Why Chinese car maker BYD is now headed to Germany

car manufacturer
Why Chinese car maker BYD is now headed to Germany

The Chinese car maker BYD is economically in the fast lane

© IMAGO / Xinhua

Chinese electric car manufacturer BYD also wants to gain a foothold in Europe. The first cars are to be sold in Germany in autumn – a slow revolution begins

It is a brand that promises great things: “Build your dreams” (BYD). The Chinese car manufacturer has attracted a lot of attention in recent months as the brand is in the fast economic lane. Two numbers prove this. First: 300 percent. This is how vehicle sales increased in the first half of 2022. Despite the blockage, the lack of chips and disruptions in the supply chain. The Chinese supplier has sold over 641,000 vehicles, almost 80,000 more than the alleged best-in-class Tesla.

This article is available to Capital.de in partnership with China.Table Professional Briefing – China.Table first published it on August 9, 2022.

Number two: nine billion dollars. This is what the stake in BYD, which Warren Buffett bought in 2008 for $ 235 million, is now worth. The brand is now worth more on the stock exchange than Volkswagen and has left the German group behind in electromobility in China.

BYD is currently celebrating this success mainly in its home market in China. But the company also wants to settle in Western markets. The expansion is initially still being undertaken with cautious steps. But if it could make a name for itself in traditional automotive countries such as Germany and the US, BYD would have done so and would become a global car manufacturer. Recently, the South Korean brand Hyundai has managed to do so among Asian suppliers.

BYD: Only one dealer in Germany so far

BYD has recently found a trading partner for Germany and Sweden: Hedin Mobility Group. The company has 235 locations. But there is only one in Germany, in Bremerhaven. According to the annual report, one employee sold a total of eleven Dodge cars there in 2021. There was a lot of buzz in specialist circles about the launch of BYD in Europe. However, it has not been noticed that the company is just beginning to recruit dealers.

BYD’s success in China is due to the broad positioning of the Chinese. It has existed since 1995. At that time, BYD was also producing batteries for mobile phones and MP3 players. It wasn’t until 2003 that the company’s founder Wang Chuanfu diversified his business and started developing electric cars. The Battery and Electric Vehicle Divisions have been so successful that BYD is now one of the world’s largest battery manufacturers. In addition, every fourth electrified car in China – purely electric cars and hybrids – comes from BYD. The only reason why this share is not even higher is the lack of production capacity. A bottleneck that the recently opened Fifth Factory eases somewhat. Thanks to it, in the future, the brand will be able to produce 3.4 million cars per year.

Unlike many of its competitors, BYD has a fairly secure supply of raw materials. The company not only has its own battery factories, but also has the rights to extract lithium in Chile since the beginning of the year. In Africa, the brand wants to take over six more mines. BYD batteries are also cobalt-free. The mining and production is so smooth and the end product is of such a high standard that even Tesla would like to buy batteries from a competitor in the future.

Cost advantage for BYD

Thanks to its subsidiary BYD Semiconductor, the brand also controls chip shortages. The company also manufactures semiconductors for automotive systems. BYD is currently negotiating an IPO with the Chinese stock exchange regulator. This is to raise funds for research and development.

Due to diversification in the value chain, BYD has a huge cost advantage over the competition, in addition to security of supply. Although batteries have become cheaper over the years, they still account for about a third of the cost of an electric car. BYD also meets the law. In China, electric car manufacturers have to re-collect batteries. However, the carmaker also diversified here and was the only carmaker to open a recycling plant.

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BYD will also rely on these advantages when introducing a market in Europe and will need to maintain its strength. Experience shows that new brands have difficulties with this, especially in Germany. Lexus has never moved beyond a niche role and Infiniti has completely ceased operations, although Toyota and Nissan are behind it with groups with European expertise. But BYD is not a deterrent. Contrary. In 2022, the brand wants to sell 20,000 in Europe. cars. Considering there were only 1,000 units in 2021, this is a very ambitious plan. Even out of the original 200,000 copies once released in 2023 – a pre-crown era expansion fantasy – Wang never pulled back.

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