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The Rise of BYD Electric Vehicles!

Chinese car brand Build Your Dreams (Byd) is inching closer to becoming the largest electric vehicle (EV) manufacturer in the world, selling more electric vehicles (EVs) than Tesla. Byd’s electric shuttle buses, public transport buses, trucks, and taxis are cruising through countless cities globally, expanding their influence in Latin America and Southeast Asia. They have a factory in the US, and Warren Buffett chose to invest in them instead of Tesla for as little as in 2008.

Byd has been building cars for 20 years, and the growing popularity of electric vehicles presents an opportunity for automakers globally. EV designs are simpler, with fewer moving parts and less complexity, making the playing field fresh when compared to combustion vehicles. In late 2023, Byd overtook Tesla as the global leader in EV sales, with sales reaching 526,000 vehicles for the same period.

Byd’s EVS have made significant strides globally, particularly in Israel and Thailand, where they lead EV sales. Indonesia’s largest taxi operator plans to buy 80% of its EVS from Byd. Byd aims to start producing electric cars by 2025 and is currently scouting locations in France, Spain, and Germany.

Byd’s success can be attributed to its focus on efficiency, safety, and the basic aspects of electric vehicles. The company has also expanded into Mexico, Brazil, Latin American countries, the Middle East, and Europe, and is currently scouting locations in France, Spain, and Germany.

Byd’s rapid growth and diversification can be attributed to its origins as a battery company and its focus on building vehicles around that core. The company, founded in 1995 by Wang Chuan Fu, aims to revolutionize battery production in China by supplying batteries for mobile phones, laptops, and various electronic devices. By 2002, it had become the world’s second-largest producer of rechargeable batteries, boasting a 25% market share.

Wang purchased a struggling company called Chin Chuan in 2003, which allowed him to expand his business and leverage his battery expertise. This reverse engineering tactic allowed Byd to offer premium cars at affordable prices, mimicking Toyota models but at better value than other Chinese competitors. In 2006, domestic sales skyrocketed, and by 2008, the first example of electric vehicles arrived. Warren Buffett’s Birkshire Hathaway purchased 10% of Byd’s publicly traded shares in Hong Kong, with Charlie Mungar comparing Fu to Thomas Edison.

In 2021, Byd’s market capitalization was 74.8 billion, making it the world’s 207th most valuable company. The main reasons for Byd’s success were robust support from the Chinese government, which introduced generous tax breaks and incentives for both EV makers and buyers. A $30 billion tax exemption was announced from 2009 to 2022, with an additional 97 billion in the pipeline through 2027. As demand for electric vehicles in China grew, Byd expanded its range of EV models, and Chinese consumers couldn’t get enough.

Byd  has achieved significant success by creating the Blade Battery, a Cobalt-free alternative to traditional lithium iron batteries, which enhances safety and stability. By incorporating these batteries into their vehicles and selling them to other automakers, including Tesla, Byd owns the majority of its supply chain for its Electric Vehicles (EVs), including batteries, motors, chips, and software. This allows Byd to avoid the global chip shortage, reduce costs, improve quality, and innovate faster than competitors.

Byd’s price competitiveness is another reason for its success. The Tesla Model 3 starts at around $35,000, while the Byd Seagull starts at about $10,000 and offers two battery options. These price differences and features matter, especially in price-sensitive markets like China, Southeast Asia, and Latin America. Byd’s popularity over Tesla in these markets is due to their lower production costs and economies of scale.

Byd’s expertise in all areas, including battery engineering, has allowed them to offer their EVS at such low prices. The Seagull is a culmination of Byd’s expertise and knowledge in all areas, with well-engineered battery quality and a sleek design. Byd cars have come a long way since 2015, and quality has not been an issue with Chinese-made products like the Byd SE Go.

The Byd Seal, a medium-sized sedan with a sleek design and good performance, has been compared to Tesla’s Model 3. While it may be cheaper and more affordable than a Model 3, it has been criticized for its overreliance on touchscreens, overly eager safety assist systems, and confusing warranty terms. Despite its impressive growth, there is still room for improvement in the electric vehicle market. In 2022, Byd faced a pause on the delivery of the ATO 3 Du due to child safety seat compliance issues. Warren Buffett reduced his stake in Byd by over 60% in 2022, possibly due to geopolitical factors or profit-taking strategies. In October 2023, the European Commission launched an anti- probe investigation into several listed Chinese EV manufacturers, including Byd. The investigation aims to determine whether punitive tariffs should be imposed to protect European EV makers. Byd’s management has expressed full cooperation with the EU investigative authorities. In the last decade, electric cars have grown from nearly zero to 10.2 million on the road, with estimates predicting them to grow to 300 million by 2030. The EV market is evolving, and Chinese companies like Byd are quick to seize the trend.

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