Chinese company closes in on Tesla and sets sights on US market
Chinese automaker BYD has overtaken Mitsubishi to become the third-largest EV manufacturer in the world. With 161,000 total sales including hybrids, it now trails only the Renault-Nissan Alliance (369,000 sales) and Tesla Motors (164,000 sales).
In fact, it is so close behind Tesla that since the statistics were collected at the end of September, BYD may already be in second place.
China is both the largest and fastest-growing EV market in the world, and BYD has taken a dominant position in its home market. Their two most popular cars are the Qin, a sedan launched in 2013 of which 65,178 units have been sold globally, and the Tang, an SUV of which 44,963 units have been sold. Indeed, BYD is keen to point out that Tang boasts more power than a Corvette Stingray, the archetypal American sports car.
BYD’s flourishing in its home market has coincided with a number of drives to promote ZEVs and renewable energy. The Chinese government has spent the last three years pushing particularly hard to incentivise EVs in major cities, and just last month a government mandate was proposed to ensure that 15% of newly-sold cars are EVs by 2020.
In 2013 the Qin sold just 142 units. In 2014, sales saw a hundred-fold increase to 14,747 sales by the end of the year. The Tang, released in 2015, sold 18,175 in its first year and now sells more per month than the Qin.
In addition to China, BYD has seen relative success in South America, although its exposure in the US and Europe has been limited so far. That could all change soon, though, as the company is reportedly looking to dive into these two huge markets.
Private car sales will not initially be the main focus for the company in the States, as it instead aims at the commercial and industrial vehicle market. Already it is emerging as a leader in electric bus and truck manufacturing in California. At present, its plant in Lancaster, CA employs 400 people and is planning to triple employment and production by the end of next year. The company recently won an award from the Los Angeles Sustainability Coalition and has been backed by Warren Buffet, who invested US$230 million in 2008. Even if BYD might struggle to compete with Tesla or GM in terms of private cars, it clearly already has a strong foothold in the wider EV market.
Tariff troubles in Trump’s America
BYD may face far greater struggles than trying to compete with Tesla on their home turf, however. Donald Trump has promised throughout his election campaign to increase tariffs for Chinese firms in order to boost manufacturing and employment at home, and since BYD’s plans to expand in the US were announced, he has become President-Elect. As with numerous companies, it would appear that BYD’s plans had not actually anticipated a Trump presidency, and if he keeps to his word, it could spell trouble for the manufacturer in the US. And whilst tariffs may not affect sales of the buses manufactured in California, they would surely affect imports of BYD’s raw materials and cars.
Furthermore, Trump is notoriously dismissive of environmental issues and subsequently of renewables and EVs as well. Again, if he sticks to the script of his campaign, incentives and subsidies for both of these areas will dry up, making the US market a tricky one, regardless of tariffs. On the other hand, because American companies such as Tesla have relied so much on subsidies in the past, a lack of governmental support for them could see Chinese companies become more competitive in the US.
But BYD will continue to thrive in the EV-friendly Chinese market, and is poised to capture emerging ones such as India and South America. In addition to this, its all-electric e6 model was, until recently, the cheapest on the market at the equivalent of US$50,000, and they have taken numerous orders from taxi services in countries such as Spain, Colombia and the Netherlands.
Donald Trump may or may not put a dent in BYD’s American ambitions, but either way its future on a global scale looks bright.