The Mistake That Could Leave Elon Musk Scratching His Head
BYD is currently facing new challenges as it expands its global presence. The batches of cars being shipped to different countries are experiencing quality issues.
Deterioration at BYD
The Warren Buffett-backed automaker has become the world’s largest electric vehicle manufacturer in 2023, surpassing Tesla. It is also the third-largest automaker in the world by market capitalization, following Tesla and Toyota.
According to the Wall Street Journal (WSJ), BYD cars being exported from China require multiple repairs upon arrival. The article states that cars arriving in Japan are scratched, while those arriving in Europe have mold issues.
Although mold is not uncommon in vehicles, especially when they are stationary for extended periods in wet weather conditions, the problem for BYD is that they have not implemented proper measures to remove mold.
Meanwhile, in Thailand, where Chinese electric vehicles dominate the market, quality issues with BYD cars seem to be increasing. Complaints of peeling paint and plastic are becoming common. In Israel, BYD electric cars show signs of warping.
These issues appear to be related to post-production rather than manufacturing defects. A BYD executive compared the situation to “going to a fancy restaurant only to find a broken plate.”
BYD’s Risk of Losing Its Position
The situation of “broken plates” at BYD is quite alarming. In Europe alone, there are around 10,000 unsold BYD cars sitting in warehouses, despite being intended for sale since the end of last year. The large number of idle cars not only reduces their appeal to consumers but also affects licensing deadlines. If they cannot be cleared through customs quickly, these cars will no longer be marketable.
Quality control during transportation could be a significant challenge for BYD. However, it is too early to determine whether this is negligence or a serious loophole as BYD strives to become the world’s largest electric vehicle manufacturer.
According to WSJ, with vehicles being stuck in warehouses for so long, BYD’s goal of selling 400,000 cars internationally in 2024 may not be achievable.
This has raised concerns among some BYD executives and investors. European directors deem BYD’s plan too ambitious. According to the plan, BYD aims to triple its market share in Europe by 2025, from 1.1% in 2023. This target is in addition to the massive investment packages already finalized (such as in Thailand) or under consideration (such as in Vietnam). Vietnam is the next market that BYD is targeting.
There are reports suggesting that BYD Chairman Wang Chuanfu is dissatisfied with the opposition. As a result, he plans to bring in Chinese officials to replace the current management. WSJ has asked BYD for comments on this matter, but the company has declined to provide a response.