Build Your Dreams

While Silicon Valley’s Tesla and founder Elon Musk making global headlines and ‘Tesla Motors’ is valued about 30 billion USD on financial markets, its worth to notice, that in the business of batteries and electric cars, there is another company around that’s much bigger, but less valued: China’s BYD for ‘Build Your Dreams’. 

 

In eastern China’s Anhui province, agriculture plays an important role. The province is crossed by the ‘Huai River-Qin Mountains line’, the geographical dividing between northern and southern China. North of the Huai, potatoes are grown, while south of the Huai it’s rice instead.

 

In this province, in April 1966 or exactly 50 years ago, Wang Chuanfu was born to a family of poor farmers. And just like Henry Ford, who was also a farmer’s son, Wang Chuanfu would become a man that writes an important chapter in the auto-history.

 

He left the farm and the province to study chemistry at the Central South University, and spent several years as a government researcher. 

 

Then he left again and entered the private sector.

 

In February 1995 he started BYD – Build Your Dreams in Shenzen, just north of Hong Kong, with a modest goal: to edge in on the Japanese-dominated battery business. “Importing batteries from Japan was very expensive” Wang told ‘Fortune’ Magazine a few years later. There were import duties, and delivery times were long. 

He studied Sony and Sanyo patents and took apart batteries to understand how they were made, a process that involved much trial and error. 

Sony and Sanyo later sued BYD, unsuccessfully, for infringing on their patents while BYD grew quickly and within 10 years captured more than half of the world’s mobile-phone battery market. 

 

Wang then entered the automobile business in 2003 by buying Chinese state-owned car company Tsinchuan. He knew very little about making cars but proved to be a quick study. A BYD sedan called ‘F3’ became the bestselling sedan in China, topping brands like the Volkswagen Jetta and Toyota Corolla. 

 

Seeking to utilize BYD’s battery production resources, the company started selling a hybrid – a plug-in electric car with a backup gasoline engine – called F3DM for ‘dual mode’. The model was introduced at the 2008 Geneva Motor Show and became the world’s first mass-produced (remember Henry Ford ?) plug-in hybrid automobile.

 

In 2012, the F3DM successor named Qin, after China’s first empire, was introduced and became the top selling plug-in electric vehicle in China in 2014 and 2015. In recent months the range of BYD’s battery-powered cars and hybrids has been extended to 8 models. 

 

In spring 2016, one of these models, a pure battery electric version of the Qin, the EV300, was released in China just days before the Tesla Model 3 was launched in California. The EV300 is powered by a 218hp electric motor, and its battery pack is expected to deliver a range of 300 km, hence the EV300 name. 

 

Tesla or BYD? As a human, a driver or an investor – you have the choice: I would advise you to choose an electric vehicle as your next car. This would be wise – even with current low gas prices – since it helps to preserve the environment, makes you independent from sometimes strange acting oil-producers, and supports the important ideas of innovators like Elon Musk or Wang Chuanfu. 

 

Which electric-car model you pick is none of my business, but if you’re thinking about investing in shares of innovative companies like Tesla or BYD, I would prefer the chinese. BYD offers a more attractive valuation with a greater upside-potential than the already high-valued shares of Tesla. But until BYD will fulfill your investment dreams, patience is required.

First, by naming its models after different Chinese Dynasties, BYD is setting itself apart from other automakers that use internationally acknowledged letters or numbers like Audi A6, BMW’s 3 Series or Mercedes’ S-Class. According to ‘Bloomberg’, BYD risks ‘creating an identity so tied to Chinese culture’ that it resonates less in the american and european markets.

Second, the company has to overcome the image of a ‘mass market’ producer and create a ‘brand’-culture to find buyers at the profitable top end of the market, where Tesla and its founder Elon Musk have a clear advantage for the moment. 

 

An opportunity for Build Your Dreams to create a higher global brand-awareness is coming up soon, when the international ‘Beijing Motor Show’ opens its doors on April 25.

 

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Build Your Dreams: The Qin EV300 is China’s version of Tesla’s model 3 – both cars will be sold in the 30’000 to 40’000 EUR range.