Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: In the middle of the Mediterranean Sea, between North Africa
Speaker 2: and Italy lies Malta, a sunny, tiny island nation that's
Speaker 2: known for its beaches and ancient temples. But it might
Speaker 2: not seem worth the attention of a disruptive global car brand.
Speaker 2: So when gabriel Coppola, a Bloomberg auto reporter based in Detroit,
Speaker 2: heard that BYD, the Chinese ev company, was selling their
Speaker 2: all electric model, the Auto three, in Malta, she was intrigued.
Speaker 3: They sold new cars on the island of Malta last
Speaker 3: year was around seventy two hundred. How many cars were
Speaker 3: sold in the US over fifteen million, So that is
Speaker 3: like a piece of a fingernail of the side of
Speaker 3: the US car market.
Speaker 2: Mean, it is tiny, but Malta isn't too tiny for Gabrielle, says.
Speaker 2: Malta and small markets like it are part of a
Speaker 2: key strategy in BYD's global expansion. BYD is facing heavy
Speaker 2: tariffs in some of the biggest auto markets, the US
Speaker 2: and the EU, so it's looking to boost sales in
Speaker 2: emerging countries that don't have their own auto industries. One
Speaker 2: automotive analyst compared its strategy to chicken ribs, because chicken
Speaker 2: ribs don't have much meat on them, but you also
Speaker 2: don't want to throw them away and let them go
Speaker 2: to waste.
Speaker 4: It's like a chicken rib market.
Speaker 2: You know.
Speaker 3: You add up all those chicken ribs. That's a lot
Speaker 3: of meat in all these countries, and all those little
Speaker 3: bits of meat, all those chicken ribs add up to
Speaker 3: like ten million cars, and you've got a real business
Speaker 3: outside of China.
Speaker 2: Byd is now exporting to roughly ninety five markets, including
Speaker 2: twenty new ones this year. Meanwhile, It's annual sales in
Speaker 2: China are booming, and Bloomberg's China EV reporter Danny Lee
Speaker 2: says the car maker has its eyes on surpassing one
Speaker 2: of the biggest global players in this space.
Speaker 1: It has been hunting down Tesla over the last several
Speaker 1: quarters to being the lead as the best selling electro
Speaker 1: vehicle brand globally.
Speaker 2: Welcome to the Big Take Asia from Bloomberg News.
Speaker 4: I'm Wanha.
Speaker 2: Every week we take you inside some of the world's
Speaker 2: biggest and most powerful economies and the markets, tycoons and
Speaker 2: businesses that drive this.
Speaker 4: Ever shifting region. Today, on the.
Speaker 2: Show the story of BYD, how it became one of
Speaker 2: the world's largest EV manufacturers, and whether it can succeed
Speaker 2: in its quest to become the best selling EV brand
Speaker 2: in the world. BYD began as a battery company in
Speaker 2: the nineties, started by an engineer Wang chuanful. He was
Speaker 2: born in rural Anhui Province in eastern China.
Speaker 3: His parents died when he was still pretty young, and
Speaker 3: he was raised by his elder siblings. He is an
Speaker 3: engineer through and through. He focused on batteries and that
Speaker 3: was the early part of his career was he was
Speaker 3: doing very in depth research, experimenting with different battery chemistries
Speaker 3: and seeing what batteries could do.
Speaker 2: Wong was convinced he could make cell phone batteries more
Speaker 2: cheaply than the Japanese companies who were dominating the industry.
Speaker 3: The story goes he got a three hundred and fifty
Speaker 3: thousand dollars loan from his cousin. That was the money
Speaker 3: he used to start BYD, and so he went south
Speaker 3: to Shanjan and he started the company.
Speaker 2: BYD had a humble beginning. Its workers were assembling batteries
Speaker 2: by hand, while Japanese companies were using highly automated equipment. Eventually,
Speaker 2: Wang developed his own manufacturing production line, but the company
Speaker 2: didn't get its big break until the late nineteen nineties
Speaker 2: thanks to a young saleswoman named Stella Lee.
Speaker 3: She had joined the company as an export sales manager,
Speaker 3: and you know, she basically said, put me in coach,
Speaker 3: I want to go out there. I want to make
Speaker 3: this happen. I'm going to land these big contracts. I'm
Speaker 3: gonna sell.
Speaker 2: So Lee was sent to the US to court Motorola,
Speaker 2: which was then one of the world's biggest mobile phone makers.
Speaker 2: She showed up in Georgia with a box of battery
Speaker 2: samples and spoke very little English, and she spent months
Speaker 2: trying to win over the team at.
Speaker 1: Motorola to ask them to give BYD a chance in
Speaker 1: order to say, look, we have a product which is
Speaker 1: lower cost and capable of delivering you the performance of
Speaker 1: the margins you need as a business.
Speaker 3: Sella was just very persistent, always following up, you know,
Speaker 3: what do we have to do next. The people I
Speaker 3: interviewed and told me that at first they thought she
Speaker 3: was annoying, she was a pest because she was just
Speaker 3: never leave them alone.
Speaker 4: But eventually they.
Speaker 3: Were like, holy crap, Like can we hire this person?
Speaker 3: Like she's amazing?
Speaker 1: Stella is a fascinating person.
Speaker 2: Danny Lee is Bloomberg's China ev supply chain reporter based
Speaker 2: in Hong Kong, and he co reported this story.
Speaker 4: He's met Lee in person several times.
Speaker 1: When you go to talk to she's such a warm
Speaker 1: and welcoming individual. But you know, when it comes down
Speaker 1: to business, she knows the details, she knows what she
Speaker 1: wants to achieve, and she's very firm with that.
Speaker 2: Eventually, Stella's persistence paid off. The executives at Motorola did
Speaker 2: give BYD a chance.
Speaker 4: It took two years.
Speaker 2: For them to evaluate the products, and in two thousand,
Speaker 2: BYD officially became Motorola's first lithium iron battery supplier from China,
Speaker 2: and that gave BYD's products a big stamp of approval.
Speaker 2: So how would you characterize Stella Lee's role at BYD
Speaker 2: versus Wang Chan Fou's the engineer and company's founder.
Speaker 1: Wang is very much the head of the company. He
Speaker 1: is the thinker, He is the creator. He wants to
Speaker 1: figure out the next steps. However, but for Stella, Stella
Speaker 1: is very much the executor She'll be executing on all
Speaker 1: of Wong's plans and also being the driving force in
Speaker 1: making sure that that business that they have effectively built
Speaker 1: hand in hand continues to grow at pace.
Speaker 2: Besides being business partners, Wang and Lee are also a
Speaker 2: couple with two kids together. BYD declined to comment on
Speaker 2: it and said the company doesn't discuss personal matters. What's
Speaker 2: clear is that their business partnership has reaped profits. After
Speaker 2: the Motorola deal, other big contracts followed and BYD rode
Speaker 2: the momentum. In two thousand and two, the company went
Speaker 2: public on the Hong Kong Exchange, but just a year
Speaker 2: after the IPO, Wang decided that B one should pivot
Speaker 2: its future into something beyond batteries. In two thousand and three,
Speaker 2: BYD bought a majority stake in a failing state run
Speaker 2: car company, sion Tinchuan Auto. That decision didn't go over
Speaker 2: well with the company's investors and shareholders.
Speaker 3: Lan Schwan Food didn't even know how to drive a
Speaker 3: car at the time. The car business is a tough
Speaker 3: business to this day is notoriously you know, being a
Speaker 3: metal basher. It's low margins, it's a hot very capital intensive.
Speaker 3: This is not what BYD's investors were hoping he would do.
Speaker 3: They did not want this. Phone lines in shen Jen
Speaker 3: were ringing off the hook with people.
Speaker 4: Who are like, what are you doing.
Speaker 3: Don't go into the car business.
Speaker 2: Though it was a big bet. Wog saw cars as
Speaker 2: a natural extension of BYD's battery business. In two thousand
Speaker 2: and four, at the Beijing Auto Show, Wang outlined his
Speaker 2: vision to use batteries to change the future of the
Speaker 2: automotive industry. Very few investors took him seriously, but a
Speaker 2: very important one did. In two thousand and eight, Warren
Speaker 2: Buffett's Berkshire Hathway invested two hundred and thirty two million
Speaker 2: dollars in BYD.
Speaker 3: Call it the Buffet effect, but shares of BYD have
Speaker 3: jumped five hundred percent since Buffett first announced his buy
Speaker 3: In September.
Speaker 2: And the same year that BYD received Berkshire's backing, it
Speaker 2: launched its first plugin hybrid EV model now Danny, the
Speaker 2: BYD F three d M. It doesn't roll off your tongue,
Speaker 2: does it?
Speaker 1: Yeah? I couldn't even say it myself.
Speaker 4: And how was it? Received?
Speaker 1: Badly? Badly? The car that BID produced in two thousand
Speaker 1: and eight was so poorly received because it looked like
Speaker 1: a cheap knockoff Toyota Corolla. The color, the design, it
Speaker 1: all looked pretty bad. Consumers want something that looks good
Speaker 1: feels good. This was far from it.
Speaker 2: The early models of BYD were so unimpressive that Elon Musk,
Speaker 2: CEO of Tesla, publicly laughed at BYD's design in a
Speaker 2: Bloomberg interview in twenty eleven.
Speaker 1: Vehicles, Warren Buffett On and ten percent stake in that
Speaker 1: why do you laugh.
Speaker 4: Trying to compete? Why do you laugh?
Speaker 2: Have you seen their car?
Speaker 4: I have seen their car?
Speaker 2: Yeah, In fact that the Berkshire halfway meeting.
Speaker 4: I saw their cars.
Speaker 3: Yeah, well they're a tell me why you're laughing?
Speaker 4: You don't see them at all as a competitor.
Speaker 2: No, But a little more than a decade later, Musk
Speaker 2: would hit reverse on his diss of BYD. Last year,
Speaker 2: Musk commented on this old interview on X saying that
Speaker 2: was many years ago. Their cars are highly competitive these days.
Speaker 2: So how did BYD go from being a joke of
Speaker 2: the industry to one of the best selling car brands
Speaker 2: on the road?
Speaker 4: And where are they headed next? That's after the break.
Speaker 2: In two thousand and eight, BYD's first hybrid EV was
Speaker 2: a flop, and Bloomberg reporter Danny Lee said in the
Speaker 2: following decade, sales for their other cars also fell short.
Speaker 1: BYD over the past decade prior to around twenty twenty
Speaker 1: and was selling cars, but they were just not appealing
Speaker 1: and it got to the point where sales were sliding.
Speaker 1: So by twenty fifteen the company not only saw poor sales,
Speaker 1: it had to think about raising money to.
Speaker 2: Figure out how to build better evs. In order to
Speaker 2: sell more. BYD poured money into research and development. They
Speaker 2: brought in expensive designers from Alfa, Romeo and Audi to
Speaker 2: make better looking cars. They also developed what's called a
Speaker 2: vertically integrated supply chain. Here's Danny again.
Speaker 1: BYD largely creates its own products. It doesn't have to
Speaker 1: rely on external forces for the most important components to
Speaker 1: make its automobiles, from the mining of the materials to
Speaker 1: make the electric vehicle batteries all the way through to
Speaker 1: the components that powder cars, from the chips semiconductor chips
Speaker 1: to even the seats, for example, that it is able
Speaker 1: to control so much of a supply chain.
Speaker 2: In a teardown of the BYD seal Sedan ubs found
Speaker 2: that about seventy five percent of the parts were made
Speaker 2: in house, giving BYD a twenty five percent cost advantage
Speaker 2: over American and European carmakers, and after about a decade
Speaker 2: of hard work, BYD finally hit a golden breakthrough.
Speaker 3: In twenty twenty, BID came out with the Blade battery
Speaker 3: and it was a total game changer because it changed
Speaker 3: the way the world looked at this technology.
Speaker 2: Now there are two prominent battery technologies in the world,
Speaker 2: nickel based batteries and lithium iron phosphate or LFP. While
Speaker 2: most researchers outside China were experimenting with the nickel based ones,
Speaker 2: Wong and his team went against the tide and chose
Speaker 2: to make batteries with LFP, which is in general cheaper
Speaker 2: and safer, but it comes with a huge flaw. It
Speaker 2: lacks energy density, meaning it couldn't go very far on
Speaker 2: a single charge.
Speaker 3: People thought LFP could never be used for an individual
Speaker 3: wants to go on a road trip, things like that.
Speaker 3: But through his engineering innovations, the work they had done
Speaker 3: to improve the energy density of LFP chemistry, and the
Speaker 3: work they did the design a pack and the software
Speaker 3: system that can kind of get the maximum amount of
Speaker 3: energy out of that battery. It just showed the world that, hey,
Speaker 3: I can make an electric car with decent range using LFP.
Speaker 2: By any measure, the Blade battery was a real turning
Speaker 2: point for BYD, and it allowed the company to drastically
Speaker 2: reduce overall costs for its vehicles, so much so that
Speaker 2: other automakers couldn't help but follow suit. Today, Ford, Tesla,
Speaker 2: and Toyota all use LFP batteries in their cars in China,
Speaker 2: as do many Chinese automakers. And in just three years
Speaker 2: after BYD released the Blade battery, it went from selling
Speaker 2: under one hundred eighty thousand electric and hybrid cars to
Speaker 2: selling ten times that much.
Speaker 3: Everyone I talked to says they have mastered the affordable
Speaker 3: EV something that Tesla, Ford, all these other carmakers are
Speaker 3: still trying to do. To do that and make money
Speaker 3: at it, no one else has done that the way
Speaker 3: that BYD and Watchwanfou and Stella and their team have.
Speaker 2: All this gave BYD the cash to fund a new
Speaker 2: overseas push.
Speaker 3: They're building a new assembly plant in northeast Brazil that's
Speaker 3: going to make one hundred pty thousand cars. They just
Speaker 3: opened new assembly plant in Thailand or building in Turkey,
Speaker 3: in Hungary, if stated their intentions to build a plant
Speaker 3: in Mexico. BYD is leaving no stone unturned.
Speaker 2: But BYD cars aren't available in the US. Tariffs have
Speaker 2: kept them and other Chinese made evs out of the country,
Speaker 2: and that's a big market to be missing out on.
Speaker 3: How many cars were sold in the US over fifteen million.
Speaker 3: I mean, you look at Toyota, Hyundai. Without the US market,
Speaker 3: they'd be a lot smaller of a company.
Speaker 2: And it's not just automakers in the US that feel
Speaker 2: threatened by BYD. Earlier this month, the EU, the third
Speaker 2: biggest car market, voted to slap tariffs as high as
Speaker 2: forty five percent on electric cars from China. That was
Speaker 2: in response to an investigation that found that China unfairly
Speaker 2: subsidized its industry. Next week, BYD is expected to post
Speaker 2: strong quarterly earnings, and it says it's on track to
Speaker 2: sell four million vehicles by the end of this year. Meanwhile,
Speaker 2: Wall Street expects Tesla to sell just two point two
Speaker 2: million cars this year. But Gabrielle says by D success
Speaker 2: can't just be.
Speaker 4: Chalked up to Chinese government support.
Speaker 3: This is not a story about the power of the
Speaker 3: Chinese government. This is a story about the power of
Speaker 3: China's brand of capitalism, where you know, you can have
Speaker 3: an entrepreneur who is very much a capitalist, who clawed
Speaker 3: his way to success after twenty years of hard work
Speaker 3: and vision and innovation, and now he's got the power
Speaker 3: of the Chinese state behind him. It's important to understand
Speaker 3: that if a company wants to figure out how they're
Speaker 3: going to keep their auto industries and keep them competitive,
Speaker 3: they need to truly understand what's going on. And if
Speaker 3: they tell themselves this is all about subsidies and nothing else,
Speaker 3: then they're definitely going to fail.
Speaker 4: This is the Big Tack Asia from Bloomberg News. I'm
Speaker 4: one Huh.
Speaker 2: This episode was produced by Young Young, Naomi Mum and Quebec.
Speaker 2: It was mixed by Alex Suguiera and fact checked by
Speaker 2: Adrianna Tapia. It was edited by Caitlin Kenny and Danielle Sachs.
Speaker 2: Naomi Shaven is our senior producer, Elizabeth Ponso is our
Speaker 2: senior editor, and Sah Bauman.
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