BYD’s electric car was exhibited at a car show held in Munich, Germany in September. Leonhard Simon/Getty Images
Casual observers of the auto industry may have been surprised when China’s BYD recently overtook Elon Musk’s Tesla to become the world’s number one electric vehicle seller.
But what caught other automakers around the world off guard was something else about Warren Buffett’s Berkshire Hathaway-backed BYD: its low prices.
“Nothing can match BYD on price. Times have changed,” said Michael Dunn, CEO of Asia-focused auto consultancy firm Dunn Insights. financial times. “Boards in the United States, Europe, South Korea and Japan are in a state of shock.”
BYD is able to keep costs low because it owns the entire EV battery supply chain, from raw materials to finished battery packs. This is important because batteries account for about 40% of a new car’s price.
BYD cars are not yet commonly seen on U.S. roads, but many experts think it’s only a matter of time before they become commonplace, despite the current heavy tariffs. ing. Currently, the United States imposes a 25% tariff on Chinese-made EVs, which will also include a 2.5% tariff on imported cars.
But Dunn said that even if BYD and other Chinese automakers enter the market with $20,000 cars, the high tariffs will still remain, given that the average price of a new car in the U.S. this year is about $20,000. He said he would be in a “good position.” $48,000.
BYD launched an EV called Seagull in China last year for an unbeatable price of about $11,000, and it quickly became one of its best-selling EVs. “But it is overseas where EVs can become a truly disruptive force,” writes UK-based market intelligence firm Autovista Group.
According to Reuters, BYD’s Dolphin hatchback still costs from $33,000 in the UK, nearly 30% less than the starting price of its VW rival ID.3 hatchback.
But BYD plans to export cheaper models to markets around the world, including Europe, South America and Southeast Asia. In the past three years, China’s EV exports have increased by 851%. new york times Reported in October.
As for the US, BYD could enter from south of the border. According to the FT, the company is looking for a location in Mexico for a new manufacturing plant.
Mexico has free trade agreements with the United States and Canada. In November, members of Congress warned that major Chinese companies like BYD were “gaining a backdoor into the U.S. market” through their southern neighbor.
Last year, Ford Motor Co. Chairman Bill Ford Jr. warned that the U.S. automaker was “not yet ready” to compete with Chinese rivals in electric vehicles. “It was developed very quickly, it was developed on a large scale, and now it’s being exported,” he told CNN. “They’re not here, but we think they’ll be here someday.”
BYD also has the advantage of founder and CEO Wang Chuanfu, which the late Charlie Munger, Buffett’s longtime partner at Berkshire, mentioned in one of his final interviews last year.
in obtained On the podcast, Munger said Wang could see someone’s role in the morning and “do it in the afternoon.” I’ve never seen anyone like that…He’s a natural engineer, he’s a get-it-done type of production executive, and he has a huge talent for having that in one place. ”
He added, “BYD people are better at actually building things than Elon.”