This year’s CES 2023 shone the spotlight on two key trends in the automotive industry: electrification and digital transformation. In a sign of how these two trends are converging, automakers unveiled a flurry of new electric vehicle (EV) models complemented by intelligent, software-driven platforms.
Several Chinese automotive companies like Nio, Li Auto, and XPeng have been at the cutting-edge of this convergence, combining advanced connectivity and autonomous technologies with vehicle electrification. A name to reckon with in recent years has been BYD (Build Your Dreams), a Chinese automaker that is unique in that it is both battery maker – it was among the top five EV battery manufacturers, globally, in 2022 – and EV manufacturer.
At CES 2023, as part of its collaboration with Nvidia, BYD unveiled the possible future of commuting. It exhibited a smart cockpit that supported immersive gaming capabilities, enabling in-vehicle streaming of its partner’s cloud gaming service, GeForce Now.
As it readies to launch its new premium brand, Yangwang, in Q1 2023, followed by the introduction of a second high-end EV brand “grounded in highly professional and personalized identities, to meet the diversified demand of consumers,” the question is what next for BYD? After all, this is a company that has dominated EV passenger sales in China for the last nine years and surpassed Tesla to become the world’s largest EV seller in 2022. Meanwhile, at the recent 2023 Auto Expo Show held in India, BYD declared its ambition of capturing 40% of the country’s booming EV market by 2030.
Superlative Performance
By all accounts, BYD had an extraordinary 2021, culminating in cumulative EV shipments totaling nearly 1.5 million. From April 2021, all its new BEVs had the company’s proprietary, high energy density, Blade Battery, with this performance-enhancing, lithium-iron-phosphate battery pack technology poised to be made available to other EV manufacturers, including Tesla. In May, BYD launched Ocean Network, a comprehensive sales network aimed at improving customer engagement. And, finally, as early as May 2021, it laid claim to becoming China’s first automaker to ship one million EVs.
It followed this with a stellar 2022, more than doubling total (plug-in and battery EVs) sales from the previous year, rolling out its three millionth new energy vehicle (NEV) in November, strengthening its battery technology, ceasing production of traditional internal combustion engine (ICE) vehicles, and widening its geographic footprint. And the icing on the cake? In July 2022, BYD overtook Tesla to assume the mantle of the world’s top EV seller, registering 30% more sales than its famous counterpart, while tripling sales to 1.86 million units in 2022.
To learn more, please access our research report, Strategic Profile of BYD or contact sathyanarayanak@frost.com for information on a private briefing.
Our Perspective
Electrification trends will gather greater momentum, both in passenger vehicle and commercial vehicle segments. This will create tremendous growth opportunities and high intensity competition in the global EV market.
Our research underlines that leading EV OEMs will continue to make strong gains, with BYD anticipated to record a CAGR of more than 30% between 2021-2030. This projection is predicated on its scaling capabilities, advanced technologies, independent and diversified R&D, supply chain competitiveness, vertical value chain, and robust aftersales network.
We will see BYD explore new international markets, many of which (the US, UK, Germany, France, Netherlands, and Japan, among them) have announced their intention of phasing out ICE vehicles by 2030-2040.The company already has a presence in 400 cities across 70 countries/regions. Its NEVs are available in countries ranging from Norway and Japan to Singapore and Brazil. But while BYD is poised to boost its international presence both in terms of geographic footprint and export shipments, it will simultaneously continue to focus on the Chinese market which still affords massive growth potential.
Worldwide, there has been a move towards sustainable transport. BYD’s EVs have been strongly positioned to leverage the demand for EVs in ride hailing and ride sharing fleets. For example, in 2020, it collaborated with Didi to develop a purpose-built, compact, electric MPV – the D1 – for ride hailing. It has since been trialed by Brazilian ride hailing app 99 even as Mexico’s largest electric car provider, Vemo, placed an order for 1,000 D1s in April 2022. In Europe, German car rental company Sixt is contracting for 100,000 EVs from BYD by 2028.
In parallel, the switch to electrified public transport alternatives presents a mouthwatering opportunity for BYD which, in addition to cars, also produces electric buses (eBuses), trucks, and forklifts. It has won contracts to ship eBuses to various European countries, including Finland, Spain, the UK, Ireland, and Scotland. In Latin America, BYD won a contract to supply 1,000 e-buses to Colombia, besides winning other eBus orders to Ecuador, Brazil, Argentina, and Chile. Its commercial eTrucks are being trialed by companies in Europe, the US, and Latin America.
Beyond its EVs, BYD’s prospects are strengthened by its advanced technological capabilities. To keep up with rising demand for automotive battery technology, BYD is gearing up to boost battery production and expand its manufacturing bases. Its competitive standing will further be bolstered by its DiLink 4.0 – an intelligent network system touted as being the first mass-produced 5G in-vehicle communication and entertainment system. The upgrade of the company’s ePlatform to Version 3.0, with its promise of enhanced safety and extended battery life, will further support the company’s growth potential. Strategic collaborations on autonomous driving, including chips, processors, and artificial intelligence (AI) functions will also drive BYD’s aggressive growth plans.
While such trends augur well, challenges persist. Despite its many obvious advantages, the company’s vertically integrated model presents inherent difficulties since it requires juggling varied product segments, ranging from batteries and cars to mobile phone parts and semiconductors. Moreover, the rapid growth of the company’s franchisee model could result in erratic service standards; stringent oversight will be required to ensure a uniformly high-quality service experience.
In 2023, we expect this Warren Buffet backed company to race ahead in the high stakes global EV competition.
