BYD, the most important company you’ve never heard of, has been showing off its wares at the Shanghai Auto Show.
The leading Chinese electric vehicle manufacturer unveiled 23 new car models, ranging from high-powered gull-winged sports cars to SUVs, minivans and city cars.
The reason I say BYD is the most important company you’ve never heard of is not because of its cars, but its buses.
From Bloomberg in 2018:
Electric buses were seen as a joke at an industry conference in Belgium seven years ago when the Chinese manufacturer BYD Co. showed an early model.
“Everyone was laughing at BYD for making a toy,” recalled Isbrand Ho, the Shenzhen-based company’s managing director in Europe. “And look now. Everyone has one.”
Suddenly, buses with battery-powered motors are a serious matter with the potential to revolutionize city transport—and add to the forces reshaping the energy industry. With China leading the way, making the traditional smog-belching diesel behemoth run on electricity is starting to eat away at fossil fuel demand.
In fact, the market for electric buses has got so big it’s having a real effect on oil demand.
The Bloomberg article continues (emphasis mine):
The numbers are staggering. China had about 99 percent of the 385,000 electric buses on the roads worldwide in 2017, accounting for 17 percent of the country’s entire fleet. Every five weeks, Chinese cities add 9,500 of the zero-emissions transporters—the equivalent of London’s entire working fleet, according to Bloomberg New Energy Finance.
It goes on to say that these electric buses are reducing oil demand by 233,000 barrels a day. A day! When you add in the oil saved by electric cars and light trucks that rises to 277,000 a day.
That’s the equivalent of about 7.5% of Shell’s daily production.
It is a massive amount. And the vast majority of it is from electric buses. Electric car stores may grab most of the headlines, but it seems it’s buses that are leading the way.
So, it’s clear that BYD is a major player in the electric vehicle market. But what grabbed me about its Shanghai Auto Show releases was not the new supercar concept it was showing off…
… but the small town car it’s created:
Why? Well, this car has a range of 189 miles, and will go on sale for around £6,825. That’s incredibly cheap for any car, but for an electric one it’s unheard of.
The BYD E1 is an economical compact electric car. It comes in 4 variants, with prices between 59,990–79,990 RMB ($8,915–11,888). The design is in line with most compact economy cars — as in, you get what you pay for — but I find the design good for what it is supposed to be. The range is 305 km (189 miles) NEDC.
To put that into perspective, the best-selling Nissan Leaf has a range of 169 miles and starts at £31,440.
And let’s not forget that once you’ve made the initial outlay, electric cars are incredibly cheap to run. We’re talking around 3p per mile, compared to diesel’s 9.1p per mile and petrol’s 12p per mile.
An electric car with a decent range that costs less than £7,000 to buy brand new, could transform the automotive industry.
The question is whether BYD will ever ship its cars to the West, and whether they will meet our stricter regulatory standards.
As Eoin Treacy showed, two tweets from Donald Trump sent the Chinese stockmarket tanking and created shockwaves in markets throughout the world.
The biggest question for companies like BYD is how the trade war between China and the US will turn out.
But even so, if companies are managing to make decent electric vehicles at the prices BYD is quoting, the “electric vehicle revolution” may play out much faster than many analysts realise.
And if you’d like to find out how to profit from this situation, keep an eye out later this week when I’ll be sharing Eoin Treacy’s latest research into this area with you.
Until next time,
Editor, Exponential Investor