INTRO: The first companies that come to mind when
you think about EVs are Tesla, Rivian, Nio, and Lucid. In terms of legacy automakers, Volkswagen
and Ford are making a pretty good push as well. But, have you ever heard of a company called BYD?
In the western world, BYD vehicles are basically non-existent, but in China, BYD is a rather
popular choice. BYD isn’t some new startup that was created to leverage EV hype either. BYD has
actually been around since 1995, and they’ve been involved in the automotive business since 2003.
Moreover, unlike Lucid and Rivian who have barely sold any cars,
BYD is a leader in EV sales. In fact, within the first 9 months of 2021, BYD was only beaten out
by Tesla in terms of EV deliveries, and they’re currently the third largest automotive company
in the world by market cap. BYD was actually the world's largest EV company until Tesla’s
recent parabolic run. So, here’s the story of the EV behemoth that most of you have never heard of.
FOUNDING BYD:
Taking a look back, the story of BYD dates back to a poor man named Wang Chuanfu. Wang was born on
April 8, 1966 in Wuwei County to a couple of poor farmers. By the time Wang was a teenager, both
of his parents had passed away, and he was being raised by his older brother and sister. For Wang,
education was the only viable path out of his situation, so he attended Central South University
where he majored in chemistry. He would instantly turn around and get his masters from the Beijing
Non-Ferrous research institute in 1990. Wang’s initial goal was to simply live a modest life
by being a good engineer, and as such, Wang became a government researcher out of college. He worked
at the General Research Institute for Nonferrous Metals where his job was to research rare earth
metals that could be used in batteries. He spent a couple of years here, but he found very little
fulfillment from this job. So, in 1995, he teamed up with his cousin, Lu Xiangyang, to create BYD.
Wang has never revealed what the true meaning of BYD is, but he often jokes that it stands for
Bring You Dollars or Build Your Dreams. Anyway, BYD wasn’t an automotive company from day one,
they were actually a battery company. Wang didn’t have any connections or very much brand power,
but what he did have was expertise in batteries. And given that the laptop and mobile phone
markets were booming, this knowledge was extremely valuable. BYD started off by
producing batteries for small consumer tech items like portable lights and solar modules.
But, as BYD built a name for themselves, they were able to secure larger jobs like producing
batteries for Black & Decker power tools, Nokia handsets, Dell laptops, and most importantly the
classic Motorola Razr flip phone. Wang was able to build a great relationship with Motorola.
In fact, Motorola was so impressed with BYD that the chairman of Motorola awarded BYD for
being an excellent supplier. The road wasn’t all smooth though. Two notable companies,
Sanyo Electric Co. and Sony, would sue BYD for intellectual property theft.
BYD would end up settling with Sanyo while the Sony lawsuit was rejected by a Japanese court.
If you were being sued by these guys, it definitely meant that you were a serious threat.
So, now that BYD had built a name for themselves, Wang decided to take the company public in
2002. And using the raised funds, Wang purchased a majority stake in a failing state owned car
company called Xi’an Qinchuan Auto Company, and this marks the beginning of BYD auto.
BYD AUTO:
At first, BYD simply continued to sell the Flyer that Xi’an had already developed.
The Flyer sold decently pulling in 20,000 sales per year, but it wasn’t anything too crazy.
In the background though, BYD was working hard at reverse engineering every car they could get their
hands on. They reverse engineered engines, molds, motors, entertainment systems, and Wang’s S class.
In other words, they were copying everything. Wang was actually notorious for ordering large
quantities of parts from a notable supplier, and then never ordering again because he had
reverse engineered the item and learnt to build it himself. After a few years of copying, I mean
reverse engineering, BYD came out with their first model since the acquisition called the F3.
The front of the F3 looks awfully similar to the 2003 Toyota Corolla. But despite their similar
looks, the F3 was far cheaper which made it much more attractive to many customers. Over the next
few years, BYD launched a handful of cars like the F6, and basically all of these were ripoffs of
different vehicles from Toyota. It should also be noted that none of these vehicles were electric,
so BYD wasn’t really adding anything to these vehicles other than a lower price.
It wasn’t until 2008 that BYD jumped into the EV market with the launch of the F3DM. The F3DM
was a dual motor hybrid that had a pure electric range of 60 miles, and it was actually the first
plug-in hybrid in the world. But despite this title, consumers didn’t really care. The F3DM was
basically just an electric corolla, and it didn’t have the appeal that EVs have today. So, the
launch ended up being a massive flop in both China and internationally. But despite the underwhelming
launch, BYD was definitely onto something. They were targeting the utilitarian EV market which
is likely to become the biggest portion of the EV industry over the next few decades.
But, in the late 2000s, this market simply wasn’t developed yet. Most utility car buyers preferred
to stick with cheaper gas alternatives, and EV customers were generally premium consumers. So,
BYD was stuck in no man’s land. Wang didn’t want to jump into the luxury vehicle market though,
so he looked closer into who might be interested in utility focused EVs and the answer was clear:
governments. Governments don’t care about buying cool looking vehicles. They just
want the most cost effective vehicle and if it's eco friendly, that’s just a bonus.
So, in 2009, BYD started focusing their efforts into mass producing electric buses.
BYD sold these buses to Amsterdam, Frankfurt, Los Angeles, and Albuquerque.
But, this launch was actually quite controversial. Albuquerque would end up returning the buses due
to mechanical issues. Meanwhile, California received several complaints that the busses
were manufactured by people earning just $1.50 per hour. Despite these concerns, BYD continued
to target the government by manufacturing electric garbage trucks, airport shuttles,
tractors, and mining trucks. Around this same time, Warren Buffett would invest $232 million
into BYD in 2008 which attracted international interest into the company. All of this extra
interest combined with their government endeavors allowed BYD to reach 500,000 deliveries by 2010.
To put that in perspective, Tesla didn’t reach that figure until 10 years later in 2020.
But unlike Tesla who is blasting past that number, BYD has been stuck at half a million for a decade.
REBRANDING:
While a decade of no sales growth sounds really bad from the surface, it’s actually
not too bad in BYD’s case. Wang figured that the utility consumer EV market still had years
if not decades to develop. I mean even now, sub $30,000 EVs aren’t that popular. So, Wang decided
to simply maintain what BYD was doing and instead focus their effort into building a real brand.
Up until then, BYD was really just a Chinese knockoff that people only bought for the price.
But, this would all change with BYD’s second generation cars. The first of these second gen
vehicles was the BYD Qin hybrid which debuted in 2013. Just by looking at it, you can see that this
was nothing like BYD’s older vehicles. The Qin wasn’t a super sleek vehicle or anything, but for
the first time, it was original. Aside from its unique look, the Qin was also quite affordable.
The Qin wasn’t able to live up to BYD’s promised launch price of just under $30,000.
But it did launch for $35,000 which is still cheaper than the model 3 today. Following the Qin,
BYD came out with the Yuan in March of 2016. The Yuan was offered as a compact crossover SUV that
was offered as a hybrid and as a full EV. The hybrid version cost between $32,000 and $38,000,
so still under that $40k mark. Both the Qin and Yuan were solid vehicles, but by far their biggest
jump forward came with the Han which was released in July of 2020. The Han instantly sticks out as
a modern EV with its sleek design. But not only does it look good, it’s also quite affordable.
The standard range comes with 314 miles of range and only costs $33,730. You can also get the
extended range which comes with 376 miles of range and costs $36,540. BYD quickly followed up the Han
with a sleek SUV called the Song in September of 2020. The Song also boasts a range above
300 miles and comes in under $40,000. So, though BYD’s sales have remained stagnant for a decade,
I think we’d agree that BYD is a completely different company today than they were in 2010.
BYD TODAY:
As for BYD today, I believe that they’re on the cusp of a massive boom. In July, the Han crossed
100,000 deliveries, and I don’t really see anything stopping them from reaching millions.
Also, BYD formed a partnership with Toyota two years ago. Originally, it seemed like they were
just going to manufacture some models together, but they actually ended up creating a new car
company BYD Toyota in April of 2020. It’s not clear when they will launch their first car,
but it should be within the next few years as neither of them are new to the car business.
In terms of international expansion, BYD does have some presence within Latin American
and some Scandinavian countries, but the vast majority of their business comes from China.
Wang does eventually want to spend more time on the western market with his long term goal being
20-30% of sales coming from outside China. But, even if that doesn’t materialize, it’s not that
big of a deal given the strength of the Chinese EV market. The CCP has made some super questionable
moves in the past, but their embracement of EVs is definitely not one of them. Experts
predict that as much as 40% of Chinese vehicles could be electric by 2030. Considering this,
it wouldn’t be that surprising to see BYD overtake Toyota within this decade, but it is extremely
ironic. BYD went from knocking off Toyota, to partnering with Toyota, to overtaking Toyota.
As for Wang, his net worth comes in at about $25 billion which puts him comfortably within the
top 100 richest people in the world. And I think Wang more than deserves all of it given that BYD
is one of the only companies in the EV space that not only has hype but also results. Were you guys
familiar with BYD? Comment that down below. Also, drop a like if you think that legacy automakers
should get more serious about EVs. And of course, consider joining our discord community to suggest
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