BYD Prepping For Huge Overseas Growth – CleanTechnica

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A week ago, BYD held a big summit for suppliers. More than 500 representatives from 380 major components suppliers converged on a conference center in Turin, Italy, and got a special call to action from BYD executives. One of the messages was that BYD was eager to collaborate with them in Europe. In short, to avoid tariffs on electric vehicles produced in China, BYD is prepping to produce electric cars in Europe for Europe.

According to BYD, the event included more than 170 individual meetings. BYD also offered test drives in its electric cars.

“The event and increasing engagement with Europe’s automotive supplier industry are further key steps in BYD’s expansion into the region, spearheaded by the ongoing construction of its first localised passenger-car production facility. Located in Hungary, the new factory is on track to start producing its first vehicles before the end of this year. It is a central component of BYD’s pan-European strategy, with cars being produced in Europe for European customers,” BYD reports. We already reported on that factory last year, and BYD already produces electric buses in Hungary. The questions were simply how well this strategy would work, how effectively BYD could penetrate the European EV market, and whether BYD would grow beyond that Hungary factory in Europe. Whatever the answers to those questions are, it seems clear BYD is prepping hard to make this first factory a success and does hope to build more factories in Europe. Executive Vice President Stella Li indicated last week that the company wants to build another factory in Europe and a decision on the location should be coming within 18 months.

Apparently, BYD sees Italy as a key center for some of its supplier contracts. “I am extremely pleased to have created this link between BYD and our industrial supply chain, made up of companies that represent the excellence of Italian know-how,” BYD Special Advisor for Europe Alfredo Altavilla comments. “These companies are distinguished by know-how that has no equal on the international scene and that the whole world recognises. Italy is the first country involved in this activity, and I believe it is right to offer our companies the opportunity to once again become active players in the future of mobility, especially in this delicate phase of technological transition, in which they can play a fundamental role.”

However, this event wasn’t the only notable move from BYD this week. Earlier this week, BYD sold $5.6 billion (HK$43.5 billion) worth of stock in order to fund overseas expansion. That was the company’s largest stock sales in 4 years. (Naturally, that led to a stock drop, because that’s what happens when you sell billions of dollars of stock, but in the longer term, the whole point is that BYD is aiming to grow faster worldwide.)

Of course, this comes on the back of massive BYD sales growth. “The offering follows a strong performance by the automaker, which sold more than 318,000 pure electric and hybrid passenger vehicles last month — a 161% year-on-year surge. The company also notched another record month for overseas sales, which hit 67,025 units,” Bloomberg writes. Aside from that 161% growth in passenger vehicle sales, BYD’s commercial vehicles division had even much stronger growth.

Some Wall Street analysts had even more insight. “We view the equity financing as positive,” said Citigroup analyst Jeff Chung in a note to the company’s investment clients. “BYD is raising cash in Hong Kong because transmitting the Chinese yuan into foreign currency is expensive, said Chung, who covers automotive stocks.”

Regarding the big sale, “The sale was several times subscribed, BYD said in a statement Tuesday. Al-Futtaim Family Office from the United Arab Emirates participated as a strategic investor, and the two firms plan to build on their successful collaboration and transition into a strategic partnership, focusing on areas including new energy vehicles, BYD said. Long-only investors and sovereign-wealth funds also bought shares in the deal,” Bloomberg reports. More details on the stock sales can be found in BYD’s announcement.

The broader story seems more than obvious at this point. BYD has come to dominate the Chinese electric vehicle market, which is far ahead of almost every other auto market around the world. BYD wants to dominate other auto markets around the world, and it sees now as a critical time to grow manufacturing capacity and ramp up its business — in as many places as possible. Europe is a key target, but BYD is also entering big markets in South America, elsewhere in Asia, and in Africa. There is nothing new in this final statement, but it seems worth noting that this is what many people expected of Tesla, whereas Tesla sales have dropped and expansion has stalled recently.