‘The older the ginger, the spicier it is’: Warren Buffett-backed electric car company ‘takes the throne’ of Tesla, selling more cars than ever

BYD’s electric vehicle sales hit a record high in December and further cemented its position as the world’s largest non-fossil fuel car maker. In addition, this positive business result also shows that the bet of Berkshire Hathaway – billionaire Warren Buffett’s conglomerate, on this company is right.

The Shenzhen-based automaker said in a report submitted to the Hong Kong exchange that BYD’s all-electric vehicle sales rose 4% from November to 235,197 in December. Its vehicle sales tripled in 2022 to 1.86 million units, most of which were sold in China.

The factor driving BYD’s sales to taxi and family car fleets is “affordable” prices. It also shows that layoffs in China’s tech industry and the pandemic-hit economy have prompted buyers to consider cheaper, locally-made models, rather than new ones. imported models or foreign brands like Tesla.

Eric Han, senior director of Suolei, a consulting firm in Shanghai, said: “BYD benefits from ‘consumers reduce consumption’ as the Chinese economy decelerates. The country’s mass-market vehicles are well received by middle-class consumers, as they are seen as ‘great value for money’ products.”

Electric vehicle sales in 2022 of companies in China (Source: Technode).

Most BYD models are priced between 100,000 yuan and 200,000 yuan ($29,000). This price is very affordable compared to Tesla cars or other domestic brands like Nio and Xpeng, with cars equipped with more modern technology costing more than 300,000 yuan.

Tian Maowei, sales manager at Yiyou Auto Service Shanghai, said: “Electric cars under 200,000 yuan are popular with office workers because they want to save money. In the domestic market, BYD’s electric and plug-in hybrid vehicles are selling well because of their high-performance batteries, which are considered to be on par with those of higher-end automakers.”

BYD was originally just a battery manufacturer, but has now recorded a 10th straight month of EV sales since March 2022. The company also won the “throne” from Elon Musk’s Tesla in the second quarter.

Meanwhile, Tesla’s sales were 6% lower than Wall Street estimates, having delivered 405,278 electric vehicles worldwide in the last three months of 2022. The company’s stock price has plummeted like never before. Tesla’s global sales last year increased 40% to 1.31 million vehicles but still 29% lower than BYD.

Founded by Chinese billionaire Wang Chuanfu in 1995, BYD has been manufacturing vehicles since 2003. The company mainly sells cars in mainland China but is looking to grow beyond its borders with plans expand to several foreign markets. Berkshire Hathaway currently owns 14.9% of BYD shares listed on the Hong Kong Stock Exchange as of December 8.

Its lithium iron phosphate (LFP) battery line has proven good performance with both Chinese users and car assemblers. Batteries are arranged in a way that increases performance density, copper generally increasing resistance to overheating. The batteries are also supplied to Tesla’s factory in Berlin.

Inside BYD’s factory.

According to the China Passenger Car Association (CPCA), China’s electric vehicle sales growth rate could slow to 30% in 2023, having more than doubled in 2022 to an estimated 6 ,4 million pieces. The reason is that the subsidy to buy electric cars will expire from January, according to which buyers will be more hesitant to buy cars.

But China is still the world’s largest electric vehicle market, with three out of every five new cars on the road capable of running on batteries by 2025, according to UBS forecasts.

Tesla is still the leading name in the high-end electric car segment in the mainland. In the first 11 months of last year, the Shanghai factory delivered more than 390,000 Model 3 and Model Y vehicles to customers in China, 21.5% more than sales of 321,000 units in 2021.

Refer to SCMP