Musk once laughed off BYD as a threat. Now the Chinese giant has taken Tesla’s EV crown — here’s how

Elon
Musk
dismissed


BYD
in
2011
by
laughing
at
their
products
during
a
Bloomberg
interview.

“Have
you
seen
their
car?”
Musk
quipped.
“I
don’t
think
it’s
particularly
attractive,
the
technology
is
not
very
strong.
And
BYD
as
a
company
has
pretty
severe
problems
in
their
home
turf
in
China.
I
think
their
focus
is,
and
rightly
should
be,
on
making
sure
they
don’t
die
in
China.”

BYD
did
not
get
wiped
out.
Instead,

BYD
dethroned
Tesla
in
the
fourth
quarter
as
the
top
EV
maker,
selling
more
battery-powered
vehicles
than
its
U.S.
rival.

“Their
goal
was
to
be
China’s
largest
auto
manufacturer
and
put
China
manufacturing
on
the
map,”
Taylor
Ogan,
CEO
of
Snow
Bull
Capital,
said
of
BYD’s
long-standing
ambition.

So
how
did
the
Chinese
company,
which
began
by
making
phone
batteries,
become
an
electric
car
giant?

While
BYD
is
now
known
as
an
electric
car
giant,
its
tentacles
stretch
into
many
areas
from
batteries
to
mining
and
semiconductors,
which
is
a
large
reason
behind
its
success.

Chemist
Wang
Chuanfu
founded
BYD
in
1995
in
the
southern
Chinese
city
of
Shenzhen,
China’s
massive
tech
hub.
It
was
founded
with
20
employees
and
2.5
million
Chinese
yuan
of
capital,
or
$351,994
at
today’s
exchange
rate.

In
1996,
BYD
began
manufacturing
lithium-ion
batteries,
the
type
that
are
in
our
modern
day
smartphones.
This
coincided
with
the
growth
of
mobile
phones.
BYD
went
onto
supply
its
batteries
to
Motorola
and
Nokia
in
2000
and
2002,
respectively,
two
of
the
mobile
phone
industry’s
juggernaughts
at
the
time.

In
2002,
BYD
listed
on
the
Hong
Kong
Stock
Exchange,
riding
the
wave
of
its
success
in
lithium-ion
batteries.

It
wasn’t
until
2003
that
BYD
acquired
a
small
automaker
called
Xi’an
Qinchuan
Automobile.

Two
years
later,
it
launched
its
first
car
called
the
F3,
which
was
a
combustion
model.
And
then
in
2008,
it
launched
the F3DM,
its
first
foray
into
electric
vehicles.
The
F3DM
was
a
plug-in
hybrid
electric
vehicle.

That
same
year
Warren
Buffett’s
Berkshire
Hathaway

made
what
was
at
the
time
a
$230
million
investment
in
BYD.

This
gave
a
boost
to
BYD’s
electric
car
ambitions.

BYD
continued
to
push
into
the
EV
space
and
this
is
where
its
history
as
a
battery
maker
came
into
play.
In
2020,
the
company
launched
the
Blade
battery,
which
many
argued
helped
spark
BYD’s
growth
in
EVs.

It
is
an
LFP
or
lithium
iron
phosphate
battery.
At
the
time,
according
to
Ogan,
many
battery
makers
were
moving
away
from
LFP
batteries
due
to
perceptions
that
they
had
poor
energy
density,
i.e.
they
were
too
heavy
for
the
amount
of
energy
they
were
able
to
provide.

But
BYD
touted
the
Blade
as
a
breakthrough
that
provided
good
energy
density
and
high
levels
of
safety.
It
committed
to
putting
this
in
its
Han,
a
sporty
sedan
which
was
released
in
2020
and
seen
as
a
rival
to


Tesla’s
Model
S.
BYD
then
put
the
Blade
in
subsequent
models
it
released.

“The
energy
density
at
the
cell
level
and
the
pack
level
were
actually
higher
than
what
BYD
initially
unveiled
…
Everyone
was
blown
away,”
Ogan
said.

BYD
sold
130,970
pure
battery
electric
vehicles
in
2020.
Last
year,
the
company
sold
1.57
million
battery
EVs.

The
breakthrough
with
the
Blade
underlines
why
BYD
has
found
success
in
EVs
—
strategic
investments
and
the
fact
that
it
has
more
businesses
than
just
cars.

“BYD
cut
their
teeth
being
a
supplier
in
the
high
tech
space,
building
up
resiliency
by
supplying
batteries
to
hard
to
please
companies
like
Apple,”
Tu
Le
of
Sino
Auto
Insights,
told
CNBC.

“Wang
Chuanfu
then
had
the
wherewithal
to
acquire
a
broken
down
local
Chinese
automotive
brand
and
was
able
to
focus
on
innovating
on
battery
tech,
enough
so
that
it
can
sell
to
other
automakers.
If
that
wasn’t
enough
they
were
head
down
grinding,
continually
improving
the
design,
engineering
and
quality
of
it’s
own
stable
of
vehicles.
We
didn’t
know
this
at
the
time,
but
everything
it’s
done
over
the
last
15-20
years
set
it
up
to
surpass
Tesla
in
Q4
’23.”

At
the
start,
BYD
did
not
jump
straight
into
pure
EVs.
The
company
still
sold
hybrid
cars,
which
Alvin
Liu,
analyst
at
Canalys,
said
was
key
to
BYD’s
initial
success.

“In
the
early
stages
of
the
Chinese
EV
market,
BYD
chose
to
simultaneously
launch
Battery
Electric
Vehicles
(BEV)
and
Plug-in
Hybrid
Electric
Vehicles
(PHEV).
This
strategy
allowed
BYD
to
win
the
market
when
charging
infrastructure
was
not
well-established,
and
users
were
not
very
clear
about
the
advantages
of
EVs,”
Liu
told
CNBC.

“PHEV’s
characteristics
like
high
economic
efficiency
and
not
having
range
anxiety
played
a
significant
role
in
helping
BYD
to
win
the
market.”

Liu
said
BYD
postioned
itself
in
the
mid-range
market
where
there
were
fewer
competitors
in
China
which
helped
propel
its
growth.
BYD
has
done
well
on
branding,
according
to
Liu,
creating
differetn
sub-brands
to
tackle
different
price
points
in
the
market.
One
such
example
is
BYD’s

mid-to-high-end
EV
brand
Denza.

As
well
as
BYD’s
own
tactics,
its
rise
has
been
helped
by
the
Chinese
government’s
huge
support
of
the
country’s
EV
sector.
Over
the
past
few
years,
Beijing
has
offered
subsidies
to
incentivize
buyers
of
electric
cars
and
offered
state
support
to
the
industry.
These
measures
began
around
2009,
at
the
time
BYD
was
looking
to
ramp
up
its
EV
push.

Rhodium
Group
estimates
that
BYD
received
approximately
$4.3
billion
in
state
support
between
2015
and
2020.

“BYD
is
a
highly
innovative
and
adaptive
company,
but
its
rise
has
been
inextricably
linked
to
Beijing’s
protection
and
support,”
Gregor
Sebastian,
senior
analyst
at
Rhodium,
told
CNBC.
“Without
Beijing’s
backing,
BYD
wouldn’t
be
the
global
powerhouse
it
is
today.”

“Over
time,
the
company
has
enjoyed
below-market
equity
and
debt
financing
allowing
it
to
scale
up
production
and
R&D
activities.”

After
dominating
China’s
EV
market,
BYD
is
now
epanding
aggressively
overseas.
It
sells
cars
in
a
number
of
countries
from
the
United
Arab
Emirates
to
Thailand
and
the
U.K.

In
southeast
Asia,
BYD
has
a
43%
market
share
in
electric
vehicles.
But
BYD’s
interntional
expansion
is
not
just
about
selling
cars,
it
involves
manufacturing
and
materials
too.

BYD
said
in
December
it
would
open
its
first
European
manufacturing
plant
in
Hungary.
And
the
company
is
also

looking
to
buy
lithium
mining
assets
in
Brazil.
Lithium
is
a
key
component
of
BYD’s
batteries.

However,
with
global
expansion
comes
scrutiny
from
governments
who
are
concerned
about
the
subisides
that
Chinese
carmakers
have
received.

In
September,
the
European
Commission,
the
executive
arm
of
the
European
Union,

launched
an
investigation
into
subsidies
given
to
electric
vehicle
makers
in
China.

Meanwhile
the
U.S.
is
trying
to
boost
its
own

domestic
EV
sector
through
the
Inflation
Reduction
Act,
with
an
aim
of
keeping
out
Chinese
competitors.

“Initiatives
like
the
IRA
and
the
EU
anti-subsidy
probe
aim
to
impede
China’s
progress
in
these
markets,”
Rhodium’s
Sebastian
said.

“To
ensure
sustained
growth,
BYD
is
proactively
addressing
these
political
hurdles,
as
seen
in
its
recent
investment
in
an
EV
plant
in
Hungary,
underscoring
its
commitment
to
global
expansion.”

The
battle
between
Tesla
and
BYD
—
the
world’s
two
biggest
EV
makers
—
is
set
to
continue.
Sino
Auto
Insights’
Le
said
he
beleives
that
BYD
still
hasn’t
“reached
max
potential.”

“Most
automotive
companies
for
the
longest
time
didn’t
take
them
seriously.
That’s
where
part
of
their
journey
mirrors
Tesla’s
because
people
didn’t
take
Tesla
seriously
in
the
early
days
either,”
Le
said.

As
for
Tesla,
the
company
is
facing
stiffer
competition
in
2024
with
Chinese
competitors
launching
more
models
and
traditional
automakers
trying
to
catch
up
in
the
EV
race.

Daniel
Roeska,
senior
research
analyst
at
Bernstein
Research,
told
CNBC
that
there
isn’t
a
big
driver
of
sales
volumes
in
Tesla’s
car
portfolio
in
the
coming
months.
BYD
on
the
other
hand
could
see
faster
growth.

“BYD
quite
to
the
contrary
is
really
pushing
the
pedal
to
the
metal
…
by
accelerating
growth
in
Europe
and
other
overseas
markets.
And
so
there
is
a
lot
more
growth
in
the
BYD
story
in
the
next
12
to
24
months
for
sure,”
Roeska
said.

Tesla’s
Musk
has
recognized
that
he
shouldn’t
have
taken
BYD
lightly.
In
a
comment
posted
in
X
in
response
to
a
video
of
his
2011
Bloomberg
interview,
Musk
said:
“That
was
many
years
ago.
Their
cars
are
highly
competitive
these
days.”