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China’s BYD is biggest EV maker, but isn’t coming to US anytime soon

The BYD Atto 3.
Richard Bord/Getty Images

  • China’s BYD passed Tesla as the world’s top EV seller last year.
  • Just don’t count on the carmaker cracking the US market anytime soon.
  • Geopolitical challenges and weak demand will make it tough for BYD to “do a Toyota,” analysts say.

Japanese and Korean carmakers cracked the US market long ago — but don’t expect Chinese EV seller BYD to repeat that feat.

There’s no chance the company, which passed Tesla to become the world’s top EV seller last year, will “do a Toyota” by expanding Stateside, a top exec said last month.

“We’re not planning on coming to the US,” BYD Americas CEO Stella Li told Yahoo Finance.”It’s an interesting market, but it’s very complicated if you’re talking about EVs.”

According to analysts, even if BYD did want to start selling its cars in the US, a combination of geopolitical challenges and weak demand would leave it facing an uphill battle.

“It’d be very difficult for a Chinese EV maker to enter the US market,” Seth Goldstein, an equity strategist at Morningstar, told Business Insider. “Even if BYD were to try, I’m not sure how much consumer demand there would be — it’d take some time for them to prove themselves.” 

Doing a Toyota

In the past, Asian automakers have managed to carve out a huge slice of the US market.

Toyota established its first office in North America in 1957 — just 12 years after World War II ended. It’s been scaling up its US business since then, and passed General Motors as the top-selling carmaker in 2021.

Japanese rivals Nissan, Mazda, Lexus, Honda, Suzuki, and Mitsubishi surged in popularity in the US over the second half of the 20th century. South Korea’s Hyundai and Kia also made big inroads.

It’s easy to imagine BYD and other China-based EV brands claiming the North American market in a similar fashion. Just as Toyota and its peers were able to outperform their US rivals thanks to more efficient manufacturing processes, BYD offers something different to its competitors.

Ford CEO Jim Farley said last month that smaller, cheaper EVs would be key for driving sales growth. Yet neither Ford nor Tesla appear close to launching a vehicle that could compete price-wise with BYD hatchbacks like the $11,000 Seagull.

The BYD Seagull.
VCG via Getty Images

“Japanese and Korean manufacturers became successful in the US because they brought a product to the market that consumers were crying out for,” Will Roberts, automotive research lead at the EV intelligence firm Rho Motion, told BI. “Their cars were more reliable, more fuel efficient, more affordable … there’s certainly a comparison to be made here.”

However, things have now changed he added: “Considering the tensions between the US and China today, Chinese EV makers will likely find entering the US market a lot more difficult.”

Geopolitical challenges

Both Goldstein and Roberts flagged the Inflation Reduction Act of 2022 as one factor that could make it much tougher for BYD and other Chinese EV makers to expand in the US.

The bill, a key part of US President Joe Biden’s economic agenda, offers tax credits worth up to $7,500 for EV makers, excluding any “Foreign Entity of Concern.”

In November, the Energy and Treasury Departments confirmed that companies from China, Russia, Iran, and North Korea would all be classed as foreign entities — meaning Chinese EV makers like BYD aren’t eligible for the subsidies.

Joe Biden signs the Inflation Reduction Act into law in August 2022.
Demetrius Freeman/The Washington Post

The White House would likely bring in more restrictions if BYD or any other Chinese firm tried to crack the US market, according to Rho Motion’s Roberts.

“If the US government were really worried about this, you’d quickly see legislation come into play that would either make it prohibitively expensive to buy a China-made EV or feed into consumers’ negative perception of these sorts of vehicles,” he told BI. Biden’s decision to order an investigation into smart cars last month is a sign that lawmakers are determined to discourage the American public from buying Chinese vehicles, Roberts added.

Weak demand

As if those restrictions weren’t off-putting enough, Chinese EV makers might also conclude that there isn’t much life left in the US market, where EV sales edged up just 1.3% over the final three months of 2023, per data from Cox Automotive.

BYD, for example, has vowed to scale up everywhere from Brazil to Thailand, but appears to have little desire to grow its business in the US, where top Republican politicians — and some voters — have turned aggressively anti-EV. The world’s largest economy also lags behind China regarding charging infrastructure.

Conservative politicians slamming EVs “can bring a lot of confusion to consumers and also to auto manufacturers. They are not eager to invest,” BYD Americas CEO Li warned last month.

“In China, the message is strong. If you are not investing in an electric car, you are out. You will die. You have no future,” she added.

BYD isn’t the only company turning its back on the US EV market. Apple has reportedly abandoned its lengthy effort to build an electric car, while Toyota has maintained focus on hybrids to bring down prices.

BYD failing to crack the US wouldn’t be a death knell for the company — there’s still potential for it to grow by ramping up its business in Asia and South America, according to Roberts.

But it won’t be able to repeat the success Japanese carmakers had at the end of the 20th century. Given that EV sales growth is stalling in US, it’s perhaps little wonder companies like BYD are not too bothered.



This article was originally published by a www.businessinsider.com . Read the Original article here. .

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