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BYD, China’s Answer to Tesla, Is Coming for the World
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China’s electric-vehicle champion BYD has sped ahead in its home market despite a bruising (十分激烈的) price war. Now it will try to export its way to even greater success.
The Warren Buffett-backed Chinese automaker sold 1.8 million new-energy vehicles, including plug-in hybrids, in the first eight months of the year—an 83% rise from a year earlier. The surging adoption of EVs in the country has helped BYD overtake Volkswagen as China’s bestselling car brand this year. Around 1 in 3 cars sold in China this year was an EV.
The company reported last week that its revenue in the first half of 2023 grew 73% from a year earlier. More impressively, it managed to expand its gross margin (毛利) to 18.5% from 13.5%. That is against a background in which automakers were slashing (大幅削减) prices in China to compete for market share. BYD’s scale and better product mix—together with proximity (靠近) to China’s EV supply chain—helped. Its vertically integrated (整合) model, with BYD making its own batteries, has helped keep its costs low.
Overseas sales accounted for only about 1% of BYD’s total sales in August. But as China has become the world’s largest EV exporter, partly helped by Tesla shipping from its Shanghai factory to other countries, BYD is setting its sights abroad, too. The company is pushing out new models to Europe. Its Atto 3 crossover sport-utility vehicles have been quite popular in countries such as Sweden. Its Seal sedan and Dolphin hatchback will start shipping to Europe later this year.
BYD’s formula for success in its home country could likely work outside China, too. UBS estimated that the carmaker has a sustainable 25% cost advantage over other legacy automakers. The bank said the BYD Seal carries a similar profit margin to mass-market internal-combustion-engine cars globally after tearing the car down component by component. BYD’s cost advantage allows it to make better cars more affordably, even compared with gasoline-powered cars.
European carmakers have been doing well in China for a long time with Volkswagen deriving a substantial portion of its sales in the country. Now they have to face competition on their home turf from Chinese rivals such as BYD, and it could be brutal. BYD’s cost leadership will give it a leg up in the EV transition race.