How Did Chinese Electric Vehicle Giant BYD Challenge Tesla?

A modern era like a fairy tale In this story that can be told; An orphan in one of China’s poorest regions becomes the world’s leading electric vehicle manufacturer. Even though it looks like a movie, this success story is Wang Chuanfubelongs to

The vehicles of BYD, which he founded, are currently On sale in more than 60 countries; By selling 42,000 more vehicles than its American rival last year, BYD surpassed Tesla and became the world’s largest electric vehicle manufacturer.

First, let’s get to know Wang Chuanfu better.

Chuanfu, who was born into a poor farmer family in China’s Anhui province in April 1966, went to high school. because their parents died He was raised by his older brother and sister.

To study metallurgical physical chemistry at Central South Industrial University after high school. won a scholarship and graduated in 1987. Then, in 1990, from Beijing Non-Ferrous Metal General Research Institute. received a master’s degree.

After working as a government researcher for several years, Chuanfu moved into the private sector in 1995, working with his cousin Lu Xiangyang outside Shenzhen. founded a mobile phone battery manufacturing company and they called it BYD Company.

The company was founded with an initial capital of $300,000. Even though Chuanfu said that the company’s name did not represent anything at that time, nowadays we know it means “Build Your Dreams”.

Thanks to their correct strategies, they achieved success in mobile phone batteries in a short time.

Initially, the company’s strategy was quite simple: imitating successful products And costs as much as possible keep it low. Despite capital-intensive and highly automated processes in Japan, BYD operates on short-term contracts. a large workforce employed.

In addition, by producing the important machines they need in production in-house, they have lower unit costs compared to their Japanese competitors. a significant decrease They provided.

To Motorola in 2000 and to Nokia in 2002 They started to supply batteries. In July 2002 BYD Companyworldwide 65% of production became the leading NiCd battery manufacturer.

Over the next 7 years, it became the second largest producer of NiMH batteries and the third largest producer of Li-ion batteries. consolidated his position.

The birth of Tesla’s nightmare: BYD Auto.

In the early 2000s, the Chinese government gave importance to renewable energy production. subsidy And tax benefits started to provide.

This period was a very suitable timing for BYD because it could use the batteries they produced in electric cars. In 2003, Chuanfu acquired Tsinchuan Automobile. BYD Auto was established.

Initially, BYD Auto continued to produce the Flyer, an off-the-shelf model, but in 2005, its first self-designed model, F3He launched . This model Toyota CorollaIt was similar to but very it was more cost effective.

BYD, which did not produce fully electric vehicles in the first years, towards the end BYD F3DM and BYD M3 DM models in later years hybrid vehicle It started production and achieved great sales success.

their strategies focusmodels compared to foreign competitors more affordable and at the same time compared to its Chinese competitors it was better quality. This strategy ranged from production of 20,000 Flyers in 2003 to production of half a million vehicles in 2010. made them grow.

The beginning of uncontrolled growth begins with Warren Buffett’s discovery.

In the late 2000s, Warren Buffett watched the growth in automobile demand in China He wanted to seize the opportunity. On the advice of business partner Charlie Munger He turned his sights to BYD.

Munger to Buffett, referring to Chuanfu he said: “This guy is a combination of Thomas Edison and Jack Welch; like Edison at solving technical problems and like Welch at getting things done. I’ve never seen anything like it.” said.

While introducing its operations, Chuanfu used some water to impress investors and emphasize how clean the batteries were. drank battery fluid.

This impressive move must have worked because Berkshire Hathaway wanted to buy 25% of BYD. But Chuanfu, reluctant to sell a large part of the company, rejected the offer.

Chuanfu’s principled approach evaluate positively Berkshire Hathaway to BYD for $230 million invested. Focusing on the domestic market before this investment, the company attracted the attention of investors around the world and accelerated the company’s expansion and growth into new markets. BYD was valued at $5.1 billion in 2009, and Chuanfu made his Forbes debut China’s richest people was at the top of the list.

Their income doors have never been closed, thanks to their ability to adapt to all conditions.

At times, even though there was a decline in sales, BYD was able to get things back on track. from Shenzhen and Hunan cities of China public transport contracts signed; it also made deals with Amsterdam, Frankfurt and Los Angeles.

Today, BYD has more than 50,000 customers worldwide. Manufacturer of electric bus It has more than 1,000 vehicles on the road or in production in its location and in the United States.

They have a large factory in California and in this factory trucks and forklifts as well as buses They produce other tools such as.

BYD is also aware that it does not make sense to produce vehicles in China and then transport its models to other countries. For this reason, the company in Europe first production facility It announced last month that it would open in Hungary.

During the beginning of the pandemic, many brands supply chain issues While experiencing this problem, BYD easily avoided this problem. was able to turn it to his advantage.

It also became one of the first Chinese companies to start producing masks during the pandemic, and within a few months world’s largest producer became.

The beginning and result of the competition with Tesla.

Tesla CEO Elon Musk, in an interview with Bloomberg in 2011 during the interview When asked his thoughts on BYD, he sarcastically replied, “Have you ever seen their cars?” he laughed.

BYD taking over Tesla’s throne and world’s largest electric vehicle manufacturer With that being said, Elon Musk is probably now he is not mocking.

That was many years ago. Their cars are highly competitive these days.

— Elon Musk (@elonmusk) May 27, 2023

In fact, in early 2023 when this interview is shown “That was many years ago. Their cars are extremely competitive these days,” he commented.

Today, BYD is worth approximately $78 billion; This, Only 10% of Tesla’s market value Even so, the company continues to work to maintain its current position and take it forward.

Experts say BYD is still has not reached its maximum potential. Will BYD’s growth continue at the same pace over the next few years? Time will show that.

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