CHINA REPORT
BEIJING— Chinese electric vehicle (EV) and battery maker BYD is going to become Tesla’s battery supplier for the first time, a senior executive at the company backed by Warren Buffett’s Berkshire Hathaway said recently.
“Tesla is a very successful company. BYD has great respect for Tesla and raises our hat to it,” said BYD’s executive vice president Lian Yubo in an interview with the state-owned news channel China Global Television Network (CGTN), when he was asked his thoughts of China-made vehicles in comparison with Tesla. “(Tesla CEO) Musk and us are good friends now as we are preparing to supply batteries to it very soon. We learned a lot from Tesla,” Lian added, noting the U.S. rival’s positioning itself as a high-end EV brand.
Lian’s remark suggests BYD is set to be the second China-based battery supplier of Tesla next to CATL, the world’s largest EV battery company. LG Energy Solution, the South Korean battery maker second to CATL, and Tesla’s long-time partner Panasonic currently are another two battery makers in Tesla’s supplier list.
Lian confirmed rumors about Tesla and BYD’s partnership. It was reported last August that Tesla reached an agreement to use BYD’s “Blade Battery,” a product introduced in 2020 that was alleged far-less-susceptible to catching fire. Delivery was reported to begin in Q2 2022 as Tesla models equipped with blade batteries had entered the C-sample test phase.
Lian’s comment also mirrored the increasing competition that CALT faced from BYD and other competitors. Earlier this year, Tesla’s Chinese rival Xpeng was reported to be switching from CATL batteries to products made by another Chinese battery company, CALB, because of price increases by CATL.
A report in March said Fudi Battery, a unit BYD spin off last year, was said to win orders from Xpeng’s domestic peer NIO and Xiaomi Auto, a unit founded last November by the leading Chinese smartphone maker.
Source: Visual China Read The Article
PSR Analysis: BYD and Tesla are both major makers of new energy vehicles. Tesla is BYD’s second big attempt to provide batteries for EVs; it also has targeted Toyota. The moves show that BYD’s battery technology and costs have reached a good balance.
In 2021, sales of new energy vehicles in China were less than 3 million units, accounting for about 14% of the Passenger market. Today, the new energy vehicle market is still in development, and the overall strength is far from surpassing that of fuel vehicles. Therefore, both are in the camp of new energy vehicles. In fact, the only goal of BYD and Tesla is to surpass the brands in the fuel car camp.
However, after the market and scale of new energy vehicles increase and become stronger, BYD and Tesla will benefit from this partnership. Considering the competition between BYD and Tesla, it is better to join forces to compete with fuel brands.
At the same time, both BYD and Tesla have different priorities. BYD’s core competitiveness is the technology, safety and endurance of new energy batteries; it provides new energy power solutions in all fields. The cooperation with Tesla is conducive to BYD’s further brand building in North American and European markets and the expansion of other overseas markets.
Tesla’s core competitiveness lies in the global promotion of its ADAS and Internet of vehicles technology. The technical cooperation between the two sides can provide Tesla with another battery supplier after CATL and LG, so it can take advantage of technology improvements and competitive costs. PSR
Jack Hao is Senior Research Manager – China for Power Systems Research
