BYD turns an electric car into a mask against Covid; get to know – 12/30/2023 – Market

A company poised to become the largest electric car manufacturer in the world, but doesn’t consider itself an automaker. Which took global leadership in the manufacture of masks against Covid without belonging to the health sector. It produces more solar panels than any other company in Brazil, but it is not in the infrastructure sector either. It sounds like a charade, but it’s BYD.

The Chinese giant became known among Brazilians after announcing the installation of a car factory in Bahia at the beginning of this year. What few know is that the conglomerate has several business fronts around the world: from lithium enrichment to the production of semiconductor chips.

BYD (read ‘bi-uai-di’) is an acronym for Build Your Dreams, something like “build your dreams” in English. The name has something of a motivational slogan and appears written in full on most of the company’s electric vehicles.

Founded in 1995, BYD has built a diverse empire of superlative numbers even by Chinese standards.

There are 600,000 employees, which makes the company one of the ten largest employers in the world, according to Fortune magazine. Of this “Sorocaba” of employees, 90 thousand work solely in research and development of new products and solutions, 70 thousand are engineers.

The Chinese company holds at least 26 thousand patents, out of 40 thousand requested, with an average of ten requests per day, which helps to size up the variety of sectors in which it operates.

In the hexagonal-shaped complex where the company’s headquarters are located in Shenzhen, in southeastern China, the patent wall occupies a prominent place on the access floor to the main building, where recently launched vehicle models and a showroom with the company’s history, with samples from its other divisions, such as electric buses and urban trains.

There is also a wall of authorities who have worked at BYD or who have met with company executives; former Brazilian president Dilma Rousseff (PT) is one of those portrayed.

But it was not always so. BYD was born as a cell phone battery supplier founded by Wang Chuanfu — who has been called the Chinese Elon Musk.

Unlike the Tesla owner, Wang did not come from a rich family that explored emerald mines in South Africa. Born in one of the poorest provinces in China, Wang lost his parents at a young age and was raised by his older brothers, who focused on his studies . He succeeded.

A few years after its founding, BYD was already one of the main suppliers of brands such as Motorola and Nokia. The company projects that two in ten devices such as cell phones and tablets in the world will have components manufactured by it.

The debut in the automobile industry would only happen in 2003. Wang’s idea was to replace cars’ combustion engines with electric batteries. The venture was ambitious for the time, but it attracted billionaire investor Warren Buffett, who bought 10% of the company in 2008.

In the following years, BYD moved to expand its portfolio, beginning to manufacture trucks, buses, monorail trains and even electric forklifts.

Growth in this industry would come over time, parallel to the maturation of this market and the incentives provided by the Chinese government. Since 2014, clean energy vehicles have been exempt from a tax of around 10% – the company has already pleaded with the Brazilian government for a similar incentive.

Amid the recent boom in electric cars (stimulated mainly by the push for alternatives to fossil fuels), BYD is about to overtake Tesla and become the world’s largest producer by number of sales.

Between July and September 2023, for example, the company sold 431,000 vehicles, just 3,000 fewer than its American rival. When fourth quarter results are released, it is very likely that BYD will have dethroned Tesla.

Marcello Schneider, institutional director of BYD in Brazil, says that the company maintains a vertical structure, which gives it more control over everything it needs.

“We produce practically everything we need, microchips, processors, motors, inverters and all electrical parts. Basically we don’t make the glass and tires”, he says.

The size of the production chain, according to Schneider, was a differentiator during the pandemic, when automakers had difficulty acquiring parts due to supply problems. “BYD didn’t have any problems.”

Control over various aspects of production appears in the BYD structure also in the form of new businesses. Entering the solar panel market is somewhat related to this interest.

According to Schneider, the company understood that it was not strategic to power an electric car with polluting energy.

“An industry, for example, can use our electric forklifts and have the solar panel that will power not only these vehicles, but eventually the cars in the fleet. We are able to combine a little of all the products and sell a complete solution.”

Currently, the conglomerate produces photovoltaic modules in just two countries: China and Brazil.

The factory is located in Campinas and guarantees BYD the title of largest producer of solar panels in the country. The business began in 2017 and was one of the first that the Chinese company had in Brazil, with an eye on the energy generation auctions that the government prepared for that year.

In addition to the module factory, BYD currently has a production of electric buses in Brazil —also in Campinas— and a unit in Manaus for assembling batteries.

Another example of this capacity comes from the production of face masks. At the beginning of the Covid-19 pandemic, there was a shortage of this product around the world, including in China.

“In less than a week, a group of engineers changed a production line to produce masks — initially for their own employees. This quickly became a business unit and, today, BYD is the largest manufacturer of face masks in the world , with more than 100 million units produced per month”, he states.

With the diversity of business fronts, it makes sense for BYD to avoid the automaker label. “We see the company as a greentech, a green technology company that has several businesses”, says the director.

The new front of control of the business chain in the electric car segment is in mining. Today, BYD has agreements to purchase the minerals necessary for battery production with Chile, Brazil, among other countries with reserves in Africa and Oceania.

In July this year, Bloomberg showed that BYD was moving an engineering team as part of a project to begin processing lithium in Chile, a country that is home to the world’s largest reserves of the metal.

The objective, according to the agency, is to build a US$290 million lithium cathode factory in the north of the country.

According to Schneider, there is also planning for the conglomerate to begin operating in lithium processing in Brazil. The idea is to be able to manufacture the battery cells here in the country — a process that is currently done in China.

The director states that there are still no plans to operate in the direct extraction of the mineral, but emphasizes that the company is always on the lookout for “interesting opportunities”. Partnerships with companies such as Sigma Lithium, which is exploring lithium in the Jequitinhonha Valley, are not ruled out.

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X-RAY

Foundation: 1995
Net profit in 2022: US$2.5 billion
Employees: 600 thousand
Cars sold in 2022: 1.86 million
Mainly competitors: Tesla, Volkswagen, Volvo

*The reporter traveled at the invitation of BYD