China’s BYD pushes into emerging markets amid policy uncertainty in the U.S., Europe

In
the
race
against


Tesla
for
the
global
electric
car
market,
Chinese
automaker


BYD
is
pushing
hard
overseas
despite
rising
barriers
to
the
U.S.
market.

The
Shenzhen-based
company
has
already
tested
the
waters
in
a
number
of
countries
with
some
immediate
sales
success,
often
just
one
year
after
entering. 

Given
policy
uncertainty
around
Chinese
EV
exports
to
major
markets
like
the
U.S.
and
Europe,
BYD
is
seeking
to
bolster
overseas
sales
by
moving
production
to
regions
perceived
as
more
friendly.
Already,
the
company
has
factories
in
Thailand,
Brazil,
Indonesia,
Hungary
and
Uzbekistan
in
the
works. 

“They
are
targeting
countries
without
very
strong
domestic
auto
industries,
where
they
are
likely
to
face
less
political
pushback
or
headwinds
from
a
policy
perspective,”
said
CLSA
research
analyst
Xiao
Feng,
noting
that
recent
developments
in
the
U.S.
underscored
the
need
for
such
an
approach. 

The
Biden
administration
last
month
said
it’s
begun
investigating
whether
Chinese-made
cars
pose
national
security
risks,
and
raised
the
possibility
of
restricting
the
vehicles.
The
U.S.
has
tried
to
support
adoption
of
electric
cars
domestically,
but

sales
penetration
is
well
below
that
of
China.

BYD
is
moving
quickly,
beginning
with
Thailand,
where
the
company
expects
its

first
factory
outside
China
to
be
in
operation
by
the
end
of
this
year.
The
automaker
surpassed
Toyota
to
grab
the
top
spot
for
passenger
car
sales
in
Thailand
in
January,
despite
having
no
sales
there
just
one
year
prior,
according
to
data
from
Marklines.

Once
operating,
the
Thailand
factory
will
likely
serve
the
rest
of
Southeast
Asia.
EY
predicts
the
electric
car
market
in
the
region

will
grow
exponentially
to
at
least
$80
billion
a
year
in
sales
in
the
next
decade. 

BYD
has
established
itself
in
Southeast
Asia
as
the
top-selling
EV
brand,
grabbing
more
than
one-third
of
the
market
last
year
after
barely
selling
cars
there
previously,
according
to
data
from
Counterpoint
Research. 

BYD
sold
70,000
electric
cars
in
Southeast
Asia
last
year
with
a
35%
market
share,
putting
it
ahead
of
rivals

Vinfast
and
Tesla,
according
to
data
from
Counterpoint
Research.

One
of
BYD’s
advantages
over
Tesla
is
a
number
of
offerings
in
the
mass
market,
as
well
as
a
mix
of
hybrid
and
battery-powered
cars.
Tesla
exclusively
makes
more
premium-priced,
battery-only
cars.
Having
hybrid
options
is
beneficial
for
emerging
markets
where
battery-charging
infrastructure
remains
limited.

Southeast
Asia
will
likely
remain
BYD’s
strongest
overseas
market
in
the
short
term
as
the
company
pursues
its
goal
of
doubling
its
car
exports
from
last
year
to
500,000
in
2024,
according
to
Canalys
automotive
analyst
Alvin
Liu.

“The
Southeast
Asian
EVs
market
is
still
in
its
early
stages,
and
consumer
habits
need
to
be
cultivated,”
said
Liu.
“Cost-effectiveness”
is
particularly
important,
he
added,
with
BYD’s
Atto
3
and
Dolphin
models
sold
in
the
region
at
very
competitive
prices.

The
company
is
also
investing
$1.3
billion
to
build
an
electric
car
factory
in
Indonesia
in
2024,

local
media
reported
in
January.
This
year,
BYD
also

reportedly
plans
to
significantly
increase
the
number
of
its
stores
in
Singapore
and
the
Philippines. 

The
company
did
not
respond
to
a
request
for
comment
about
the
reported
plans. 

While
BYD
does
not
break
out
capital
expenditure
by
country,
it
disclosed
81.52
billion
yuan
($11.33
billion)
in
autos-related
capex
in
the
first
six
months
of
2023,
nearly
double
the
45.94
billion
yuan
reported
for
all
of
2022.

In
another
contrast
with
Tesla’s
direct-dealership
model,
BYD
often
relies
on
local
distributors
and
partners
for
sales
in
countries
outside
China.
For
example,
in
late
2022,
BYD
signed
a

distribution
agreement
with
Sime
Darby
Motors
in
Malaysia. 

While
U.S.
scrutiny
on
China’s
electric
vehicle
dominance
is
only
growing,
BYD
is
expanding
in
Brazil
and
has
its
sights
on
Mexico,
on
the
U.S.
border.

The
company’s
Americas
CEO
Stella
Li

told
Reuters
BYD
is
considering
plans
for
a
factory
in
Mexico,
where
it
has
started
selling
more
electric
cars.

If
BYD
does
build
a
factory
in
the
country,
that
could
make
it
a
“beachhead
for
the
Americas,”
Bill
Russo,
founder
and
CEO
of
investment
advisory
firm
Automobility,
recently
told
CNBC’s
“Squawk
Box
Asia.”

“Mexico
is
part
of
the
USMCA
so
there
is
an
opportunity
to
export
perhaps
from
Mexico
to
North
America,”
he
said,
referring
to
the
free
trade
agreement
that
the
United
States,
Mexico
and
Canada
enacted
in
2020. 

BYD
does
not
plan
to
sell
passenger
cars
to
the
U.S.,
Li

reportedly
said
at
the
end
of
February.

The
automaker
did
not
respond
to
a
request
for
comment
on
this
story.

China
remains
by
far
BYD’s
largest
market.
Out
of
more
than
3
million
new
energy
passenger
vehicles
the
company
produced
last
year,
just
over
242,000
went
overseas.

The
rapid
growth
of
BYD
and
other
Chinese
electric
car
companies
has
other
automakers
worried.

In
February,
the
Alliance
for
American
Manufacturing
released
a

report
warning
that
low-cost
Chinese
imports
could
be
an
“extinction-level
event
for
the
U.S.
auto
sector”
and
called
on
Washington
to
prematurely
block
imports
from
Mexico.

That
was
just
weeks
after
company
releases
confirmed
that

BYD
was
well
ahead
of
Tesla
in
terms
of
vehicle
production.

A
global
push
to
go
electric
has
given
Chinese
automakers
potential
market
opportunities,
especially
as
growth
slows
at
home. 

“BYD
needs
to
look
for
more
overseas
opportunities
in
other
regions
where
the
EV
penetration
will
accelerate
with
infrastructure
development
for
its
long-term
sustainable
growth,
not
losing
share
against
the
US
and
European
automakers,”
said
Liz
Lee,
associate
director
at
Counterpoint
Research. 

BYD
announced
late
last
year
it
would

open
a
factory
in
Hungary,
and
in
January
said
production
would

start
in
three
years. 

The
news
came
just
months
after
the
European
Union
announced
a
probe
into
the
role
of
subsidies
in
China-made
electric
cars. 

BYD
is
also
selling
cars
in
Australia,
the
Middle
East
and
Africa,
and
in
January
announced
the
launch
of

production
at
its
jointly
owned
facility
in
Uzbekistan.