BYD is the EV company no one saw coming. While we were all focused on Nio, XPeng, Li Auto, Fisker, Lucid, Faraday, Workhorse, Nikola, and Canoo, among others, as the EV company that would challenge Tesla, BYD was quietly becoming the second largest electric car manufacturer in the world. Now it is looking to expand production in other countries.
On March 10, BYD began construction of a new factory in Thailand that will have an annual capacity of 150,000 electric cars when it is completed in 2024. Thailand is seeking to become a manufacturing hub for electric cars and the components — especially batteries — needed to build them. While China has recently eased its Covid lockdown policies, many Chinese companies made plans to move production elsewhere while they were in effect.
Thailand, in turn, has actively encouraged new manufacturing with significant government incentives for manufacturers and rebate programs for purchasers of electric vehicles. The Thai government wants electric vehicle production to reach about 700,000 by 2030, or 30% of total auto manufacturing, Reuters reports. The establishment of a passenger car production base in Thailand is one of BYD’s key initiatives to accelerate its expansion into the Asia-Pacific market, said Liu Xueliang, general manager of the company’s Asia-Pacific automotive sales division, according to a report by CNEvPost.
Of the 150,000 cars BYD plans to build annually in Thailand, 10,000 are expected to be sold in that country, with the rest exported to other Asian countries. The Atto 3 electric SUV will be the primary vehicle manufactured at the new Thai factory. As part of the groundbreaking ceremony last week, the company celebrated the delivery of the 10,000th Atto 3 in Thailand, although that figure appears to represent vehicles supplied to dealers, not actual sales to customers.
BYD currently has factories in India, Brazil, and the US, and is looking to expand its manufacturing base to Europe as well. Its US division focuses exclusively on electric trucks and buses, but it plans to challenge Tata, India’s largest auto manufacturer, in vehicle sales in that country.
No Thank You, UK
BYD is planning to begin the production of electric vehicles in Europe as part of its goal to become one of the top three EV companies in Europe by 2030. That will mean selling about 800,000 EVs a year on the Continent by the end of this decade.
It has a list of ten countries where it might build its next factory. Germany, France, Spain, Hungary, and Poland are on the list. The UK is not. Michael Shu, the head of European operations, told the Financial Times last week, “As an investor we want a country to be stable. To open a factory . . . is a decision for decades. Without Brexit, maybe. But after Brexit, we don’t understand what happened. The UK doesn’t have a very good solution. Even on the long list we didn’t have the UK.”
In 2019, Elon Musk announced that Tesla would build its first European factory in Germany, claiming that Brexit had been a big part of the reason the UK was not chosen. At the time, he told Auto Express, “Brexit [uncertainty] made it too risky to put a Gigafactory in the UK,” Musk said. Tesla also cancelled plans to construct a research and development center in the UK.
Singing The Brexit Blues
Last month, the Tony Blair Institute For Global Change (yes, that Tony Blair) published an analysis of how Brexit has impacted that country’s economy. It concluded that Brexit has been an utter disaster, an unforced error that has hobbled business and industry, slashed investment in the country, and robbed the treasury of billions in tax revenue.
“When Britain left the European Union on 31 January 2020, Boris Johnson, then prime minister, proclaimed that Britain would ‘rediscover the muscles that we have not used for decades’. Three years after a rupture in its economic ties with Europe, the country appears anything but muscular. Britain has the lowest growth rate among G7 countries and the IMF forecasts that it will be the only leading economy to shrink this year. While Brexit is not the only reason behind the economic underperformance, it is an important factor,” that report says in its opening paragraph.
“The decision to leave the EU has fueled significant uncertainty since the 2016 referendum, undermining business investment in the UK economy. Although business investment in Britain had been growing steadily since the 2009 financial crisis, this trend was abruptly interrupted precisely at the time of the 2016 referendum. Business investment in the UK is 31 per cent below the pre-referendum trend. In the EU, by contrast, business investment is currently 2 per cent above its pre-2016 trend.”
The report notes that the Covid pandemic certainly played a hand in this diminished economic activity, but other countries have now recovered from the effects of Covid while the UK has not.
“When comparing latest estimates with the forecasts before and after the 2016 referendum, our analysis shows that the economic hit from Brexit has been greater than forecast on all but one indicator – the exports of goods. The actual GDP hit is more than double the mean forecast, vindicating those who were accused of fearmongering by Brexiteers.
“The UK economy is estimated to be 5.5 per cent poorer now than it would have been had it stayed in the EU, according to a study by the Centre for European Reform that compares the UK’s current performance with a counterfactual UK that did not leave the EU. Imports and exports of goods have been hit significantly and so was investment. It is estimated that, had the UK stayed in the EU, tax revenues would have been about £40 billion higher than today.”
More proof of the pudding, if any is needed, can be found in the recent turmoil over Britishvolt, the battery manufacturing enterprise that was supposed to bring economic wonders to Wales. It has now collapsed after being unable to raise the capital it needed to proceed and has been taken over by an Australian startup with almost no prior history in the battery manufacturing business.
This manufacturing stuff is risky business. The investments made today are in factories that will be churning out manufactured goods for decades. BYD is clearly on an upward trajectory, although whether it is able to keep up with Tesla remains to be seen. Sharp-eyed readers will notice that the US is also not on the list of possible future BYD automobile factories. It is hard to know today how America will react to the sale of Chinese-made cars. Alleged senator Marco Rubio is beating the xenophobia drum for all its worth and warning that every Chinese enterprise is just a cog in China’s plan for world dominance.
The Atto 3 is taking world markets by storm, but there are none for sale to American customers. How long can that situation last? Certainly if China begins military operations in what it considers its “sphere of influence” — that would include Taiwan — the market for its products would shrink dramatically. Europe does not seem to have the same concerns about Chinese manufacturers — yet — but that could change in a heartbeat.
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