BYD Is Going for Global EV Leadership (1 of 2) (Tech Strategy – Daily Article)

This is Part 1 of a breakdown of the competitive dynamics of surging EV automaker BYD (HKST: 1211). Plus, some background on the company.

Wang Chuanfu and the Early Days of BYD

BYD was founded in 1995 during the boom years of Shenzhen. During the years when China was becoming manufacturing powerhouse. During the years when “Made in China” was becoming a common phrase.

In the 1990’s, the center of China was Shenzhen and its gateway to the world markets via Hong Kong. This was before Chinese consumers started spending. And before China had become a big market. It was certainly long before China moved into digital. This is when China and BYD were a manufacturing story.

BYD began as a manufacturer of rechargeable nickel–cadmium (Ni-Cd) batteries. At the time, the global rechargeable battery market was dominated by Japanese companies, which were then shifting from Ni-Cd to nickel-metal hydride (NiMH) and Lithium-ion (Li-ion batteries). And Japanese battery manufacturers were using highly automated processes that were efficient. But also, capital intensive and fairly inflexible (i.e., it takes a lot of time to switch battery types on an automated manufacturing line).

Enter BYD, which began manufacturing Ni-Cd batteries using a large labor force in hyper efficient processes. Basically, they used few machines and automation. Instead, they had complicated and highly coordinated human processes. Japanese companies had far greater productivity per worker. But BYD has far lower per unit costs, even with fair less individual productivity. BYD entered the global rechargeable battery market with a low price point and lots of flexibility in battery types. This made them very responsive to client demands.

By 2002, BYD had become the world’s leading Ni-Cd battery manufacturer. According to Wikipedia, they had 65% of global production. They were also second in NiMH batteries and third in Li-ion batteries.

Within ten years of founding, BYD had +200,000 employees and had captured half the world’s mobile-phone battery market. It was the largest Chinese manufacturer of rechargeable batteries.

And this had a lot to do with co-founder and CEO Wang Chuanfu, who is now widely recognized as one of the world’s most successful technologists and entrepreneurs.

Wang was born to a family of poor farmers in Eastern Anhui province. Both of his parents died, and he was raised by his elder brother and sister.

He studied metallurgical physical chemistry at Central South University in Changsha, Hunan. And went on to earn a master’s degree (1990) from the Beijing Non-Ferrous Metal General Research Institute. He was a government researcher in metallurgy. This is where he noticed the opportunity presented by Japanese manufacturers. He quit his government position to co-found BYD with his cousin Lu Xiangyang at age 29.

This is a common story the first generation of Chinese entrepreneurs. Many of the most famous (Wang Shi of Vanke, Ren Zhengfei of Huawei) were based in Shenzhen in the late 1980’s and early 1990’s. They were usually working in government jobs or the military as those were the only positions. Then as Shenzhen opened to the world and the private sector emerged, they started their own companies.

Wang Chuanfu still leads BYD today. In January 2024, his net worth was $15B.

A fun factoid:

BYD was originally based in the Dapeng New District located in the East of Shenzhen. It was located on Yadi Road and had named itself Yadi Electronics (亚迪电子). They later changed this to Biyadi so the company would be alphabetically near the top at trade shows. In English, they called this BYD, which they later said stands for “Build Your Dreams”.

BYD Jumps from Battery Manufacturing into Autos

Already successful in batteries, BYD expanded into producing mobile phone components in the early 2000s. This became BYD Electronic. Smart device components and assembly is still one of their core businesses today (although small).

Wang launched BYD Auto in 2003 with the acquisition of Xi’an Qinchuan Automobile. Qinchuan was a declining / dying car manufacturer and it got BYD car manufacturing technology and an automobile production license (important). BYD constructed a new manufacturing plant in the Xi’an Development Zone.

This was a pretty dramatic move. Battery manufacturer to electric car company was really daring. Plus, this was shortly after going public in Hong Kong, and was a surprise to shareholders.

But Wang Chuanfu, like Elon Musk in the West, was an early and fervent believer in electric vehicles. They both ended up being early movers that forcibly opened up the market.

  • BYD’s first car (the BYD F3) went into production in 2005.
  • BYD’s first plug-in hybrid electric vehicle (the BYD F3DM)went into production in 2008.
  • BYD launched their first battery electric vehicle (the BYD e6) in 2009.

In 2005, BYD Auto was 10% of BYD revenue. But by 2009, it was more than half of BYD revenue. And by 2008, BYD had two vehicle assembly manufacturing plants in Xi’an and in Shenzhen with a capacity of 300,000 units per year.

2008 was when Himalaya Capital’s Li Lu told his partner Charlie Munger about an opportunity to invest in a China battery manufacturer. Charlie told his partner Warren Buffett about a CEO that was the “Thomas Edison of China”. They ended up acquiring 10% of BYD.

Like Tesla, BYD’s move into electric vehicles was characterized by almost total vertical integration. This is common for early movers in completely new product categories. You have to produce everything yourself so you can innovate rapidly. Plus, the industry doesn’t exist yet so there are no companies to buy components from.

But while Tesla integrated backwards into manufacturing from engineering and software, BYD integrated forward from the manufacturing of batteries. While Elon would struggle building out manufacturing facilities, BYD has always a manufacturer and metallurgy company at heart. It is claimed that all the components in BYD vehicles except tires and windows are produced in-house. And the group does operate lithium mines, lithium processing, and battery production. It even has an in-house computer chip unit (BYD semiconductor), which may or may not go public at some point.

BYD Auto Is Surging. And They Are Playing to Win Everywhere.

In 2023, much of the world heard about BYD for the first time. They saw the cars on the streets. Or at least saw billboards. And business news began announcing things such as:

  • BYD is now the world’s largest plug-in hybrid electric vehicle manufacturer.
  • BYD is the second-largest battery electric vehicle manufacturer, after Tesla.
  • BYD had the best-selling car brand in China, overtaking Volkswagen which has held the title since the opening of the Chinese automotive industry.
  • BYD has 36% of the new energy vehicle market of China.

BYD does claim to be the #1 electric vehicle company. But this includes electric vehicles, plug-in hybrids, and full hybrids. Tesla, by contrast, only does EVs. So, it’s not really apples to apples.

Here’s the BYD headquarters, which is still in Eastern Shenzhen. Note: BYD has 570,000 employees (Tesla has 127,000 FTEs).

BYD sells a long list of models under the main BYD brand. They are rolling out sedans, SUVs, compacts and just about every other type of passenger car you can think of. It breaks these into Ocean and Dynasty categories, which you can see below.

Here are some of the BYD models from its China website.

BYD also sells high-end vehicles under its Denza, Yangwang, and Fangchengbao brands.

And since 2021, the company has really been expanding sales into overseas markets. You can now see BYD in Europe, Southeast Asia, Oceania, and South America. Their first factory outside of China is in Thailand.

2020-2023: Riding the EV Wave

Things have really surged in the past two years. Here are some factoids.

  • In 2022, China auto sales reached 26M units (up 3% yoy). Note: USA auto sales were 13M.
  • In 2022, 7M of the 26M sales in China were EVs (25%). And EV sales were up 90% yoy.
  • In 2023, BYD sold 3,024,417 vehicles globally, a 7x increase over 2020.
  • In September 2022, BYD became the first carmaker in China to build one million new energy vehicles in a single year.
  • In the first half of 2022, BYD surpassed Tesla as the world’s largest plug-in electric vehicle manufacturer by selling 641,000 vehicles.
  • On November 24, 2023, BYD became the first company in the world to produce its 6 millionth new energy vehicle.

BYD Financials Are Pretty Simple

BYD has 4 businesses overall.

  1. EV Auto. Going global very quickly.
  2. Rechargeable battery manufacturing. Already a global leader. This includes:
    1. Consumer batteries. Mostly for electronic devices (Samsung, Dell). Increasingly for robots.
    2. Power batteries. For EVs, which require high capacity and the ability to deliver a lot of power quickly.
    3. Energy storage batteries (power grid, household storage, industrial). These have high capacity and can store for a long time.
  3. Photovoltaic business. This includes designing and manufacturing everything from silicon wafers to solar cells to PV modules and PV system apps. For PV, they are covering the whole sector from energy collection to storage to application.
  4. Handset components and assembly. This is basically a one stop shop for large companies making smartphones, tablets, computers, smart home devices, drones, robots, etc.. BYD provides materials development, R&D, product design, component manufacturing, supply chain management, logistics, after-sales, etc.

BYD’s financials are about what you would expect. It’s all about the auto sales and there is lots of recent growth. As a big, manufactured product, the gross profit is relatively small. Especially because BYD sells much cheaper cars than Tesla.

  • In 2022, revenue was 424B RMB (about $60B), which basically doubled from 2021.
  • In 2022, gross profit was 17%, which has been stable.
  • Net profit was 3%.

If you look at the revenue breakdown, it’s coming from cars in China.


Ok. that was a lot of background. In Part 2, I’ll go into the business model and the key factors that matter going forward.

Cheers, Jeff


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Photo by P. L. on Unsplash


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