia, they decided to enter the automotive business.
I bought the Xi’an Kin Chuan Automobile and started its first internal incineration vehicle in 2005. In 2008, we launched F3DM, a plug-in hybrid EV.
They remember that they drove to the early Bido, and F3 and F1 are called.
In 2010, the company introduced its inaugural fully electric vehicle, the E6.
Slow Growth and Moderate Profits for BYD’s Automotive Division in the 2010s
While a step forward, EV adoption was mainly due to taxi incentives, with little private buyer interest.
Throughout the 2010s, the automotive division of the company experienced minimal growth.
Although sales did rise, the increase was only gradual, and the profits generated from these sales were average at best.
Despite sales declines in 2018-2019 creating uncertainty, BYD rebounded with new, German-designed models like the Tang and Han around 2019.
For the first time, it became evident that these vehicles were aesthetically appealing, indicating potential for the brand.
By 2022, BYD halted combustion engine production to concentrate on electric and hybrid models.
Most of their offerings cater to the mass market, which aids in achieving higher sales volumes. Furthermore, BYD did not abruptly transition to exclusively electric vehicles.
Warren Buffett’s Early Endorsement of BYD and Consideration of US Market Entry
Warren Buffett’s Berkshire Hathaway supported BYD, considering a US entry in 2008 when Buffett took a 10% stake.
He said his bet was on the leadership over technology, expressing uncertainty about China’s EV market.
He recognized something exceptional in Wang Chongfu, which led him to endorse an investment of approximately $4 billion.
A substantial portion of his interest stemmed from the battery sector rather than the vehicle segment.
which has seen remarkable growth alongside vehicle sales.
Since Buffett’s initial investment, BYD’s stock has surged over 1,400%.
Citing geopolitical concerns, particularly Taiwan, Berkshire Hathaway has divested over 60% of its BYD shares since last summer.
Introducing Yang Wang’s Flagship Models: The U9 Supercar and U8 Luxury SUV
Yang Wang, created in 2023, targets the high-end segment, with a supercar, the U9, and a luxury SUV, the U8.
Feng Cheng Bao also created in 2023, launched its first vehicle, the Bao 5, in November last year.
Yang Wang, established in 2023, focuses on the premium market with its supercar,
the U9, and a luxury SUV, the U8.
Recent announcements regarding its upcoming model, the U7, indicate.
It will feature four electric motors and offer a range of approximately 500 miles.
Feng Cheng Bao, also founded in 2023, introduced its inaugural vehicle, the Bao 5, in November of the previous year.
The Growing Trend of International Expansion Among Chinese Car Manufacturers
Yang Wang represents BYD’s strategic move into the luxury automotive sector. The vehicles are either notably large or fall within the sports car category, distinguishing them from BYD’s typical offerings.
Historically, many automakers have sought to develop flagship models that enhance the overall brand image, and BYD is no exception.
Reflecting rising confidence, this shows BYD aiming to rival or even exceed Ferrari, Lamborghini, and Porsche.
As the leading electric vehicle manufacturer in China, BYD aims to expand its presence in international markets.
Beginning around 2018-2019, the market experienced a slowdown, leading to declining profit margins.
Overcapacity and intense competition forced Chinese automakers to see the need for overseas expansion, a trend now clearly visible.
Rapid Market Penetration: BYD’s Meteoric Rise in Thailand
BYD dominates Southeast Asia’s EV market (43%) and is the top seller in Thailand, Brazil, Colombia, and Israe
BYD went from almost zero to Thailand’s top car brand in just a year.
Furthermore, BYD aims to double its sales in the Philippines and Singapore this year. Last year, the company commenced sales in Mexico and is planning to enter the Japanese market.
BYD is now launching the Dolphin in Mexico and expanding across South America, where Tesla’s presence is limited.
Establishing Local Production: BYD’s First European Plant in Hungary
BYD is enhancing its footprint in Europe, having sold 13,000 vehicles there last year,
Now operates a large cargo ship capable of transporting 7,000 vehicles.
Recently, the company delivered 3,000 vehicles to Germany as part of its inaugural shipment.
This move aligns with BYD’s overarching strategy to maximize in-house operations,
As owning the shipping process allows the company to exert significant control over costs.
It is evident that Europe is currently BYD’s primary focus in international markets.
The region’s EV shift is fueled by affluent consumers and a decent charging network.
BYD has announced plans to establish its first European manufacturing facility in Hungary;
however, the Chinese automaker is encountering challenges in foreign markets.
Recently, the EU launched a probe into Chinese EV production subsidies.
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The EU Commission suspects BYD’s competitive pricing may involve dumping or excessive subsidies.
In China, the government has provided significant backing for new energy vehicles,
with the Rodeum Group estimating that BYD received around $4.3 billion in state support from 2015 to 2020.
A critical question remains: will BYD attempt to enter the U.S. market?
The company is certainly preparing for this opportunity, biding its time for the most advantageous moment.
BYD needs to conquer profitable US and European markets despite tariffs (25% EV + 2.5% car). Many, including China’s government, will accept initial losses for market dominance.
Recently, BYD announced plans to construct a factory in Mexico, potentially to secure a position in the North American market.
As Mexico’s leading auto supplier, China is expected to build production plants there.
Evaluating sites and progressing in research, they plan to export to the US after 2025.
What are the implications of Chinese companies increasingly penetrating our market?
In the next five to six years, it is expected that several automakers will initiate final assembly operations in Mexico.
This development is significant due to NAFTA, which effectively removes tariffs on these vehicles. Some may argue that American consumers will not purchase Chinese-made cars.
$9,000 vs. $20,000 for the same SUV makes the choice clear.
This sentiment has been echoed by numerous individuals we have spoken with in the region. U.S. lawmakers have expressed concerns that Chinese automakers could inundate the market, posing a potential threat to domestic manufacturers.
There is certainly awareness of this issue in Washington,it is likely that discussions are taking place with Mexican officials.
U.S. market risk is tangible, especially after recent UAW gains.
Concerns for the Global Automotive Industry Due to China’s Rise
Tariff-free Australia sees BYD capture 14% of the EV market since 2022.
Tesla, which has been operating in Australia since 2014, currently holds a 53% market share.
Chinese automotive manufacturers are among the most competitive in the global market.
Substantial success abroad depends on tariffs and trade for them.
In the absence of such barriers, they are likely to outperform most other automotive manufacturers globally, given their exceptional capabilities.
However, with China emerging as a dominant force in the automotive sector, it may prove challenging to temper their ambitions.
Chinese automakers quickly gained skills to produce attractive, affordable, and often superior vehicles.
This development should raise concerns within the broader industry. Currently, China possesses the capacity to meet half of the global demand for vehicles.
Their advantages (low cost, design, quality) make their progress seem unstoppable.
Thank you for your attention.