BYD has accelerated the pace of international expansion amid worries about its growth in mainland China, where a stagnating economy poses a threat to sales of big-ticket items like electric vehicles (EV). “BYD is actively seeking to tap the overseas markets, banking on both exports and local production,” the company said in a filing to the Shenzhen Stock Exchange. “Our global expansion pace will pick up.” The world’s largest EV maker has sold some 200,000 pure electric and plug-in hybrid vehicles outside mainland China to date, about 3.3% of its total deliveries, it said. BYD currently operates 170 showrooms across Europe, an increase of 30 compared with September, according to the filing. The carmaker has a presence in 58 overseas markets, including Germany, Japan and Australia. Under the Made in China 2025 industrial strategy, the Chinese government wants the country’s top two EV makers to generate 10% of their sales overseas by 2025. Though authorities have not named the two companies, analysts believe BYD is one of the two because of its large production and sales volume.
Shenzhen-based BYD, backed by Warren Buffett’s Berkshire Hathaway, dethroned Tesla as the world’s biggest EV maker last year, but most of its sales were made in the domestic market. “Chinese electric-car makers have reasons to quicken their overseas expansion now that overcapacity woes have surfaced in the home market,” said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. “BYD, which enjoys an advantage in production cost, can beat many foreign brands in the international market.” The Hong Kong-listed shares of BYD plummeted 12% in November, while Nasdaq-listed Tesla and local rival Xpeng, which is listed in New York and Hong Kong, advanced more than 15% each. Analysts said BYD’s price drop resulted from concerns that the carmaker would not be able to sustain its sales growth momentum in China. In November, BYD delivered 301,903 units to Chinese customers, practically unchanged from 301,833 in October.
“BYD is facing pressure to reduce inventory and it is offering discounts to buoy sales,” Huachuang Securities said in a research note. “It is pinning hopes on the new models to be launched next year to regain the upwards momentum in terms of both pricing and volume.” Swiss bank UBS found that BYD’s pure electric Seal sedan has a production advantage over Tesla’s Model 3 assembled in mainland China. The cost of building a Seal, a potential rival to the Model 3, is 15% lower, UBS said in a report. In Europe, the Seal has a 25% cost advantage over rivals, even after factoring in growing trade barriers such as tariffs, the report said. The bank forecast that Chinese-made cars, benefiting from a faster pace of electrification in the world’s largest car market, will control 33% of the global market by 2030, compared with 17% last year, the South China Morning Post reports.
