Analysis: Why BYD is ahead of Tesla

e-mobility
Why BYD is ahead of Tesla

BYD was founded in the mid-1990s by former university professor Wang Chuanfu.

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While Tesla is struggling with production difficulties, a competitor from Shenzhen BYD is setting new sales records with the Shanghai Corona Lock playing its part. But experts also see Tesla and BYD as technology peers

This article is available to Capital.de in partnership with Europe.Table Professional Briefing – Europe.Table first published it on July 18, 2022.

Tesla has been struggling with serious problems in China in recent months. As the Shanghai plant was hit by a severe blockage, it is estimated that the US manufacturer sold 80,000 to 100,000 fewer cars than originally planned.

It was also the main reason why Elon Musk’s group fell behind China’s BYD top electronic dog for the first time in three years in terms of global sales. While Tesla sold 564,000 cars worldwide in the first half of the year, the Shenzhen group was able to sell 641,000 vehicles – 300 percent more than in the previous year.

Of course, the comparison between Tesla and BYD is not entirely fair. Because while Tesla only produces premium electric cars, around half of BYD’s vehicles are still plug-in hybrids. In addition to a large battery, they also have an internal combustion engine. Added to this is geographic happiness. BYD produces most of its vehicles in Shenzhen in southern China, which has been less affected by severe coronation measures than Shanghai.

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Warren Buffett came in early

Nevertheless, there is no doubt among automotive experts that BYD will continue its long history of success and will be the biggest challenge outside of China for both Tesla and German premium manufacturers in the future. US investor Warren Buffett clearly had the right instincts when he acquired an 8 percent stake in BYD in 2008. The share price of the Hong Kong-listed company has increased more than twenty-fold since then. It wasn’t until the end of June that the newspapers broke a new all-time record.

Founded in the mid-1990s by former university professor Wang Chuanfu, BYD started out as a battery manufacturer and expanded into the automotive industry in the early 2000s. The company is increasingly benefiting from the fact that BYD produces its own batteries and invests heavily in research.

The battery makes the difference

“BYD has grown considerably in the last five years and has positioned itself upwards,” says German car expert Ferdinand Dudenhöffer. The vehicles are modern, “state-of-the-art” and therefore clearly compete with German premium manufacturers in China.

The key point is BYD’s extensive battery knowledge, which is expressed, for example, in a so-called paddle battery. They are large format prism cells that allow much higher energy densities in the same volume. “BYD is the pinnacle of development here,” says Dudenhöffer.

BYD is also very innovative when it comes to integrating the battery into the vehicle and already uses so-called chassis cell technology. Here, the batteries are connected directly to the chassis, which can reduce the weight of the car (China.Table stated). Tesla is also dealing with chassis links, but BYD is clearly ahead of Mercedes and BMW.

The foreign expansion begins

The increase in sales, according to Dudenhöffer, is therefore not a flash in the head. “BYD will soon attract attention also in Europe,” concludes the automotive expert, who also sees good opportunities for other Chinese manufacturers. SAIC, FAW, XPeng, Nio, Geely, Lynck & Co, Polestar showed how strong the Chinese are and how they are gradually developing in the Western auto markets. “We are entering the phase where Tesla learn from China,” believes Dudenhöffer.

BYD already sells electric buses in Europe, Japan and India, and is taking steps to introduce passenger cars in Europe, Australia, Latin America and the Philippines. Earlier this month, the Chinese signed a contract with the Dutch car dealer Louwman. BYD is also currently examining its options in Southeast Asia.

This article first appeared on Table Media.

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