China’s BYD Aims to Build Not Just an Electric Car, But an Ecosystem

By · October 18, 2010

BYD e6 electric car

The BYD e6 electric car promises 200 miles of driving range.

The Chinese company known as BYD—that’s Build Your Dreams—has an audacious plan to solve China’s energy and environment problems. Readers of this site might know BYD as the carmaker backed by famed investor Warren Buffet—and as the top contender to bring Chinese-made electric cars and plug-in hybrids to the United States.

But it may come as a surprise that BYD views the U.S. market as somewhat irrelevant, and doesn’t see high-volume sales of its all-electric e6 or the BYD F3DM plug-in hybrid as that high of a priority.

That’s because BYD’s Chairman, Chuanfu Wang, has a much bigger vision. “The goal is to create a zero emissions ecosystem,” said Michael Austin, a Chicago-based BYD vice president with marketing and public relations duties. “And you don’t create the zero carbon zero emissions ecosystem by just producing a whole bunch of electric vehicles.” BYD’s electric and plug-in hybrid cars, now available in China, will go on sale to U.S. private consumers as early as 2012.

Vertical Integration

I recently spoke with Austin, a former Motorola executive who began working with BYD about a decade ago, when he was looking for an affordable source of commodity batteries for Motorola cell phones. Of the three-dozen or so Chinese companies making cell phone batteries at the time, BYD was the only one with durable and safe battery chemistry—backed by its own intellectual property regarding battery technology. Moreover, the company’s philosophy of vertical manufacturing integration allowed the company to reach an enormous scale.

“They own the chemicals. They own the mines. They refine the chemicals. They make their own cans for the cells. They did their own windings,” Austin said. “They did every component of the build, and that total vertical solution got them in a place where they had the lowest cost, so they could control the market.”

And what they did for batteries, they also did for cell phones. Currently, 30 to 40 percent of the world’s cell phones, regardless of the brand, can be traced back to BYD. Now they are applying the same scale to solar panels and to automobiles. They have 100 million square feet of factory space. They make every component of the vehicle, except the tires and the safety glass. And for the past two years, the company’s F3 sedan has been China’s number one seller.

Coal-Powered Nightmare, Avoided

BYD needs its massive scale of manufacturing to match the size of the Chinese auto market. Last year, China bypassed the United States to become the largest automobile market in the world, and it continues to grow at an impressive rate. “If BYD were to sell tens of thousands of electric vehicles in Tianjin and in Beijing, it would create a worse environmental condition than China has today. All they have are coal-burning plants,” Austin said.

BYD e6 power button

The power button on the BYD e6.

Instead, BYD wants to couple solar energy generation with massive amounts of stationary energy storage using its batteries. Then, add efficient lighting at home—BYD also makes LED lighting—and electric cars for the road. “If you discharge to those energy storage plants to electric vehicles, then you have zero emissions.” Voila! The ecosystem is complete.

Back in the U.S.A.

Given the size of the Chinese auto market, and the Chinese government’s goal of making electric cars represent 10 to 20 percent of total cars sales, the U.S. auto market is nearly an afterthought.

Nonetheless, with that kind of scale driving production and reduced cost in China, it’s possible to bring the same total energy solution to the United States. Austin: “We don’t want to just sell electric vehicles in our U.S. dealerships. That’s not selling the zero emission story. We want to sell solar panels. We want to sell solar-shaded parking. We want to sell LED lighting. We want to sell energy storage for your home, and charging stations coupled to energy storage, so we can do DC-to-DC quick charging. Oh, and you can use solar panels to charge your energy storage, that’s now powering your vehicle.”

BYD wants to work down the price of its electric car—without any subsidy—to $20,000 or less. Austin says that the price of BYD's EV batteries is currently at $350 per kilowatt hour. “That’s lower than everybody else. Nobody else is even close to that,” Austin said. “And that’s where we are at today.

It all comes full circle, when you consider the effects of the Chinese economy on the price of gasoline. “BYD is completely convinced that the emerging markets are going to eat up all the gasoline. When China and India emerge, the price is going to skyrocket,” Austin said.

The price in the U.S. and the developed world, that is. The Chinese government will continue to subsidize its gas to around $1.50 a gallon, according to Austin. “They don’t curb their consumption. So, we’ll get screwed with high prices, and they’ll continue to consume at incredible rates," he said. Consider that less than six percent of Chinese currently own cars, but that around 30 percent now have the financial means to buy a vehicle. “There are 330 million cars yet to be sold,” Austin said.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.