From China with Love: How BYD is Dominating the Global EV Space

Nowhere is there a greater need for solutions to excessive emission of greenhouse gases than in the world’s largest emitter of CO₂, China¹. This need is not only driven by international pressure² for China to do more in the long-term war against Climate Change, but also by the more immediate health impacts that emissions are having on a rapidly urbanising population³. Studies have shown that air pollution contributes to 1.6million Chinese deaths per year⁴. In this context, it is no surprise that the Chinese government has supported the growth of BYD into becoming the global leader in sales of electric vehicles (EVs) in 2015⁵.

BYD, which stand for “Build Your Dreams”, was founded in 1995 with 20 employees and an initial investment of $300 000 as a manufacturer of mobile phone batteries. Within 5 years it had grown into the world’s largest manufacturer of rechargeable batteries for cell phones³, supplying Nokia and other large mobile phones companies. After acquiring a failed automobile manufacturer in 2005, BYD leveraged its expertise in batteries to produce hybrid and pure electric vehicles. Being the world’s leading producer of rechargeable batteries³ means that BYD has been able to produce EVs that are able to travel further (thanks to its technical expertise) and that are more cost-effective (thanks to the vertical integration within the firm) than most of its rival EV manufacturers³.

Since its inception BYD has grown to an organisation of more than 180 000 employees across the IT, automobile and energy industries. According to it’s website, BYD sold more than 60 000 EVs in 2015⁵ (compared to Tesla’s ~50000), becoming the global leader in EV sales, and could sell more than 150 000 in 2016⁶.

Although the company is now backed by Warren Buffet and other influential investors⁶, much of its early success can be attributed to the influence of the Chinese government policy on the EV market. In an attempt to reduce the concentration of hazardous fumes in the air in major cities, and to reduce its projected reliance on oil, China set ambitious targets in 2009 to promote the sale of hybrid and fully electric vehicles in the country. Government policy focused on promoting the sale of 500 000 cars by 2015 and 5 million by 2020⁷. Specifically, a direct subsidy was offered for the purchase of BYD and other manufacturer’s EVs. Figure 1, below, from G Maseiro et al.⁷ shows the subsidies offered by major Chinese local governments for the purchase of various BYD models. Additionally, manufacturers of EVs have been offered various tax-incentives, including in Shenzen, where BYD is based⁷.

Pathways to Just Digital Future

Watch this tech inequality series featuring scholars, practitioners, & activists

Figure 1: Local government incentives for purchasing BYD EV models in China

Although BYD has clearly been making great strides in the passenger car segment, this is by no means its only focus. BYDs automobile division is guided by its Green Mobility Strategy, which states BYD’s aims to electrify all forms of transport currently dependant on fossil fuels⁷, including taxis, commuting coaches, garbage trucks, construction logistics and even harbour, mining, warehouse and airport vehicles⁷. Here their leadership over other EV manufacturers is clear. For example, over and above the passenger vehicles BYD manufactures (including Qin, Tang, Denza and e6 models), the company also produces fully electric and hybrid buses and has entered into partnerships with numerous governments (including in Brazil, Malyasia, United Kingdom and South Africa) to introduce EV buses as part of the public transport systems⁸.

Figure 2: BYD K9 All-Electric Bus (tested in Portland, Oregan)⁵

BYD is in an excellent position to continue to take advantage of global trends to seek EVs to replace fossil fuel-based transport and to grow into the dominant business in this and adjacent industries. However, an important question remains on the effectiveness of EVs in the battle against climate change, particularly in developing countries. Research suggests that while the introduction of EVs improves air-quality, they will not materially reduce net CO₂ emissions in countries, like China, which continue to rely on fossil-fuels, especially coal, for electricity generation¹. In the context of the greater existential question for earth in the face of Climate Change, is cleaning up the air good enough? [699 words]

References

1. Hofmann, J., Guan, D., Chalvatzis, K. and Huo, H., 2016. Assessment of electrical vehicles as a successful driver for reducing CO 2 emissions in China.Applied Energy.
2. The Guadrian, 2 Dec 2015. China says it will cut power sector emissions 60% by 2020. The Guardian. Accessed online: https://www.theguardian.com/environment/2015/dec/02/china-says-it-will-cut-power-sector-emissions-60-by-2020
3. Ogan, T.L. and Chen, X., 2016. The Rise of Shenzhen and BYD–How a Chinese Corporate Pioneer is Leading Greener and More Sustainable Urban Transportation and Development.
4. Dan Levin, 13 August 2015. Study Links Polluted Air in China to 1.6 Million Deaths a Year. The New York Times. Accessed online: http://www.nytimes.com/2015/08/14/world/asia/study-links-polluted-air-in-china-to-1-6-million-deaths-a-year.html?_r=0
5. BYD, 22 Jan 2016. Who Sold The Most Plug-In Electric Cars In 2015? (It’s Not Tesla Or Nissan). BYD website. Accessed online: http://www.byd.com/news/news-326.html
6. Bloomberg News, 29 March 2016. BYD Sees Electric-Car Sales Tripling in Market Coveted by Tesla. Bloomberg News. Accessed online: http://www.bloomberg.com/news/articles/2016-03-29/byd-sees-electric-car-sales-tripling-in-market-coveted-by-tesla
7. Masiero, G., Ogasavara, M.H., Jussani, A.C. and Risso, M.L., 2016. Electric Vehicles in China: BYD Strategies and Government Subsidies. RAI, 13(1), p.3.8.     BYD, 24 Oct 2016. BYD Wins Tender to Supply Electric Buses to Cape Town. BYD website. Accessed online: http://www.byd.com/news/news-367.html