If an industry shakeout is looming, it’s best to be near the front of the race. That’s the enviable position that Chinese electric vehicle giant BYD finds itself in. Its management expects only a handful of the country’s EV carmakers to survive in the medium to long-term — down from 129 today. But navigating the traffic has not left it entirely scrape free.
Until recently, China’s EV industry was powering ahead. Almost half of all sales this year in the world’s largest car market are expected to be either plug-in hybrids or battery EVs, according to EY. Outside China, BYD’s sales more than doubled in the first half of the year, and in Europe they passed those of Tesla for the first time, a sign that efforts to build brand awareness are working. Over the past five years, BYD has outperformed Tesla in share-price terms, too. Its Hong Kong-listed stock has risen almost fourfold, while its US rival has gained a comparatively miserly 150 per cent.
Since July, however, Beijing officials have called time on a bruising price war that BYD was arguably leading, given its size. Also, painfully for its near-term finances, Chinese authorities are forcing carmakers to pay their suppliers within 60 days, which in BYD’s case, meant more than halving its average payment times.