Global automotive giants are realizing that their presence in the Chinese auto market might not look like it has in previous years. Volkswagen’s CEO, Oliver Blume, noted that things are looking up during his February visit, although international legacy manufacturers’ share has plummeted from 61% to 41% in 2020’s fourth quarter. Toyota has been able to hold its own better than its Japanese rival Nissan and Honda, while premium brands have weathered the drop more easily than their mass-market siblings.
The transition to electric vehicles is a huge factor in the legacy automakers’ decline. International legacy manufacturers only had 8% of the Chinese plug-in market in the last quarter of 2020, as Chinese companies like BYD revolted and Chinese automakers released a flurry of new electric models. Legacy automakers have been slow on the uptake and most of their models don’t match up against local ones in terms of price, range, or features.
The Chinese consumer market is more adaptable to new technologies than those in the West, meaning that the middle of the consumer market needs to be attacked next to continue growth. Early data from 2023 indicates that Japanese brands have been down 39%, while German brands have been down 21%. BYD has already sold more than 300,000 vehicles in this same time frame, a 70% increase over 2020. The company’s CEO has set a goal to be the Top-Selling automaker in China by the end of the year.
The Chinese government has had its hand in the Chinese auto market for many years. International automakers are required to work with local joint-venture partners on vehicle production, allowing for technical and manufacturing know-how to be transferred. Now that a lane has opened for entrenchment of electric vehicle production, it is unclear how many legacy automakers will accept the challenge or even make the jump successfully.
BYD, or Build Your Dreams, is a Chinese company founded in 1995 by Wang Chuanfu. By 2019, BYD became the world’s largest electric car maker and the third largest global automotive manufacturer. It produces automobiles, buses, mini-buses, dump trucks and forklifts, and has investments in solar energy and mobile phone components. Today, BYD has established branches and research centers in the United States, Germany, Japan, India, Canada and the United Kingdom.
Wang Chuanfu is the founder and CEO of BYD. He first became interested in chemistry when he was in elementary school, and eventually began developing new types of batteries based on his own experimentation. At 30, he started his own company in conjunction with a state-owned company and BYD was born. Wang Chuanfu is often referred to as the “king of new energies”, and in 2015, he was ranked fourth in Fortune’s “World’s 50 Greatest Leaders”.