The largest selling brand of BEV (battery electric vehicles, basically 100% electric) is the Chinese brand BYD (比亚迪) which has recently overtaken Tesla – a classic example of a brand that’s famous in China and actually leads its category, but isn’t known in the rest of the world.
Sales of electric vehicles continue to grow around the world, with more than 3 million units having been sold from January to May in 2022, compared to 1.7 million in the same period of 2021 (an increase of more than 80 percent). According to data from CleanTechnica, BYD produced 506,868 fully electric cars in the first half of this year, which is a market share of 15.6 percent. Meanwhile, Tesla produced only 406,869 of the cars, making up 12.6 percent of the global comparison.
BYD Auto had it’s beginnings in 2003, in Xi’an, after BYD Co. Ltd. acquired Qinchuan Machinery Works which had a license for automobile production. BYD made the world’s first production-model plug-in hybrid car, the BYD F3 compact sedan, which became China’s best-selling sedan in 2009. BYD then started expanding outside China, competing mainly on price in Africa, South America and the Middle East.
However, before venturing into automobile manufacturing, BYD Co. Ltd. was focused on rechargeable batteries – with an IPO in Hong Kong in 2002 based on it’s success in that business. The 2003 purchase was opportunistic, a chance to buy a going automobile producer from a conglomerate that wanted to get rid of it, while local government was keen to keep the factory going as a source of employment.
BYD Auto started off “reverse engineering” other cars to learn how to build them. There is a story around the founder bringing his brand-new Mercedes S-Class to his R&D center, handing over the keys to his team and instructing them to take it apart so they can study it. Over the years, BYD graduated from this to improving on what they saw and moving from internal combustion to plug-in hybrids to BEVs.
BYD Auto has some unique core strengths fueling it’s success. First, it started as a rechargeable battery company and the purchase of an auto manufacturing facility was partly to start creating a bigger market for batteries. Second, the founder is primarily an innovator and engineer who drives a culture of solving technical problems.
From being seen as a cheap, low-quality car brand, BYD has changed over the years and become one of the two leading Chinese car brands, acquired it’s own design aesthetic and from a position of strength, signed JVs with leading global automakers. The 2021 BrandZ survey of top Chinese brands shows BYD ranked 29th amongst a very broad field of ALL consumer facing brands (up from 45 the previous year) and ahead of all the other local car brands. (https://www.chinainternetwatch.com/30833/brandz-top-brands/)
China has been at the forefront of encouraging the development of hybrids and electric vehicles and BYD, SAIC and the other car manufacturers have all benefited from a faster pace of development of both consumer demand and supply-side technology in this market.
A look at the 2021 annual report reveals a revenue of 211 billion RMB at a net profit margin of 1.4%. However, almost half this revenue comes from the older BYD revenue streams of batteries and mobile handset components – with 51.09% coming from automobiles. Sales in the PRC account for 69.76% of the company’s revenue.
The original HK public company still exists but shows a small revenue of under 2 billion HK$ – clearly the China listed company is the main entity now.
With it’s strong engineering DNA, a robust brand that is now ranked well by consumers and a leading share of the global market, BYD is well-poised to build on their early success and continue to dominate the global auto market to the point where they’re famous not just in China, but around the world.
While our focus as a consultancy is making new brands famous in China, there are many (already) famous Chinese brands that aren’t well known overseas. We will be bringing them to light in this series over time.