Chinese company’s success shows the changing automotive landscape. Vertical integration from mineral mining to batteries is a central asset of BYD.
Chinese carmaker BYD is set to overtake Elon Musk’s Tesla as the world’s most popular electric vehicle (EV) manufacturer, according to Bloomberg, citing Chinese automotive industry data and company filings. The data shows that BYD sold 431,603 all-electric battery electric vehicles, just 3,456 short of Tesla, and will likely overtake the U.S. manufacturer in the current one.
The company, whose acronym stands for Build Your Dreams, entered the list of the world’s top ten largest car makers earlier this year as a sign of the growing competitiveness of China’s auto sector. BYD’s main advantage compared to other competitors is its vertical integration from mining critical minerals used in the vehicles to producing its own batteries. In an interview with the automotive market magazine Motortrend, Stella Li, executive vice president of BYD and CEO of BYD Americas, explains the company’s advantage with its origins as a battery manufacturer that later ventured into cell phone assembly. BYD thus does not rely on suppliers to produce most of its vehicle parts and can cut costs accordingly. Except for tires and windows, all parts are made in-house, Li added. In addition, the carmaker actively pursues critical mineral project acquisitions worldwide to reduce further the number of players involved in its value chain. For example, BYD is in the process of acquiring lithium projects in Chile and Brazil, besides owning existing ones in its homeland, China.
Expansion to Europe
With BYD’s announcement last week to open a manufacturing plant in Hungary, the Chinese carmaker is now set to expand to the European market beyond exporting its vehicles to manufacturing on-site. The facility in Hungary’s south is BYD’s first passenger car factory in Europe, and the company claims its vertical integration will help create a “local green ecosystem.”
In addition to growing private ownership globally and expanding to Europe, BYD also managed to become a government supplier. The company secured a contract to supply Austria’s government with 640 EVs. It came out ahead of big names like VW and Hyundai, Austrian newspaper Der Standard reported earlier this month. Critics argue that BYD’s success in Europe impedes the domestic industry and urge Europe and Austria to act accordingly to secure the competitiveness of European companies.
Photo: iStock/Trygve Finkelsen