How China built BYD, the “killer” of Tesla

China’s BYD was a battery maker looking to build cars when it showed off its latest model in 2007. American executives at the Guangzhou auto show they were speechless before him unequal work purple car paint and the poor adjustment of its doors.

“They were the laughing stock of the industry“said Michael Dunne, a Chinese auto industry analyst.

Nobody laughs now from BYD.

The company surpassed Tesla in global sales of all-electric cars late last year. BYD is building assembly lines in Brazil, Hungary, Thailand and Uzbekistan and is preparing to do so in Indonesia and Mexico. He is rapidly expanding his exports to Europe. and the company is about to overtake the Volkswagen Group, which includes Audi, as the market leader in China.

BYD sales, of which more than 80% are in China, have increased by about 1 million cars in each of the last two years. The last automaker to achieve this goal in a single year in the US market was General Motors, and this occurred in 1946, after GM suspended passenger car sales for the previous four years due to World War II.

“The growth of BYD It’s unlike anything the industry has seen in decades.” said Matt Anderson, curator of transportation at the Henry Ford Museum in Dearborn, Michigan.

Based in Shenzhen, the center of China’s electronics industry, BYD has demonstrated how Chinese automakers can take advantage of the country’s dominance in electrical products.

The largest electric car market in the world

No company has benefited as much from China’s adoption of battery electric cars and plug-in gasoline electric cars. These vehicles together represent 40% of the Chinese automotive market, the largest in the world, and are expected to account for more than half of next year.

Like most Chinese automakers, BYD does not sell its cars in the United States because Donald Trump-era tariffs are still in placebut BYD sells buses in the US.

BYD is leading the electric car export push in China and is growing rapidly the largest car carriers in the world to transport them. The first of the ships, BYD Explorer No. 1, is on its maiden voyage from Shenzhen with 5,000 electric cars on board and is expected to arrive in the Netherlands on February 21.

With the success of China and BYD came greater scrutiny.

Tesla CEO Elon Musk warned about the strength of China’s electric car exports in a company earnings conference call in January. “Frankly, I think if trade barriers are not establishedpractically it will demolish most other companies in the world“, he has declared.

Help from the Chinese government

The rapid progress of BYD and other Chinese automakers in Europe has triggered an EU investigation Chinese government subsidies and could result in duties.

BYD’s annual reports show a total of $2.6 billion in government assistance from 2008 to 2022. And that doesn’t include other aid, like ensuring that taxi companies in BYD’s hometown buy only BYD electric cars.

BYD declined to comment on the subsidies. In a statement, the company said BYD Explorer No. 1, its new vessel, “marks an important milestone for BYD as it expands into international markets and contributes to the development of the global new energy vehicle industry.”

China has built enough factories to produce more than double the cars its market can buy. This has led to a price war in China, particularly between BYD and Tesla, with discounts that caused large losses. One of BYD’s newest models, the Seagull subcompact, starts at less than $11,000.

The real estate crisis and stock market crash are weakening Chinese consumers be more cautious when buying a car. But BYD’s low production costs have left it in a better position than most of its rivals. survive any slowdown prolonged sell-offs and industry shocks.

Origin and destination

BYD President Wang Chuanfu founded the company in 1995 to make batteries for Motorola and other consumer electronics companies. He had studied at Central South University in Changsha, an elite institution famous for battery chemistry research. But I dreamed of building cars.

BYD now has its own walled city in Shenzhen, a southeastern city near Hong Kong. An airport-style monorail transports workers from the company’s 18-story apartments to BYD’s office towers and research labs.

Liu Qiangqiang, an engineer in central Shenzhen, said the staff on his automotive development team has nearly tripled since he joined the company from GM 15 months ago.

“Rhythm it’s fast“, She said.

c.2024 The New York Times Company