The World’s Largest Electrified Vehicle Maker Hits a Speed Bump
- by Laurie Burkitt
- May 8, 2017
At BYD’s manufacturing plant in the southern Chinese city of Shenzhen, six hundred workers and a host of robots climb on tires and dashboards into electrified cars that roll off the final assembly line every ninety seconds. “It could be every forty five seconds,” says factory coördinator Jun Li as he points to a long line of freshly welded and painted car figures. “We can make nine hundred a day in peak production. Now we’re making five hundred a day.”
After years of double-digit growth, sales have dropped sharply for BYD, the world’s largest electrical vehicle maker and a well-known brand in China (see “How Other Battery Manufacturers Could Help Tesla Reach Its Own Goals”), since the government lowered subsidies for electrical vehicles. BYD’s popular and inexpensive Qin hybrid sedans have led to its thirty one percent share of China’s electrified vehicle market, according to China-specialized research hard JL Warren Capital.
Now BYD, which had revenue last year of $14.Five billion from cars and a multiplicity of other battery-powered products, is attempting to figure out how to cut the cost of each car without killing its profits. Its solution is to expand its fleet of electrified vehicles, selling more electrical buses, trains, and taxis to local governments, and to expand its overall production to drive down manufacturing costs.
Low costs are how BYD got its embark. Founder chemist Chuanfu Wang launched the company in one thousand nine hundred ninety five with $300,000 raised from family. He and a team of twenty employees studied patents of other battery makers and then dismantled their batteries to see the components and how they were put together. They had to figure out the proportions of all the chemicals and the right manufacturing environment, and it took them half a year to determine how to manufacture without the kind of humidity managed dry rooms that rivals like Sanyo used.
Using cheap labor, Wang designed a system of semi-automated production, and by 2002, he was employing 17,000 workers, and BYD was one of the world’s top manufacturers of nickel-based batteries and lithium-ion batteries.
As the battery market for electronics matured and BYD faced enhancing competition in China with the entry of fresh Chinese rivals, Wang branched out into cars, observing the nascent sector as a way to leverage its manufacturing capabilities, and in time develop electrical vehicles that could be powered by BYD’s batteries.
Originally Wang followed the same copycat method he’d used with batteries, developing BYD’s very first model, the $6,000 F3 compact sedan, by having a squad of engineers take apart the Toyota Corolla to see how the engine and assets might be re-created. The F3, a pretty good copy of a Corolla for less than half the price, became one of the best-selling cars in China, and within about five years BYD was outselling big names like Volkswagen and Toyota (see “China’s Fresh Green Machine”).
Soon engineers created a “dual mode” plug-in battery and gasoline engine vehicle that was cheaper and more efficient on a single charge than the Toyota Prius at the time. This one didn’t require switch roles engineering. BYD already knew batteries, electrical motors, and controlling systems, so it combined all the technologies together to form its own homegrown hybrid.
BYD’s timing was ideal. Attempting to thwart slowing economic growth, in two thousand fifteen government leaders announced the “Made in China 2025” initiative focused on a few key sectors, one of them clean energy vehicles (see “China Wants to Substitute Millions of Workers with Robots”). Their target is to sell seven million over the next decade, two million of that by 2020.
Are government subsidies a sustainable way to support clean transportation?
Chinese leaders created large subsidies for electrical vehicle purchases, sparking an electrified car revolution in China. BYD’s auto sales have enlargened toughly forty five percent annually over the last two years.
Last year 507,000 electrical cars were sold, a fifty three percent increase over the year before, however that’s still a puny part of China’s twenty eight million car market, according to the China Association of Automobile Manufacturers.
Yet in January, when the government cut funding for electrified vehicle purchases in an attempt to force consolidation of the industry by weeding out smaller, subsidy-reliant companies, BYD’s first-quarter profit fell twenty nine percent to $88 million (605.8 million RMB), and sales dropped thirty four percent. Now BYD is hoping its slump will be solved by a global expansion with fresh products like buses, garbage trucks, and trains eventually providing a utter suite of clean-energy urban transportation. Subsidies will again play a role, and the company is investing in bus factories in France and Hungary.
Outside of Shenzhen, in a fresh district called Pingshan, a version of this clean energy ecosystem is almost a reality. Taxi drivers in compact cars supplied by BYD drop off passengers on “BYD Lane,” where the company’s headquarters look like a parody of modernity, with thousands of almost identical cars all parked outside matching monolithic office and parking structures, topped with BYD solar panels and connected by a BYD elevated monorail.
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“Do you know the thickest industry that’s subsidized by the U.S. government? Transit bus,” said BYD’s vice president of the Americas, Micheal Austin, adding that eighty percent of all capital expenditures on U.S. bus transit are funded by the federal government. In Lancaster, California, Austin leads a team manufacturing around three hundred electrical buses a year for the U.S. market. He says he has one hundred orders for electrified port vehicles and is working on electrified airport tugs.
The plan has critics. Alvit Wang, an equity research analyst at JL Warren Capital, says BYD has “zero” innovative technology in its monorail design, and the public transportation sector is already saturated. The number of cities looking for fresh energy public transportation is limited, and BYD will have to work hard to persuade local governments to spend $800,000 on a green-tech bus, says Jack Perkowski, former CEO of Asimco Technologies.
But BYD is rocketing forward. It has just spent $725 million developing its sleek, white, bullet-nosed monorail, tooled with BYD batteries. Parked just outside the office, no one is railing it yet. It still must pass final testing. But when it does, BYD says it once again will be the low-cost provider, as low as one hundred twenty million RMB ($17.Four million) for a one-kilometer project. By comparison, the Las Vegas Monorail cost around $654 million for seven kilometers when it opened in 2004.
And company executives like to point out that BYD has reinvented itself before.
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The World’s Largest Electrical Vehicle Maker Hits a Speed Bump – MIT Technology Review
The World’s Largest Electrified Vehicle Maker Hits a Speed Bump
- by Laurie Burkitt
- May 8, 2017
At BYD’s manufacturing plant in the southern Chinese city of Shenzhen, six hundred workers and a host of robots climb on tires and dashboards into electrified cars that roll off the final assembly line every ninety seconds. “It could be every forty five seconds,” says factory coördinator Jun Li as he points to a long line of freshly welded and painted car figures. “We can make nine hundred a day in peak production. Now we’re making five hundred a day.”
After years of double-digit growth, sales have dropped sharply for BYD, the world’s largest electrical vehicle maker and a well-known brand in China (see “How Other Battery Manufacturers Could Help Tesla Reach Its Own Goals”), since the government lowered subsidies for electrified vehicles. BYD’s popular and inexpensive Qin hybrid sedans have led to its thirty one percent share of China’s electrical vehicle market, according to China-specialized research hard JL Warren Capital.
Now BYD, which had revenue last year of $14.Five billion from cars and a multitude of other battery-powered products, is attempting to figure out how to cut the cost of each car without killing its profits. Its solution is to expand its fleet of electrical vehicles, selling more electrical buses, trains, and taxis to local governments, and to expand its overall production to drive down manufacturing costs.
Low costs are how BYD got its begin. Founder chemist Chuanfu Wang launched the company in one thousand nine hundred ninety five with $300,000 raised from family. He and a team of twenty employees studied patents of other battery makers and then dismantled their batteries to see the components and how they were put together. They had to figure out the proportions of all the chemicals and the right manufacturing environment, and it took them half a year to determine how to manufacture without the kind of humidity managed dry rooms that rivals like Sanyo used.
Using cheap labor, Wang designed a system of semi-automated production, and by 2002, he was employing 17,000 workers, and BYD was one of the world’s top manufacturers of nickel-based batteries and lithium-ion batteries.
As the battery market for electronics matured and BYD faced enlargening competition in China with the entry of fresh Chinese rivals, Wang branched out into cars, watching the nascent sector as a way to leverage its manufacturing capabilities, and in time develop electrified vehicles that could be powered by BYD’s batteries.
Primarily Wang followed the same copycat method he’d used with batteries, developing BYD’s very first model, the $6,000 F3 compact sedan, by having a team of engineers take apart the Toyota Corolla to see how the engine and figure might be re-created. The F3, a pretty good copy of a Corolla for less than half the price, became one of the best-selling cars in China, and within about five years BYD was outselling big names like Volkswagen and Toyota (see “China’s Fresh Green Machine”).
Soon engineers created a “dual mode” plug-in battery and gasoline engine vehicle that was cheaper and more efficient on a single charge than the Toyota Prius at the time. This one didn’t require switch roles engineering. BYD already knew batteries, electrical motors, and controlling systems, so it combined all the technologies together to form its own homegrown hybrid.
BYD’s timing was ideal. Attempting to thwart slowing economic growth, in two thousand fifteen government leaders announced the “Made in China 2025” initiative focused on a few key sectors, one of them clean energy vehicles (see “China Wants to Substitute Millions of Workers with Robots”). Their target is to sell seven million over the next decade, two million of that by 2020.
Are government subsidies a sustainable way to support clean transportation?
Chinese leaders created large subsidies for electrified vehicle purchases, sparking an electrical car revolution in China. BYD’s auto sales have enlargened toughly forty five percent annually over the last two years.
Last year 507,000 electrified cars were sold, a fifty three percent increase over the year before, however that’s still a petite part of China’s twenty eight million car market, according to the China Association of Automobile Manufacturers.
Yet in January, when the government cut funding for electrical vehicle purchases in an attempt to force consolidation of the industry by weeding out smaller, subsidy-reliant companies, BYD’s first-quarter profit fell twenty nine percent to $88 million (605.8 million RMB), and sales dropped thirty four percent. Now BYD is hoping its slump will be solved by a global expansion with fresh products like buses, garbage trucks, and trains eventually providing a total suite of clean-energy urban transportation. Subsidies will again play a role, and the company is investing in bus factories in France and Hungary.
Outside of Shenzhen, in a fresh district called Pingshan, a version of this clean energy ecosystem is almost a reality. Taxi drivers in compact cars supplied by BYD drop off passengers on “BYD Lane,” where the company’s headquarters look like a parody of modernity, with thousands of almost identical cars all parked outside matching monolithic office and parking structures, topped with BYD solar panels and connected by a BYD elevated monorail.
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“Do you know the fattest industry that’s subsidized by the U.S. government? Transit bus,” said BYD’s vice president of the Americas, Micheal Austin, adding that eighty percent of all capital expenditures on U.S. bus transit are funded by the federal government. In Lancaster, California, Austin leads a team manufacturing around three hundred electrified buses a year for the U.S. market. He says he has one hundred orders for electrified port vehicles and is working on electrical airport tugs.
The plan has critics. Alvit Wang, an equity research analyst at JL Warren Capital, says BYD has “zero” innovative technology in its monorail design, and the public transportation sector is already saturated. The number of cities looking for fresh energy public transportation is limited, and BYD will have to work hard to persuade local governments to spend $800,000 on a green-tech bus, says Jack Perkowski, former CEO of Asimco Technologies.
But BYD is rocketing forward. It has just spent $725 million developing its sleek, white, bullet-nosed monorail, tooled with BYD batteries. Parked just outside the office, no one is railing it yet. It still must pass final testing. But when it does, BYD says it once again will be the low-cost provider, as low as one hundred twenty million RMB ($17.Four million) for a one-kilometer project. By comparison, the Las Vegas Monorail cost around $654 million for seven kilometers when it opened in 2004.
And company executives like to point out that BYD has reinvented itself before.
Become an Insider to get the story behind the story — and before anyone else.
The World’s Largest Electrified Vehicle Maker Hits a Speed Bump – MIT Technology Review
The World’s Largest Electrical Vehicle Maker Hits a Speed Bump
- by Laurie Burkitt
- May 8, 2017
At BYD’s manufacturing plant in the southern Chinese city of Shenzhen, six hundred workers and a host of robots climb on tires and dashboards into electrified cars that roll off the final assembly line every ninety seconds. “It could be every forty five seconds,” says factory coördinator Jun Li as he points to a long line of freshly welded and painted car figures. “We can make nine hundred a day in peak production. Now we’re making five hundred a day.”
After years of double-digit growth, sales have dropped sharply for BYD, the world’s largest electrified vehicle maker and a well-known brand in China (see “How Other Battery Manufacturers Could Help Tesla Reach Its Own Goals”), since the government lowered subsidies for electrified vehicles. BYD’s popular and inexpensive Qin hybrid sedans have led to its thirty one percent share of China’s electrical vehicle market, according to China-specialized research hard JL Warren Capital.
Now BYD, which had revenue last year of $14.Five billion from cars and a multitude of other battery-powered products, is attempting to figure out how to cut the cost of each car without killing its profits. Its solution is to expand its fleet of electrified vehicles, selling more electrified buses, trains, and taxis to local governments, and to expand its overall production to drive down manufacturing costs.
Low costs are how BYD got its begin. Founder chemist Chuanfu Wang launched the company in one thousand nine hundred ninety five with $300,000 raised from family. He and a team of twenty employees studied patents of other battery makers and then dismantled their batteries to see the components and how they were put together. They had to figure out the proportions of all the chemicals and the right manufacturing environment, and it took them half a year to determine how to manufacture without the kind of humidity managed dry rooms that rivals like Sanyo used.
Using cheap labor, Wang designed a system of semi-automated production, and by 2002, he was employing 17,000 workers, and BYD was one of the world’s top manufacturers of nickel-based batteries and lithium-ion batteries.
As the battery market for electronics matured and BYD faced enhancing competition in China with the entry of fresh Chinese rivals, Wang branched out into cars, eyeing the nascent sector as a way to leverage its manufacturing capabilities, and in time develop electrified vehicles that could be powered by BYD’s batteries.
Primarily Wang followed the same copycat method he’d used with batteries, developing BYD’s very first model, the $6,000 F3 compact sedan, by having a team of engineers take apart the Toyota Corolla to see how the engine and figure might be re-created. The F3, a pretty good copy of a Corolla for less than half the price, became one of the best-selling cars in China, and within about five years BYD was outselling big names like Volkswagen and Toyota (see “China’s Fresh Green Machine”).
Soon engineers created a “dual mode” plug-in battery and gasoline engine vehicle that was cheaper and more efficient on a single charge than the Toyota Prius at the time. This one didn’t require switch sides engineering. BYD already knew batteries, electrical motors, and controlling systems, so it combined all the technologies together to form its own homegrown hybrid.
BYD’s timing was ideal. Attempting to thwart slowing economic growth, in two thousand fifteen government leaders announced the “Made in China 2025” initiative focused on a few key sectors, one of them clean energy vehicles (see “China Wants to Substitute Millions of Workers with Robots”). Their target is to sell seven million over the next decade, two million of that by 2020.
Are government subsidies a sustainable way to support clean transportation?
Chinese leaders created large subsidies for electrified vehicle purchases, sparking an electrified car revolution in China. BYD’s auto sales have enhanced toughly forty five percent annually over the last two years.
Last year 507,000 electrical cars were sold, a fifty three percent increase over the year before, however that’s still a petite part of China’s twenty eight million car market, according to the China Association of Automobile Manufacturers.
Yet in January, when the government cut funding for electrified vehicle purchases in an attempt to force consolidation of the industry by weeding out smaller, subsidy-reliant companies, BYD’s first-quarter profit fell twenty nine percent to $88 million (605.8 million RMB), and sales dropped thirty four percent. Now BYD is hoping its slump will be solved by a global expansion with fresh products like buses, garbage trucks, and trains eventually providing a utter suite of clean-energy urban transportation. Subsidies will again play a role, and the company is investing in bus factories in France and Hungary.
Outside of Shenzhen, in a fresh district called Pingshan, a version of this clean energy ecosystem is almost a reality. Taxi drivers in compact cars supplied by BYD drop off passengers on “BYD Lane,” where the company’s headquarters look like a parody of modernity, with thousands of almost identical cars all parked outside matching monolithic office and parking structures, topped with BYD solar panels and connected by a BYD elevated monorail.
Recommended for You
“Do you know the largest industry that’s subsidized by the U.S. government? Transit bus,” said BYD’s vice president of the Americas, Micheal Austin, adding that eighty percent of all capital expenditures on U.S. bus transit are funded by the federal government. In Lancaster, California, Austin leads a team manufacturing around three hundred electrified buses a year for the U.S. market. He says he has one hundred orders for electrified port vehicles and is working on electrical airport tugs.
The plan has critics. Alvit Wang, an equity research analyst at JL Warren Capital, says BYD has “zero” innovative technology in its monorail design, and the public transportation sector is already saturated. The number of cities looking for fresh energy public transportation is limited, and BYD will have to work hard to persuade local governments to spend $800,000 on a green-tech bus, says Jack Perkowski, former CEO of Asimco Technologies.
But BYD is rocketing forward. It has just spent $725 million developing its sleek, white, bullet-nosed monorail, tooled with BYD batteries. Parked just outside the office, no one is railing it yet. It still must pass final testing. But when it does, BYD says it once again will be the low-cost provider, as low as one hundred twenty million RMB ($17.Four million) for a one-kilometer project. By comparison, the Las Vegas Monorail cost around $654 million for seven kilometers when it opened in 2004.
And company executives like to point out that BYD has reinvented itself before.
Become an Insider to get the story behind the story — and before anyone else.
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