BYD Overtakes Tesla as Top Electric Vehicle Manufacturer: Threatening US Car Industry

In 2011, when Tesla founder Elon Musk was interviewed, he mocked the Chinese electric car company BYD as not being a competitor at all going broke in China.”

More than a decade later, Musk can no longer laugh. In the fourth quarter of 2023, BYD’s global sales of pure electric vehicles (BEV) surpassed Tesla and became the largest electric vehicle manufacturer. With a market value of US$81 billion, it is also among the top ten car makers in the world, surpassing BMW, Volkswagen and Ford.

Facing the threatening Chinese competitor, not only Tesla should be worried, but also a more serious issue: BYD can threaten the US car industry.

BYD targets mid-to-low price customers, focuses on high CP value, and is quickly emerging as a leader in electric vehicles.

“Nikkei Asia” once analyzed the three main conditions for BYD’s rapid rise: low cost, a large direct integration chain and policy subsidies from the Chinese government. Founder Wang Chuanfu started out in the battery industry.

The small electric car “Seagull” launched last year, priced at less than US$10,000 (about NT$320,000), has raised concern among global automakers, especially European and American manufacturers, who are worried that BYD will steal the market for car sizes and prices. Marin Gjaja, chief operating officer of Ford’s electric vehicle division, said in an interview with CNBC that “Chinese (car makers) will definitely come to the United States.”

(Source:BYD)

The report pointed out that most US automakers are still unable to make money from electric vehicles, but BYD’s low-price strategy of its Seagull electric vehicle has made significant profits. , BYD has focused on emerging markets in recent years,. including Latin America, Southeast Asia and Europe. Some believe that, although Seagull has not entered the United States yet, BYD’s growing influence is an undeniable fact, and it is only a matter of time before it affects the US market.

The Alliance for American Manufacturing recently issued a report stating that “BYD can sell its cars so cheaply because of the financial support of the Chinese government. Once it enters the US market, it may have a devastating effect on the US auto industry. “Musk, who had not been bad at BYD before, admitted in January this year: “Chinese car manufacturers can destroy global competitors without trade barriers.”

If the BYD Seagull is enough to shake up the US and even the global car market, what are the other benefits besides a price war?

In terms of driving experience, there is little difference between BYD’s Seagull, Chevrolet’s Bolt, Nissan’s Leaf or BMW’s i3. However, the American engineering company Caresoft Global tested more than 30 Chinese electric vehicles and found that compared to Xiaopeng, NIO and other vehicles, the BYD Seagull wins in body structure, batteries and parts “From design to manufacture, it is simple and effective.” “The quality is unexpectedly good.” With the price less than 10,000 US dollars, the value of CP is very high.

Bypassing Europe and the United States, entering countries with weak car industries and taking hold of the market

In fact, BYD’s growth can be attributed to overseas markets last year, it sold over 3 million vehicles, and overseas markets accounted for 10%, which doubled from the beginning of last year. According to CNBC, due to the ongoing Sino-US trade war and unclear European market policies, BYD is targeting emerging markets and setting up factories in Thailand, Brazil, Indonesia, the Hungary and Uzbekistan.

“BYD’s strategy is to choose countries with weaker auto industries, which will face less political opposition. “Xiao Feng, an analyst at CLSA, said Thailand for example after BYD set up a factory in Thailand, in January this year sales have surpassed Toyota (TOYOTA). “Nikkei Chinese” pointed out that in 2023, Thailand’s new car sales market will be led by BYD’s pure electric vehicles.

According to data analysis by market research firm Counterpoint Research, BYD has become the best-selling electric vehicle brand in Southeast Asia last year, capturing more than a third of the market share in the year, it aims to double sales again. After planting its flag in Southeast Asia, BYD is targeting Latin America, and recently it has targeted Mexico, a neighbor of the United States.

In February this year, BYD Executive Vice President Stella Li revealed to Reuters that they were looking for a place to set up a factory to increase their market share in Mexico. He confirmed that the factory would be located in south central Mexico, rather than in the north near the US border.

However, US concerns have not subsided. Bill Russo, CEO of the investment consulting firm Automobility, believes that if BYD really sets up a factory in Mexico, it will be able to capture the American market. , and have the opportunity to export products from Mexico to North America”.

What is the United States of America afraid of when it comes to BYD?

BYD’s rise has made it difficult for American automakers, which are facing the dilemma of shrinking markets in the United States and China. The US market share of the three auto giants General Motors (GM), Ford and Chrysler (Chrysler) was as high as 75% in 1984, but fell sharply to 40% in 2023.

Politicians in the United States and Europe are targeting Chinese electric vehicles, and some senators have even proposed raising import taxes on Chinese cars to US$20,000. Currently, electric vehicles made in China must pay a 27.5% tax to enter the US market. Seeing that BYD plans to set up a factory in Mexico, former President Donald Trump threatened to impose 100% tariffs on Chinese cars made in Mexico after they were selection.

Compared to the high consciousness of politicians, car manufacturers have a different perspective. Ford Motor believes that the industry cannot control the regulations and expansion of Chinese car makers, and that making good products is the right way forward. Jaya said: “We should think about what customers want and gain competitive advantages in technology to win the hearts of customers.”

Terry Woychowski, who once worked for General Motors, also stressed that American car makers must learn and make changes quickly to compete with Chinese makers such as BYD. He pointed out that traditional car dealers have been accustomed to a set of standard operating procedures for many years into the United States.

(This article is written by Monthly manager Reprinted with permission; source of first image:Unsplash)