Chinese electric car manufacturer BYD has not only survived the disruptions caused in China by Covid lockdowns but is also thriving like never before. BYD’s stock has increased by just over 90% in March, as its vehicle sales have soared to an all-time high. This adds $7 billion to Wang Chuanfu’s wealth.
According to Forbes_ real-time data, Wang is now the fifth-richest Chinese person. He is also the co-founder and chief executive at Warren Buffett-backed BYD. Wang’s ranking is his highest since 2017, and he is one notch higher than Alibaba co-founder Jack Ma who holds the No. With a net worth of $26.3 billion, Wang is currently No. 6.
After building a diverse supply chain and production base, 56-year-old Wang has a 17.6% share in BYD’s Hong Kong, and Shenzhen listed companies. Unlike Elon Musk, the billionaire who was forced to close down Tesla’s Gigafactory China because Shanghai placed a two-month ban on Chinese manufacturing, Wang’s BYD has been able to maintain production lines in Shenzhen and Changsha at a steady pace.
BYD’s unique business model is also a plus. BYD is unique because it manufactures its chips, batteries and EVs, unlike most automakers who source parts from specialized suppliers like Contemporary Amperex Technology Ltd. (CATL).
Yale Zhang, the managing director of Shanghai-based Automotive Foresight, estimates that as much as 90% of parts in a BYD vehicle are made locally. This protects the company against supply and logistic strains and allows it to continue producing EVs to meet increasing demand. Despite Shanghai being locked down, Chinese consumers are still placing orders. CMB International Securities’ executive director Shi Ji estimated that China’s new-energy vehicle sales would rise to 5.5 million units in 2019, up from 3.5million in 2021.
On June 30, 2022, the first vehicle, a Qin Plus DM -i sedan, rolled off the assembly line at BYD’s new manufacturing facility, Changfeng County in Hefei City.
Zhang, Automotive Foresight’s director of research, says that BYD is one of the few automakers in China that has not been affected by lockdown measures. It doesn’t source supplies from Shanghai, and its production is highly integrated.
BYD saw a 31% increase in sales from the previous year’s first half. It is now the largest EV manufacturer in the world, surpassing Tesla. Tesla delivered 564,743 vehicles during the first six months in 2022. This was a 315% increase over the previous year.
From a March low, the shares of the Chinese company have risen more than 90% in Hong Kong. The Chinese company’s market capitalization is at the threshold of reaching a trillion Yuan ($150 billion), a milestone only a few companies, such as CATL and Kweichow Moutai in China, have ever come. Wang’s cousin, company Vice Chairman Lu Xiangyang has a net worth now of $21.4 billion, as well as director Xia Zuroquan who is worth $4.8billion. Warren Buffett’s Berkshire Hathaway owns 7.7% of BYD.
However, as the lockdown restrictions are gradually lifted and other auto manufacturers resume total production, China’s EV market competition will intensify, according to Zhang Junyi (a Shanghai-based partner at Oliver Wyman).
He says that BYD’s advantage in the second half will be lower than the period when rivals were unable even to start production. To maintain the top spot in the market, the company must make more effort to adapt to changing environments.
BYD is now attempting to enter the high-end market. BYD, which makes a large portion of its sales from vehicles priced between 100,000 and 200,000 Yuan ($15,000-$30,000), unveiled the Denza D9 electric van in May. Its joint venture partnership with Mercedes-Benz produced it. The Denza D9 has a starting cost of $50,000. BYD would theoretically be able to sell more expensive vehicles, which would help increase its net profit margin, which was only 1.4% last fiscal year.
Visitors view electric vehicles at BYD’s booth at the Auto Shanghai 2020 show in Shanghai, China on April 27, 2021.
There are other issues that the company must address. Chinese news outlet The Paper reported that BYD is purchasing six lithium mines in Africa. However, this could mean that the company will be facing an increasingly complex international environment and rising resource nationalism. Chinese authorities are also investigating one of the plants in Changsha due to a foul odor and reports that children near Changsha are suffering from more severe nosebleeds. A spokesperson for BYD said that the company does not have any additional comments beyond the May statement it posted on Weibo, stating that the factory meets the country’s emission standards.
However, this has not stopped most analysts from expressing bullish views. Benjamin Lo and Martin Heung, Nomura analysts, raised BYD’s EV sales forecast this year from 1.08million units to 1.5million. They also predicted that the company’s market share would increase from 17% – 27%. Shi from CMB International believes that the company will continue its momentum.
She states, “BYD still holds quite a few orders, and it will have factories starting production.” “We anticipate the company‘s sales will continue to rise month-over-month in the coming months.”