During a TV interview with Bloomberg News Agency in 2011, Elon Musk, the CEO of American company Tesla, mockingly laughed off the threat of Chinese electric car manufacturer BYD’s products to his company’s dominance in the electric car market. He stated, “Have you seen their cars? I don’t think they’re very attractive, the technology isn’t very strong, and they are facing serious problems in their country. I think their focus should be on addressing these issues in their homeland. They should make sure they won’t die in China first before dreaming of competing with Tesla.”
Fast forward to now, BYD has surpassed Tesla as the world’s largest electric car manufacturer, selling 526,000 cars in the last quarter of 2023, compared to Tesla’s 484,000. BYD produced over 3 million electric and hybrid cars in 2023, while Tesla produced only 1.81 million, dethroning the long-held dominance of Tesla, as reported by the British Financial Times.
The Chinese company’s vehicles are sold at a lower price compared to those of the American company and have garnered wide popularity across the globe, including in the United States, the home base of the American company.
How did the Chinese company, which initially started with manufacturing mobile phone batteries, become the giant of the electric car industry worldwide?
Modest Capital
The story began in 1995 when Chinese chemist Wang Chuanfu founded BYD in Shenzhen, a major technology hub in South China. The company started with a modest capital of 2.5 million Chinese yuan ($351,000) and had only 20 employees at that time, as reported by CNBC.
In 1996, the small company began manufacturing lithium-ion batteries, the same type found in modern smartphones, coinciding with the growth of the mobile phone industry globally. Its first breakthrough came in 2000 when BYD contracted with the major mobile phone manufacturers Nokia and Motorola, supplying batteries to these companies.
In 2002, BYD was listed on the Hong Kong Stock Exchange, riding the wave of success in the lithium-ion battery industry.
Dawn of BYD in Automobiles
The company did not venture into the automobile industry until 2003 when it acquired a small car manufacturer called Shanxi Xinneng Automobile. Two years later, BYD launched its first car, the F3, which ran on fossil fuel. However, it debuted its first electric car in 2008 under the name of F3DM, marking the beginning of its success story that continues to unfold today.
In the same year (2008), the company secured a $230 million investment from Warren Buffett’s Berkshire Hathaway, giving a significant boost to the ambitions of the up-and-coming company.
BYD continued to make strides in the electric car industry, achieving another major breakthrough in 2020 by launching an advanced new battery named “Blade,” which greatly contributed to the growth and development of the company’s products.
The “Blade” is a lithium iron phosphate battery, which many battery manufacturers had been avoiding due to its perceived low energy density, meaning it is very heavy for the amount of energy it can provide. However, BYD described its new battery as a breakthrough that offers good energy density and high safety levels. The company began using this battery in its cars, delivering impressive results.
The company sold around 131,000 electric cars equipped with the pure Blade battery in 2020, and in the last year 2023, it sold 1.57 million electric cars with the pure battery, now reigning supreme in the electric car industry worldwide, as per CNBC.
Secrets of Success
The Blade battery is just one of the secrets behind the astounding success of the Chinese company. Another critical factor is vertical integration, as mentioned by Bloomberg.
Vertical integration was crucial to the company’s success. Instead of relying on other companies for components and systems needed for the car, BYD manufactured most of its components within its own factories. This enabled the company to produce relatively cheaper cars compared to other companies, including Tesla, which purchased many systems, components, and parts from other companies, leading to higher prices and an inability to compete with the cheaper and superior electric cars of BYD.
This led to an increase in the company’s sales, allowing it to offer a wide range of reasonably priced electric cars, leading to a maximum increase in sales while expanding its presence in new markets that were previously dominated by others.
Having surpassed the United States, South Korea, and Germany, China now competes with Japan for global leadership in car exports. In an industry dominated by major names such as Toyota, Volkswagen, and General Motors, companies like BYD have started to achieve serious breakthroughs and successes, as reported by The Wall Street Journal.
The American newspaper also pointed out that BYD received significant assistance from the Chinese government during its journey.
Currently, the company’s ambitions do not only revolve around surpassing Elon Musk and Tesla, but it is also constructing factories in Europe, Latin America, and across Asia as part of a broader effort to expand sales across these continents, with its cars and buses appearing in cities around the world, including the United States.
With the world increasingly shifting towards electric-powered vehicles, the Chinese car manufacturing company is confident and hopeful as it prepares to face the future.
Lesson for Entrepreneurs
The name “BYD” is an acronym for “Build Your Dreams.” Perhaps this name, which is both a name and a slogan, serves as a guiding principle for Arab entrepreneurs who dream of building their own companies and brands. It signifies that dreams alone are not enough, and one must work hard and diligently to turn their dreams into reality.
The experience of the young chemist Wang Chuanfu, who dreamt of manufacturing batteries and building cars, and started his own company with just 20 employees and small capital, serves as a lesson for many on the importance of perseverance and dedication in achieving dreams, and even turning them into the largest electric car manufacturing company in the world.
