BYD, a Chinese automaker, is set to surpass Tesla, an American automaker as a leader in global electric vehicle (EV) sales.
This will be both a symbolic turning point for the EV market and further confirmation of China’s growing influence in the global automotive industry.
Though the auto industry is still being dominated by automakers such as Toyota Motor Corp, Volkswagen AG and General Motors Co, Chinese manufacturers including BYD and SAIC Motor Corp are making serious inroads.
After leapfrogging the United States, South Korea and Germany over the past few years, China now rivals Japan for the global lead in passenger car exports.
Globally, EVs are gaining serious attraction as about 1.3 million of the 3.6 million vehicles shipped from the mainland as of October 2023 were electric.
“The competitive landscape of the auto industry has changed. It’s no longer about the size and legacy of auto companies; it’s about the speed at which they can innovate and iterate,” said, Bridget McCarthy, head of China operations for Snow Bull Capital, a Shenzhen-based hedge fund that invested in both BYD and Tesla.
According to McCarthy, “BYD began preparing long ago to be able to do this faster than anyone thought possible, and now the rest of the industry has to race to catch up.”
Europe looks poised to join the United States in slapping Chinese car imports with higher tariffs to shield thousands of manufacturing jobs. Other countries’ EV markets are still in their infancy and aren’t nearly as lucrative.
While many car buyers outside of China are still only dimly aware of BYD, Warren Buffett surely isn’t. In 2008, Berkshire Hathaway Inc. invested about $230 million for an almost 10 percent stake in the Chinese automaker.
When Berkshire started paring its holding last year – BYD shares were trading near their all-time high – the value of its stake had soared roughly 35-fold to around $8 billion.
Charlie Munger, late Berkshire vice-chairman saw BYD primarily as a battery play. On Bloomberg TV in May 2009, he said the company was working on “one of the most important subjects affecting the technological future of man.”
BYD acquired a failing state-owned automaker in 2003 and introduced its first plug-in hybrid – called the F3DM – in 2008. A New York Times reviewer panned its exterior design, calling the compact “about as trendy as a Y2K-era Toyota Corolla.” The company sold all 48 units in the first year.
Around that time, China started subsidising plug-in car purchases through support from the government spanning tax breaks for consumers, production incentives for manufacturers, help with research and development, and cheap land and loans.
As an automaker that made its batteries, BYD was uniquely positioned to benefit. Before entering the car business, it was the first Chinese lithium-ion supplier to Motorola and Nokia in the early 2000s.
To scale up output before consumers embrace EVs, the company targeted automotive segments that would need lots of cells. Its first electric bus launched soon after the F3DM.
