August 2, 2024: EV pioneer and battery giant BYD bucked the trend of global withdrawals from EV manufacturing with the firm announcing on July 16 that it plans to establish a new manufacturing facility in Cambodia.
When all its facilities are up and running, outside of China BYD will have a global production and assembly capacity of 820,000 units a year, with scope to expand this further, according to the company.
Only BYD and Tesla have the capability of operating in scale and at a profit. “This financial stability allows BYD to expand globally compared to other players that operate at significant losses,” says RHO Motion, a consultancy.
Outside of China, BYD has plants in Brazil, Hungary, Indonesia, Thailand, Turkey and Uzbekistan.
BYD’s global expansion comes at a time when many countries are looking to impose tariffs on Chinese EVs which will hurt domestic car batteries and disrupt the battery markets.
As Batteries International reported earlier on July 5, the European Commission imposed provisional tariffs on what it described as ‘battery electric vehicles that benefit from unfair subsidization’. Since the most expensive part of any BEV is the lithium battery, this is effectively a tariff on the battery not the car.
The imposition of tariffs, and slower EV sales, will have a major impact on the price of lithium batteries if a glut of them were to be dumped on to the European market, potentially prompting a further extension of tariffs being extended to batteries.
Sample individual duties the Commission is imposing on Chinese car producers are based on its evaluation of the subsidies that they have received and are variable. They are not yet set in stone.
For BYD the EC this July suggested an extra 17.4% (it already pays a tariff of 15%); For GEELY, 20% and for SAIC Motor, 38.1%.
The announced tariffs still contain uncertainty however. Talks and negotiations between the EU and China need to continue for the next four months. More lenient tariffs are possible given German car makers BMW and Mercedes are concerned about retributory actions having huge stakes in selling their vehicles into the country.
RHO said: “Additionally, with the tariffs only affecting BEV imports, some Chinese players may start pushing PHEV (hybrid electric vehicles using both batteries and gas as power) in Europe to maintain revenue.”
The majority of BYD’s vehicles are produced at its three plants in China: Shaanxi, Hunan, and Guangdong, aligning with its largest customer base. In 2023, BYD sold 2.57 million of its total 2.7 million vehicles in China. After China, its next biggest customer base in 2023 was the rest of the Asia Pacific region, particularly Thailand, Malaysia and Australia. BYD says it aspires to double its vehicle exports in 2024 compared to 2023.
Given that the price point disparity between petrol driven (ICE) vehicles and pure BEV ones is close to level in China, the successful electrification of transport looks set to be only a matter of time.
