Warren Buffett-backed Chinese automaker BYD Co Ltd (OTC:BYDDF) (OTC:BYDDY) has set its sights on becoming the top battery-electric vehicle (BEV) seller in Europe, aiming to surpass Volkswagen AG (OTC:VWAGY), Tesla Inc. (NASDAQ:TSLA), and Stellantis NV (NYSE:STLA).
What Happened: Michael Shu, the European president of BYD, announced the company's ambitious plans at the Future of the Car Summit, the Financial Times reported on Friday.
Shu revealed that BYD is preparing for a "huge investment" in factories, dealerships, and marketing in Europe. The company's strategy includes a budget model based on the Seagull, which sells in China for under $10,000. The European variant of this model is expected to cost less than €20,000 ($21,548).
Despite the ongoing investigation by the European Union into potential subsidies used by Chinese automakers to reduce vehicle prices, Shu assured that BYD plans to manufacture its cars "in Europe for Europe." This move could potentially help the company avoid higher tariffs and logistical challenges associated with importing vehicles to Europe.
"To ship cars from China to Europe is not going to be long term. The long term is to produce locally," he said.
Why It Matters: Earlier this year, BYD Executive Vice President Stella Li referred to Tesla as a "partner" rather than a competitor, stating that there is less than 15% overlap between BYD and Tesla customers. However, BYD's latest move indicates a shift in strategy as the company now aims to outperform Tesla and other major automakers in the European market.
Despite a 42% drop in overall electric vehicle deliveries in the first quarter of 2024, BYD remains confident in its European strategy. The company's market share for battery-electric cars in Western Europe was 1.7% in the first quarter of 2024, according to Schmidt Automotive Research.
BYD, which is backed by Buffett's Berkshire Hathaway Inc., briefly surpassed Tesla last year as the world's largest electric vehicle brand. The company is currently constructing a new factory in Hungary and plans to begin scouting locations for a second plant in the upcoming months.
In 2008, Berkshire invested around $230 million in BYD, obtaining 225 million shares and a 20.49% stake in Class H shares. Over time, it has reduced its stake and now holds approximately 87.6 million BYD H Shares, equivalent to a 7.98% stake.
Price Action: On Friday, Tesla's shares were trading 0.76% lower at $170.67 while in the OTC, BYDDF was trading at 1.83% higher at $28.95 and BYDDY 1.62% lower at $57.02, according to Benzinga Pro.
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