BYD, which has risen to prominence over the past decade and become one of the world’s largest sellers of electric passenger cars, is now planning a major push into the all-electric commercial vehicle market.
On March 8, BYD plans to roll out new commercial vehicle models in markets such as China, Europe and Japan over the next three years, according to media reports citing people familiar with the matter. The company has set a budget of more than $20 billion for its commercial vehicle division through 2025, with major spending planned for research, product development and capacity expansion, the sources said.
Known for its electric passenger cars, BYD’s commercial vehicle business until earlier this year consisted largely of buses only. But in January and February of this year, BYD sold 2,774 commercial vehicles other than buses, more than 10 times the number it sold in the same period last year. The company showcased a range of commercial vehicle models on its official website, including buses, cargo trucks, cement mixers and street sweepers.
Image credit:BYD
This week, Tesla, a rival to BYD, slashed the prices of two of its most expensive models in the United States in another attempt to stimulate market demand for its electric cars by significantly reducing prices, the company’s second wave of price cuts this year. Many analysts believe this is the beginning of a price war for the electric car market leader.
In the face of the rival “attack”, BYD must also figure out how to respond. Analysts believe that the expansion into commercial vehicles will help BYD offset the potential slowdown in sales growth of electric passenger cars. China, the world’s largest electric vehicle market, has ended its subsidies for electric vehicle purchases.
In 2022, with the help of these subsidies, electric and plug-in hybrid vehicles account for 26 percent of new passenger car registrations in China, up from 6 percent two years ago. ING Group expects that share to grow slightly to 27.5 percent this year.
BYD expects China’s commercial vehicle market to recover gradually after the optimization of anti-epidemic policies, people familiar with the matter said.
Sales of electric commercial vehicles are likely to continue to grow in China, but the market is highly competitive, with more than 100 manufacturers offering electric buses or trucks, said Yvonne Zhang, a Shanghai-based research associate at market intelligence firm Interact Analysis. That competition is prompting Chinese automakers to look overseas.
Zhang added that China’s large and fairly developed market “gives Chinese companies a cost advantage,” and the advent of battery-powered trucks and buses provides an opportunity for these companies to enter overseas markets. Overall, China exported about 28,000 electric trucks overseas last year, more than five times the amount it will export in 2021, according to the China Passenger Vehicle Association.
People familiar with the matter also said BYD’s hopes for exporting to the U.S. are relatively limited, and the company’s expansion in the U.S. is now generally stalled. BYD has been delivering electric buses to the U.S. and Canada since 2014. The company is currently the largest manufacturer of electric buses in North America, though its annual production capacity remains relatively small at about 1,500 vehicles per year.
Last year, Chinese Foreign Minister Qin Gang visited Lancaster, California, where he said during a tour of BYD’s all-electric bus plant that it demonstrated the mutually beneficial cooperation between the two countries.
Some car companies argue that the batteries that power large trucks, especially long-haul trucks, are too heavy, so non-battery technologies such as hydrogen fuel cells are better suited to them. But BYD believes its internal battery, known as a bladed battery, can solve that problem. Blade cells consist of a number of long, flat, blade-like battery cells embedded in a battery pack. BYD says this structure maximizes space and energy density, while minimizing the overall weight of the vehicle.
But BYD also faces many challenges in the commercial vehicle sector. Earlier this week, Isuzu Motors unveiled an electric light truck in Japan. Mercedes-Benz Group also said last month that it would begin selling a new electric van, which will be built in North America and Europe and sold in 60 markets worldwide.
BYD’s shareholders include Warren Buffett’s Berkshire Hathaway Inc. and others. In addition to several plants in China, BYD also has commercial vehicle plants in countries such as Brazil, Hungary and India.
Article from wallstreetcn.com
