Many of us know that Warren Buffett invested in BYD way back in 2008 at a time when even the most optimistic of EV proponents had not in their wildest dreams thought that New EV automakers would one day have market values much greater than the well established brands like GM, Ford, even Toyota. With the benefit of hindsight, we know that his investment had increased 32 times since, and we would probably be thinking on his behalf that perhaps he should have invested more than the 10%.
However, compared to its peers, BYD’s share price actually hadn’t done as well. As such, many, albeit with the benefit of hindsight again, raised questions about BYD’s strategy and asked if they should have done better if only they had focused on just making batteries instead of spreading their resources so thinly across so many product types. For those not yet in the know, BYD makes a lot of things other than batteries. They also produce cars (ICE, hybrids and EVs), electronics, phone component parts, and when COVID struck, they even produced masks.
Compared to CATL which makes only batteries, BYD’s market valuation is much lower. This could be hard fact for BYD to swallow as they are the pioneers of car batteries. It makes me wonder, if BYD had stuck to just batteries, would they be the undisputed number 1 today? The reality is that today, BYD is only number 3 in China for batteries. Though holding the status of being the first in China to venture into EV production, today they are still not the number 1 in China. Matter of fact, BYD started researching batteries 26 years ago and produced their first EV, months before Tesla even rolled out their first vehicle.
BYD has struck back with a vengeance recently with the introduction of the blade batteries, to rival CATL’s claim to non-explosion batteries. Indeed, the blade batteries are truly revolutionary and is a strong testament of BYD’s strong battery expertise. However, when compared to CATL, BYD does have a disadvantage when it comes to selling batteries to other car manufacturers. You see, car brands have no problems buying batteries from CATL or LG Chen or Panasonic, because these brands do not produce their own brands of cars, whereas BYD has how car brand and so car maker would be supporting a competitor if it buys BYD batteries.
What BYD has done very well is in the promotion of their electric commercial vehicles especially buses. It has a worldwide acceptance. To me, this is a very clever move, because the typical reasons holding back EV car buyers do not apply to the commercial fleets, especially government-run public transportation. There is not issue about range anxiety (public buses run on specific routes), second hand value (note that in Singapore BYD buses are expected to run for 17+3 years until the end of its useful life), payback period since the high mileage means that investment is recovered quickly.
I have a lot of respect for BYD, especially their persistence and perseverance, from the days when everyone doubts their ability to survive, when everyone doubts their vision of an EV future. When it comes to exports, BYD share the international market essentially with only 2 other Chinese EV makers namely MG/SAIC and GWM/Haval. The rest of the EVs offered outside of China come from the traditional car makers from Europe and a few from USA.
Of late, BYD has entered into strategic partnerships with well known car companies, for example Mercedes Benz, and that should pave the way for BYD to further strengthen their position in the EV battery market in the near future.