BYD will sell more battery electric cars in 2023 than Tesla. This goal is within reach thanks to a strong performance in China – the world’s largest car market – and aggressive international expansion. So why hasn’t BYD announced its plans for the U.S.? According to a fantastic article from Reuters, the explanation is the Inflation Reduction Act (IRA).
When the regulation established a new federal tax credit, it imposed some criteria for eligibility, including local production of batteries, the raw materials they need, and other EV components. With most refining coming from China, even CATL froze plans for factories in the U.S. and Mexico because material sourcing would drive costs up.
The American government approved the IRA precisely to develop an industry instead of depending on China to obtain raw materials for batteries. The pandemic and the supply chain chaos it established, especially with semiconductors, showed that relying on other countries for essential goods can be tricky.
In a world where combustion engines are quickly becoming illegal, EVs should become mainstream. When that happens, whoever controls their supply chain detains a lot of power. Strategically speaking, either the U.S. refrained from banning combustion engines or it decided to develop the necessary skills to become an EV superpower. We already know what the government chose to do.
While that may prove to be important for the U.S. in the long run, it will stop several new automakers from reaching the American market, including BYD. A Reuters unidentified source rightfully asked: “Who would start selling cars with a $7,500 disadvantage?”
Before the IRA was approved, Reuters said that BYD had hired Urban Science to determine how it would set up its distribution network in the U.S. Unlike Tesla, BYD follows the traditional dealership model, which means it can expand its distribution channels with partners, not on its own. The study included the number of dealerships it should have in each state and even the cities where they should be located. The official announcement of BYD’s premiere on American shores should have been made at CES 2023, but it did not happen – and now you know why.
According to Reuters, BYD knew its electric cars were not ready for global markets five years ago. That led to the development cycle of vehicles such as the Han and the Tang, a sedan and an SUV with which the Chinese brand started its international offensive. And that was only the beginning: BYD now has many other new EVs based on the e-platform 3.0 and PHEVs with striking electric-only ranges. The Chinese brand also had the most efficient combustion engine available – the Xiaoyun – until Geely beat it with the DHE1.5 engine.
When BYD enters the U.S. market, it should not be with imported vehicles. If the company gets there, it will probably be with another model, such as the one Peugeot was studying before Stellantis was created. The French brand would only lease its cars, not sell them. In BYD’s case, such a model could introduce American customers to the brand and test demand for them. When it was large enough to justify local production, BYD could start selling its EVs there. Considering it already produces and sells electric buses in the U.S., it is just a matter of time until American customers can also buy their EVs.
The American government approved the IRA precisely to develop an industry instead of depending on China to obtain raw materials for batteries. The pandemic and the supply chain chaos it established, especially with semiconductors, showed that relying on other countries for essential goods can be tricky.
In a world where combustion engines are quickly becoming illegal, EVs should become mainstream. When that happens, whoever controls their supply chain detains a lot of power. Strategically speaking, either the U.S. refrained from banning combustion engines or it decided to develop the necessary skills to become an EV superpower. We already know what the government chose to do.
While that may prove to be important for the U.S. in the long run, it will stop several new automakers from reaching the American market, including BYD. A Reuters unidentified source rightfully asked: “Who would start selling cars with a $7,500 disadvantage?”
Before the IRA was approved, Reuters said that BYD had hired Urban Science to determine how it would set up its distribution network in the U.S. Unlike Tesla, BYD follows the traditional dealership model, which means it can expand its distribution channels with partners, not on its own. The study included the number of dealerships it should have in each state and even the cities where they should be located. The official announcement of BYD’s premiere on American shores should have been made at CES 2023, but it did not happen – and now you know why.
According to Reuters, BYD knew its electric cars were not ready for global markets five years ago. That led to the development cycle of vehicles such as the Han and the Tang, a sedan and an SUV with which the Chinese brand started its international offensive. And that was only the beginning: BYD now has many other new EVs based on the e-platform 3.0 and PHEVs with striking electric-only ranges. The Chinese brand also had the most efficient combustion engine available – the Xiaoyun – until Geely beat it with the DHE1.5 engine.
When BYD enters the U.S. market, it should not be with imported vehicles. If the company gets there, it will probably be with another model, such as the one Peugeot was studying before Stellantis was created. The French brand would only lease its cars, not sell them. In BYD’s case, such a model could introduce American customers to the brand and test demand for them. When it was large enough to justify local production, BYD could start selling its EVs there. Considering it already produces and sells electric buses in the U.S., it is just a matter of time until American customers can also buy their EVs.