BYD zooms past Tesla in China’s electric-car market

Chinese automaker BYD sold more electric and hybrid vehicles in China last year than Tesla, new industry figures show, with a surge of growth that puts it on track to doubling sales in 2022.

One of the BYD’s most sought-after models, the Song Plus DM-i plug-in hybrid, went on sale last March. The price starts at roughly 150,000 yuan ($23,600).

“It’s so popular that buyers now have to wait three to six months get theirs,” said a sales associate at a dealership in Huizhou, a city in southern China.

The model sells so well because “the fuel economy is better by far compared with competing gasoline vehicles in the same price range,” said an analyst at Chinese brokerage Zheshang Securities.

BYD is known for its electric vehicles and hybrids, part of what China calls “new energy vehicles.” But gasoline-powered autos accounted for the majority of its sales volume until 2020.

The company took a sharp turn away from gasoline vehicles last year. Sales in that category dropped around 40% that year to 130,000 vehicles.

Meanwhile, sales of plug-in hybrids rose roughly sixfold to 270,000 vehicles. Electric vehicles more than doubled to 320,000. Overall sales shot up 70% in 2021, and BYD looks to double sales to 1.5 million this year.

Tesla’s sales in China more than tripled to about 473,000 vehicles, according to market intelligence company Marklines. BYD leads when plug-in hybrids are included.

BYD now vies for first place in the new energy vehicle category against SAIC-GM-Wuling Automobile, a joint venture that made a name for itself with the $4,500 electric car.

BYD has captured demand for moderately priced electrics and hybrids. The Song Plus DM-i is part of a series of models named after Chinese dynasties, such as the Qin and the Yuan.

Many of BYD’s electric vehicles and hybrids are priced between 100,000 yuan and 200,000 yuan — well below Tesla’s electric models that start at about 300,000 yuan.

At the other end, SAIC-GM-Wuling’s low-priced electric car is taking off in China’s rural areas.

BYD formed in 1995 as a manufacturer of rechargeable batteries and was quick to diversify. It entered the automotive industry in 2003.

Even today, BYD wins contracts to build monorails and manufacture smartphones. The company jumped into disposable masks in early 2020 when the coronavirus pandemic hit that year.

The rising demand for EVs and hybrids has changed the dynamic at the Shenzhen-headquartered company. “Priorities have completely shifted to passenger vehicles this year,” said a person with knowledge of internal discussions at BYD.

BYD aims to win over new customers by expanding its Ocean series of vehicles, which features designs targeting young people. Ocean will complement the Dynasty lineup.

Overseas expansion is gaining steam as well. Last year, BYD started exporting passenger EVs to Europe. Last week, a model went on sale in Australia.

There are also plans to increase manufacturing capacity. Assembly plants for passenger vehicles are limited to a few locations, including Shenzhen headquarters. The company is moving forward with plans to build or expand facilities in about 10 locations.

Capacity to make passenger vehicles stood at 600,000 at the end of 2020. The volume is expected to surpass 3 million vehicles in a few years, according to local media reports.

One of BYD’s biggest obstacles is falling profitability. Despite growing vehicle sales, net profit undershot the year-earlier figure during the second and third quarters last year.

High input costs are a main culprit. Vertically integrated BYD makes cars as well as the batteries, chips and other components for them, leaving it exposed to costs across the supply chain.

BYD looks to spin off parts-maker units. In late January, a semiconductor subsidiary received approval to list on Shenzhen’s startup market CHINext. After the listing, BYD will be free to shop around for other suppliers.

Another area of concern is a lack of higher-profit premium models. Only a few BYD vehicles are priced over 200,000 yuan, and virtually none are in the 300,000-yuan range, where Tesla dominates.

Meanwhile, competition from non-Chinese automakers is intensifying. Volkswagen looks to expand sales of its next-generation electric vehicles, the ID series. These cars occupy the 200,000 yuan to 300,000 yuan price range. Honda Motor will release the first in the line of e:N electric models as soon as this spring.

Author: TAKASHI KAWAKAMI, NIKKEI Asia

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