Auto, why Buffett brakes on the Chinese BYD?
BYD is ready to encircle the western market with a pincer move, offering batteries and pure electric vehicles. The Shenzen giant, which has Buffett among its shareholders, has also entered into an agreement in the rental sector
It's just a matter of time. The western automotive market will soon, indeed, very shortly, speak Chinese . In fact, we have the major battery manufacturers in China and brands will come from China that almost no European knows today, but which will compete seriously to win over the “indigenous” manufacturers. Among these is certainly the automotive manufacturer BYD, which in the first six months of the year sold more electric vehicles than Tesla, the American company led by Elon Musk and commonly associated with this type of car. Not satisfied, the brand is preparing to debut in Europe and will use next week's Paris Motor Show 2022 as a pre-launch showcase.
THE TENAGLIA MOVE OF WANG CHUAN-FU
BYD, founded in 1995 by Wang Chuan-Fu , still led by Wang himself and his cousin Lu Xiangyang (number 1 of the investment company Youngy Investment Holding), we said, in addition to being also active in the sector of mobile phone and photovoltaic components (among its customers are Dell, Apple, Xiaomi and Huawei) is preparing to tighten the western market with a pincer clamp: on the one hand it sells batteries to European and American houses that want to switch to electric, on the other it proposes to consumers models who, we will see shortly, are ready to rival some of the most established brands.
Let's start with the batteries. At the moment the most established Chinese manufacturer is another: Contemporary Amperex Technology Co. Limited (better known as CATL) which holds a market share of 34.8 percent. Until recently, in second place in the ranking there was, fixed, the South Korean LG Energy Solution, with a market share that was not even half that of CATL, to close with BYD. Until recently, in fact. In August, according to a report by SNE Research, a Seoul-based research firm, BYD performed a historic overtaking on the South Korean and now the first two steps of the podium are occupied by Chinese.
CHINA ELECTRICATED BY EV CARS
The three Asian brands are unrivaled, holding over 60% of the market. There is only the Japanese Panasonic – in fourth place, with 9.6 percent – to annoy them and its success is linked to the success of Tesla, given that it is the preferred supplier of the Texan company. In addition, Panasonic is investing to reduce the size of the batteries, in an attempt to climb the rankings, as car manufacturers are looking for more innovative solutions, which impact less and less on the size and weight of the cars. Then follow the South Korean SK On, with 6.5 percent and, again from South Korea, Samsung SDI with 4.9 percent. The Chinese CALB, Gotion High-Tech, Sunwoda and SVOLT have market shares of 4.1, 2.9, 1.5 and 1.3 per cent respectively.
THE FIRST HALF RALLY: TESLA PASSED
And then there is the division that produces cars. In the first half of 2022, BYD sold more electric vehicles than any other automaker: 641,000 units, an increase of more than 300 percent year-on-year. Over the same period of time, Tesla sold 564,000. According to the company announced, September sales reached 201,259 units. In the third quarter, BYD sold 538,704 Neves, an increase of 194% from the previous year and a surge from 355,021 in the second quarter.
Covid (which in China caused several very hard lockdowns still in the first part of the year), the spike in raw material costs and the absence of semiconductors did not slow the performance of BYD, whose sales in the first nine months of the year increased by 250% compared to the previous year, reaching the remarkable milestone of 1.18 million vehicles sold. Numbers that are enough to make it Tesla's main rival in the world, in the field of EV cars.
BUFFETT'S RELEASE DOES NOT STOP BYD'S RUN
Among the shareholders stands out the famous investor Warren Buffett who, as Il Sole 24 Ore recalls, thanks to Chinese entrepreneurship has seen his fortune in BYD grow from 230 million in 2008 to 9.5 billion dollars at the end of June. Then on August 30, the Confindustria newspaper always points out, Buffett started selling, dropping from 20.49% to 18.87%. “The sentiment on the stock has deteriorated and now the decline in Hong Kong is 22% since the beginning of the year. But BYD has never been so healthy, it just set its record for car sales in September (over 200,000, + 187% year-on-year). It sold more cars in 2022 than in the previous two years combined. And the market share of electric and hybrid vehicles in China is now 29% ”.
AND NOW EUROPE
“Europe – said Chuan-Fu – is the cradle of the automotive industry and has a strong spirit of innovation. Europeans are making a great, joint effort to accelerate automobile electrification, and Europe is the main driving force for the advancement of electric vehicles. We are therefore proud that BYD can start contributing to the adoption of zero-emission cars in so many local markets, almost at the same time. We look forward to collaborating with the best European dealers and industrial partners to create high quality products with environmentally friendly technology and offer diversified choices and experiences to more consumers ”.
EVEN TELLING IT, THE SECRET OF BYD CARS IS IN THE BATTERIES
BYD focuses on the technology of its batteries with blade cells, known in the environment as Blade Battery, with lithium-iron-phosphate chemistry. Cobalt-free, these batteries offer high performance combined with excellent safety and for this reason the house guarantees them 8 years. And they are also less bulky: they are about 5-10 cm thinner than other lithium-ion packs.
FIRST STAGE, GERMANY
The country chosen for the European landing is, surprisingly, Germany, one of the states of the Old Continent most manned by historical brands. The reason is understandable: it has an adequate infrastructure for EV cars, like Northern Europe, but compared to Northern Europe it is in the midst of the ecological transition, with many drivers fond of endothermic cars that sooner or later will have to switch to electric. At the base of the range with which the Chinese brand will try to break through in the Old Continent, the Segment C BYD Atto 3 SUV, offered at the starting price of 38,000 euros; going up in the range we find the BYD Han sedan and the BYD Tang Full Size SUV starting at 72,000 euros.
WESTERN RIVALS
The intent of Act 3 to annoy the new Tesla Model Y RWD from 49,900 euros is clear, with Tesla which, moreover, this year inaugurated its first European gigafactory in Berlin. The top of the range BYD HAN and BYD TANG, on the other hand, in Germany will try to erode market share from BMW, Audi and Mercedes-Benz.
THE AGREEMENTS IN THE FIELD OF RENTAL CARS
It is news in the last few hours that BYD has signed a long-term agreement with Sixt that sees the rental company, engaged in the electrification of its fleet, to order about 100,000 BYD electric vehicles, between now and 2028.
BYD's electric cars will initially be rented in Germany, France, the Netherlands and the United Kingdom as early as the end of this year, and will then land in other EU countries (including Italy) in the course of 2023. BYD's first model for customers Sixt will be Atto 3, a compact electric SUV with front-wheel drive, with a 204 HP engine and a declared range of approximately 420 km, ensured by a 60 kWh battery. We know that Sixt also intends to create its own network of columns for customers and branches: will BYD also enter this market?
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/auto-perche-buffett-frena-sulla-cinese-byd/ on Fri, 07 Oct 2022 10:10:28 +0000.