BYD (002594.SZ), the world’s largest manufacturer of electric vehicles, is expanding quickly to take on Tesla (TSLA.O), but for the time being it is stuck in second gear on its rival’s home ground.
A deliberate global push has emerged as the single most crucial strategic goal for China’s largest EV manufacturer, or so is claimed by the sources close to the BYD management’s views, despite the fact that BYD hasn’t fully expressed its global objectives in public.
In addition to a push into several European markets that is already underway, BYD spent a significant amount of last year researching how to establish a U.S. supply chain for its most recent electric models, according to two of the sources.
It was added that the study was thorough and serious, and it included detailed suggestions from the Detroit-based consultant Urban Science on the number of outlets BYD would require in each state and city as well as the forms for the brick-and-mortar shops.
An announcement was expected during this year’s International CES Technology Exhibition in Las Vegas, where BYD planned to display a new wave of battery electric cars (BEVs) and plug-in hybrid for the American market, as revealed by a BYD official.
The announcement was non-existent.
BYD was forced to hit the pause button, according to one of the individuals, due to tense relations among Washington and Beijing, anti-Chinese sentiment in the US, and President Joe Biden’s decision to prioritise domestic manufacture of EVs and batteries.
The source claimed BYD’s management has not yet officially approved the initiative, and a rapid expansion into the United States is unlikely in the near future.
They added that BYD is approaching the United States cautiously. Consider all the political tensions between the US and China, and then consider how crazy everything is in the world right now. Nobody wants to enter a sizable mess.
The Inflation Reduction Act (IRA) of the Biden administration, which imposes restrictions on where to get battery components and disqualifies EVs built outside of North America from a $7,500 purchase refund, hindered BYD’s U.S. project.
Who would begin selling automobiles while being $7,500 in the hole? said a different source.
BYD opted not to respond to this report.
BYD, which means Build Your Dreams, sold 1.86 million BEVs plus plug-in hybrids worldwide in 2022, much surpassing Tesla’s total of 1.3 million sales and taking the top spot.
Despite having already raised its BEV selling by 184% in 2022 compared to the previous year, BYD still lags Tesla in terms of completely electric vehicle sales by approximately 400,000 units.
However, the Chinese manufacturer plans to quickly ramp up sales at home and internationally.
Because of the geopolitical environment and Biden’s initiatives to support domestic production, BYD isn’t the only Chinese auto business to restrain its U.S. ambitions.
Because of worries that the IRA limits on sourcing materials would increase its expenses, the Chinese battery industry behemoth CATL (300750.SZ) has scaled back its planning for investments in battery factories in the United States and Mexico.
A U.S. company called HAAH Motors Holdings attempted to import vehicles made by the government-owned Chery Automobile of China and developed plans for a U.S. facility that would create jobs there.
However, the two abandoned the project in 2021 when HAAH was unable to secure funding for it, as a result of what executives said to be worries about American trade tensions and tariffs tensions.
A plant in Lancaster, California, which was erected ten years ago, is where BYD manufactures its electric buses for cities like Los Angeles but also Long Beach.
However, based on the reliability of the sources, BYD’s management, including Chairman Wang Chuanfu, recognised as recent as five years ago that their electric vehicles were not prepared for the international market due to their durability and other flaws.