EV-focused conglomerates are limited on new market access
In the most significant evolution of the automotive industry yet, car manufacturers are merging their operations with those of battery production and other electric vehicle (EV) related industries.
When it comes to affordability, BYD is leading the way thanks to its historic ability to produce batteries at higher volumes than the rest of the world. The company is known to innovate well, but also tap into the resources of the nation to bring groundbreaking technologies at the best prices on the market.
So, why doesn’t the company share its value with the rest of the world?
Local authority support their countries’ EV industries
When it comes to expansion in the US, the country’s leading manufacturer, Tesla, is its major competitor and has already tapped into global markets. Expanding into the states on a broader scale has become a tricky endeavour for BYD, but not as a result of Tesla’s progress, but the expense at which the IRA is willing to allow the company to establish a stronger supply chain.
As a result, it seems that BYD is forced to step back from its US entry and take a look at this from a different angle.
“We need to make sure, with each step, we can be successful,” says Stella Li, SVP at BYD Company.
“I Strongly believe that the IRA may slow down [adoption of our EVs] in the US.”
This works in Tesla’s favour as the company’s growth is behind that of BYD and its current trajectory is set to leave it trailing in the millions, but with limited access to the EV market in the states, the potential for BYD’s affordable battery-electric vehicles (BEVs) could be stunted.
With renewable energy at an inflection point, the time for EVs to make a significant impact is now, but the cost of ownership is too high across Western markets. By offering a low-cost option for consumers, BYD has the potential to bridge the gap in affordability and is projected to leave Tesla trailing by millions of units as it anticipates more than seven million sales of its BEVs and plug-in hybrids in 2030.
We’re yet to see more affordable options available globally. China benefits from its well-established industries—making up more than 50% of the overall battery demand—and is capable of providing the electrification technologies for its cars, meanwhile the US is expanding its battery production capabilities—Tesla its own gigafactories—and Europe is venturing into the space, but yet to make a significant impact.
The pain point seems to be found in affordable cars as more consumers look to make the switch for sustainability reasons, but are yet to source vehicles within their price range.
“BYD wants to move the EV adoption rate in Latin America to 10% to 20% in the next three to five years, from less than 2% now,” Li said. Eventually, Latin America’s EV adoption rates could outstrip the US because of the IRA’s fallout,” says Li, expecting Latin America to be a much more accessible area of the market.
“You don’t need to go to every market — you only go to the market you feel is ready.”
While the company approaches the Americas from a strategic angle, the company will continue its business across other regions and maintain its partnerships to do so.