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QILAI SHEN/BLOOMBERG
THE BOTTOM LINE China’s BYD, already China’s largest maker
of electric vehicles, is likely to enjoy a big boost if the mainland
follows Europe and bans exhaust-emitting cars after 2030.
U.S.
China
Other
○ Annual global electric
vehicle sales in millions
of cars, forecast by
Bloomberg New Energy
Finance
○ A vehicle undergoes
acoustics testing at
BYD headquarters in
Shenzhen
to make such vehicles. Either outcome could be
a bonanza for BYD.
Wang expects that China will require utility vehi-
cles such as buses, taxis, logistics automobiles, and
sanitation trucks to go electric by 2025 and order
an end to sales of all exhaust-emitting vehicles by
- That would match the aggressive promises by
countries such as the U.K. and France. “The harvest
season is about to come,” Wang says. “China’s time-
table won’t be behind that of European countries.”
Investors agree. Since August, BYD’s shares—
traded in Hong Kong—have jumped 44 percent, to
about HK$70 ($8.97), and JPMorgan Chase & Co. auto
analyst Nick Lai forecasts that the stock could rise
almost 40 percent further—topping the high reached
in 2009 after the news of Buffett’s involvement.
BYD is a hardware innovator built around a
core technology of battery cells and, as a Chinese
company, may be in a unique position to make elec-
tric vehicles affordable, says Bill Russo, founder
of investment advisory firm Automobility Ltd. “As
China’s leading volume EV maker, they appear to
be much better positioned now than at any time in
their history.”
While Wang has often been called China’s Elon
Musk, it might be more accurate to say that Musk is
America’s Wang Chuanfu. Both rose to prominence
by betting big on the possibilities of lithium ion bat-
teries to power vehicles and break the century-old
stranglehold of the internal combustion engine. But
Wang was usually ahead of the U.S. innovator, start-
ing his business as a maker of cell phone batteries
and building his first large-scale vehicle-battery plant
in 2003. Wang sold his first mass-market EV in 2008,
constructed his first solar panel factory in the same
year, and began production of electric commercial
buses in 2009. Tesla Inc., which delivered its first
EV in 2008, got into solar panels in 2016.
Moreover, Wang is the undisputed leader in
two key metrics: vehicle sales and profits. Last
year in China, BYD sold 100,183 new-energy vehi-
cles (China’s term for EVs and hybrids), and its elec-
tric buses operate in 200 cities around the globe.
Tesla sold 76,230 electric cars worldwide and has yet
to begin sales of new-energy trucks or buses. BYD
boosted net income by 79 percent, to 5.1 billion yuan
($768 million), last year and has never recorded a
loss since it went public in 2002. Fourteen-year-old
Tesla has yet to turn a profit as it invests heavily in
product development.
While Musk has ventured into space rockets and a
futuristic mode of tube-based transportation, Wang’s
ever-growing portfolio of businesses is anchored on
rechargeable batteries and solar power—for phones,
autos, electricity supply, and, most recently, mono-
rail trains. Tesla’s Gigafactory 1 in Nevada began pro-
duction of battery cells this year and is expected to
reach capacity of 35 gigawatt-hours per year by 2018.
BYD already has 16GWh of vehicle battery-making
capacity and is talking to other automakers about
supplying them with batteries, according to Wang.
Wang “recognized that one of the key elements
to making these batteries at high quality was less the
technology in the battery than it was in being able
to manufacture them,” says David Sokol, the former
Berkshire Hathaway Inc. executive who traveled to
China to investigate the investment for Buffett in
2008 and later sat on the BYD board. “His genius
was recognizing that the quality of manufacturing
would make the difference.” BYD—short for Build
Your Dreams—is pursuing what Wang calls his Three
Green Dreams: solar farms, energy storage stations,
and electric vehicles, which can all help with the
world’s sustainable development.
Wang has had his share of skeptics. When he
announced that his phone-battery business was
going to acquire an automaker in 2003, investors fled
and the stock fell 31 percent in three days. Five years
later, BYD’s F3 compact was China’s best- selling
car model, and the company had begun sales of
its first dual-mode plug-in vehicles. That was the
year Buffett’s MidAmerican Energy Holdings Co.,
now called Berkshire Hathaway Energy Co., struck a
deal to acquire 10 percent of BYD for HK$1.8 billion
($232 million at the time). The American compa-
ny’s investment is now worth almost HK$16 billion.
Wang “is an incredibly smart individual,” says Sokol.
“Everywhere we went to see their facilities, it was
clear he was in the details.”
China’s total new-energy vehicle sales were only
24,000 units in 2008, but by 2015, BYD was the world’s
biggest producer of electric cars and had expanded
into electric buses, forklifts, road sweepers, and light
trucks. A year later, South Korean giant Samsung
Electronics Co. joined the party, paying 3 billion yuan
($449 million) for 2 percent of BYD—almost double
Buffett’s investment for one-fifth as large a stake in
the Chinese company. —Bloomberg News
2017 2030
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BUSINESS Bloomberg Businessweek October 30, 2017
