BYD nudges Tesla for the Title of World’s Top EV Manufacturer

BYD-dealer

26-12-2023: Floods, bushfires, cyclones, hurricanes, storms and other dangerous climate events continue to wreak havoc across the globe as a stark reminder of the approach of perilous tipping points linked to two centuries of greenhouse gas emissions. Atmospheric concentrations of carbon dioxide today stand at 420 ppm (parts per million) compared to a pre-industrial level of around 280 ppm.[1] Although the decarbonisation of transport is but one element of the urgent need to address the dire condition of the earth’s planetary boundaries[2], it is an important starting point. To this end, two manufacturers of EVs (electric vehicles or BEV – battery electric vehicles) are neck and neck for the crown of the most sales and total market share. For years, tech billionaire Elon Musk’s Tesla was the leader, but this is now being challenged head on by the Shenzhen based BYD. BYD was only founded in 1995, and its BYD Auto subsidiary began a short two decades ago with the aim of developing “new energy” (emission free) passenger cars, buses, trucks and forklifts for the People’s Republic of China (PRC).[3] It has already achieved this goal and is now expanding internationally.

BYD vs Tesla

BYD (which stands for “Build Your Dreams” – though apparently this was added years after its founding) had already overtaken Tesla in the first six months of 2022 in terms of unit sales. Though, to be fair, Tesla’s Shanghai Gigafactory was closed for two months during that year due to the nonsensical and harmful “Covid” lockdowns imposed by the conservative Communist Party of China (CPC) led government. This cost Tesla the production of some 50 to 70 thousand vehicles.[4] However, in the third financial quarter of 2023, BYD was only 3456 EV sales behind Tesla, and is expected to overtake the famous brand in the final financial quarter of 2023.[5] In 2022, BYD also overtook South Korea’s LG as the world’s second-largest producer of EV batteries. The number one producer of EV batteries is China’s Contemporary Amperex Technology Co Ltd (CATL), which has recently unveiled an EV battery which allows an astonishing 1000-kilometre journey on a single charge.[6]

The fact that BYD produces its own batteries automatically provides it with an advantage over Tesla. For, while Tesla does have a joint venture with Panasonic to produce batteries at its Gigafactory in Storey County, Nevada, for all its China and many US produced vehicles it purchases off the shelf batteries from suppliers such as China’s CATL.[7] However, BYD does operate a bus manufacturing factory in Lancaster, California, which features a workforce of over 1000 – 750 of whom are Unionised.[8] Despite many Tesla vehicles appearing on Australian roads over the past five years, BYD is throwing down the gauntlet in the island continent. BYD plans a massive expansion in Australia, with aims to be come one of the top 5 car brands. Liu Xueliang, BYD’s General Manager of its Asia Pacific auto sales division, stated that BYD is committed to brining the best quality vehicles to Australia at affordable prices. Indeed, BYD has three models now for sale in Australia, and all three of them are priced below $50 000.[9]

Until this point, EVs have largely been too expensive for large sections of the working class, with many of them having no option but to keep older petrol and diesel powered vehicles on the road. Yet BYD’s intervention into the market could begin to change this and may force the other manufacturers to cut their prices or fall behind. BYD’s Han sedan retails in China for around $32 000, which is almost $18 000 less than Tesla’s competitor the Model Y, so it is little wonder that BYD are selling many more.[10] Thus far, Tesla’s lowest price EV starts at around $60 000, and increases from there to around $148 000 for the top of the range Model X.[11] For many workers East and West, such prices are currently out of reach and are not realistic in the near term, if at all.

State backing for BYD

BYD CEO Wang Chuanfu, who is known as the father of the “blade battery”, grew up in extreme poverty in China’s Anhui province.[12] Both his parents passed away before he entered high school. The blade battery is a game changer in battery technology, and virtually eliminates the concerns about battery safety in EVs. The blade battery passed the nail penetration test with flying colours, emitting no smoke or fire while being penetrated, as opposed to conventional lithium batteries which emit oxygen which fuels fire. The blade battery also passed other extreme tests, such as being crushed, bent, heated in a furnace to 300 degrees Celsius and being overcharged by 260%, without resulting in a fire or explosion. It was also driven over by a 46-tonne truck which resulted in no leakage, deformation or smoke, came out intact and was then able to be refitted to an EV.[13] Today, Wang Chuanfu works until 11pm or midnight, five or six days a week. BYD engineers are housed in company owned apartment complexes and receive low-cost meals in BYD canteens. A US executive who studied BYD remarked: “They’re basically breathing, eating, thinking and working at the company 24/7”.[14]

However, as brilliant as Wang Chuanfu is, and as hard working as the BYD engineers are, this is only part of the reason for the mega-success of BYD. A huge reason is the sheer volume and extent of government subsidies for BYD from the various levels of government in the PRC – stretching into the billions of dollars. It is true that Tesla (and Elon Musk’s other companies Space X and SolarCity) has also received US government subsidies in the vicinity of billions of dollars,[15] so why is BYD on the verge of overtaking Tesla in EV production? As mentioned, one reason is that BYD can now build very high quality EVs at a lower cost to the consumer, bringing them somewhat within reach of large sections of the working class in the East and the West. We can see that there is a world of difference between government subsidies in a capitalist state (the USA) and government subsidies in a workers’ state (the PRC). In a capitalist state, private corporations are subsidised in order to make profits for themselves, with the end product a secondary concern. In a workers’ state, firms are subsidised by the government for a purpose, to fulfil some of the goals of a planned economy, and/or to provide some economic or social benefit to the working class. This is not always achieved directly, but in this case, PRC government subsidies to BYD results in more affordable, high quality EVs being available in the PRC (and now for export). This contributes to the environmental goals of the electrification of transport and industry in the PRC, by lowering harmful greenhouse gas emissions. It also allows the working class to access high quality but affordable products, improving their quality of life.

No to war on China

Over a decade ago, the central government of the PRC government began encouraging carmakers to make electric vehicles, and they did this with subsidies and other incentives. These subsidies are extensive. The QZ website calculated that BYD received about $1 billion in EV government subsidies for the EVs it sold in 2016 – which is more than its $750 million net profit for that year.[16] More recently, BYD’s annual report for 2021 showed that it received 2.3 billion Chinese Yuan in subsidies, which accounted for 57% of its net income that year.[17] Some speculate that Chinese “New Energy” vehicle manufacturers would not be able to survive without these huge government subsidies,[18] and this may well be true. Yet this only highlights the fact that private profit for private corporations is not the driver of the overall economy of the PRC. The main drivers of the economy in the PRC are human needs and the development of its economy to benefit the majority. As profits for shareholders are a minor concern, social, economic and environmental goals can be, and are, factored in. In other words, capitalism does not rule the roost in the PRC, as it does in the West.

The spectacular scientific, technological and economic development in the PRC over the last two decades is a particular concern for the ruling classes of the US and Europe. The PRC is demonstrating in practice that an economy which is not based on the direct exploitation of labour and the environment has the ability to challenge and surpass those that do. Capitalism was overturned in China following a 20-year civil war which culminated in the victory of a socialist revolution in 1949. While imperialism “lost” China at that stage, the PRC’s economic development lagged behind the West until the early 1990s. In the last two decades, it is clear that the PRC has built up a powerful state guarding an economy which has the reserves to offer the world stupendous advances in technology that are accessible to the masses and contributes to environmental goals.

Imperialism in the West has but one answer to a rising socialistic power which exposes the shortcomings of capitalism – all out war. While it is true that the PRC remains a bureaucratically deformed workers’ state, where the working class is generally excluded from political power, the ruling classes of the West cannot tolerate the barest threat of an alternative. This is the real source of the relentless attempts at internal counter-revolution in China (Tibet, Hong Kong, Xinjiang) combined with non-stop provocations in the South China Sea and arming Taiwan for a fruitless battle for a fake “independence”. What is required is a proletarian political revolution in the PRC which sweeps away Stalinist rule, combined with international working class defence of the PRC against internal imperialist fomented subversion and deadly war provocations on its coastline. Authentic Marxist vanguard parties need to be assembled to lead working people East and West to the socialist future they deserve.

WORKERS LEAGUE

www.redfireonline.com

E: workersleague@protonmail.com

[1] www.climate.nasa.gov/vital-signs/carbon-dioxide/ (22-12-2023)

[2] www.science.org/doi/10.1126/science.1259855 (22-12-2023)

[3] www.electrek.co/2023/12/19/tesla-byd-has-caught-up-expected-to-take-lead-global-bev-market-share-ev/ (22-12-2023)

[4] www.scmp.com/business/china-business/article/3184241/chinas-byd-takes-teslas-crown-worlds-biggest-electric (22-12-2023)

[5] www.linkedin.com/pulse/byd-vs-tesla-faces-loss-gets-closer-global-ev-throne-evindiaonline (22-12-2023)

[6] www.news.cgtn.com/news/2022-07-07/Chinese-auto-maker-BYD-overtakes-Tesla-in-global-EV-sales-1btagWjQDBu/index.html (22-12-2023)

[7] www.linkedin.com/pulse/byd-already-delivering-could-tesla-crown-slipping-robert-guest (22-12-2023)

[8] www.en.byd.com/bus/about/#bus-about-2 (22-12-2023)

[9] www.thedriven.io/2023/11/30/byd-plans-to-overtake-tesla-and-become-top-5-car-brand-in-australia/ (22-12-2023)

[10] www.aljazeera.com/economy/2022/7/28/chinas-byd-was-dismissed-by-elon-musk-now-its-beating-tesla (22-12-2023)

[11] www.carsguide.com.au/tesla/model-3/price (22-12-2023)