Today I want to talk about a subject near and dear to my heart called “build your dreams.” No, I haven’t moved to Mendocino, started my own grow your own operation a little, or resorted to seeing a shrink to discuss my election triggering. No, build your dreams is actually what BYD stands for. BYD stands for capitalism. Wang Chuanfu is the scientist who started this company way back in the 1990s. It started as a battery company and then in 2003 he moved to making cars. I had heard of BYD briefly as Berkshire Hathaway was an early investor and I started to poke around wondering why. I remember listening to the late Charlie Munger say that Wang Chuanfu is who Elon Musk thinks he is. I remember thinking, wow, that’s bold.
Gabrielle Coppola and Danny Lee recently wrote a great article for Bloomberg about the company and how they are progressing, “After increasing its annual sales in China 15 times over, to 3 million cars in only three years, BYD is now exporting to roughly 95 markets, including 20 new ones this year. The company is building, has recently opened or has announced plans for assembly plants outside China in 10 countries on three continents. The speed and scope of this expansion have caught the global auto industry off guard and triggered protectionist tariffs in the US and EU, where policymakers fear Chinese players such as BYD will, in the words of Elon Musk, “demolish” their domestic automakers.”
Demolish is right. The EU is putting up tariffs and Elon and Trump can’t wait to put up tariffs here. Here is why, because BYD will break Tesla tomorrow and Ford and GM before you finish listening to this otherwise. It’s a better product than anything they have, and its cheaper. It is literally a capitalist’s dream unless you happen to own a car company or be a politician in a country where seeing one of your biggest industries disappear before dessert and coffee is served is a problem. If GM was too big to fail 15 years ago, what are Ford, GM, Tesla, and Stellantis? They need bailouts and their bailouts are tariffs. We no longer make the best cars and we are taking our ball and going home.
More from Coppola and Lee, “Wang’s battery and manufacturing innovations, cushioned by China’s EV-friendly government policies and the scale of its domestic auto market, have helped BYD do what Tesla Inc., Ford Motor Co. and the rest of the auto industry haven’t: build an affordable electric car for the masses and make money doing it. Since introducing a new battery technology in 2020, BYD has gone from being an also-ran in China’s crowded car market to cracking the top 10 automakers in the world. It’s unseated Volkswagen AG from its decade-plus perch at the top in China and briefly—in late 2023—surpassed Tesla to become the biggest seller of pure electric vehicles globally.”
Besides having a true engineering genius running the automotive and battery operations, they might have a secondary genius in Stella Li, their executive vice president and chief market expander. She’s expanding to an astonishing number of locations and catching everyone in the entire world off guard.
Coppola and Lee write, “This past summer, President Joe Biden imposed a 100% tariff on EVs exported from China; in September his administration proposed a ban on the sale or import of connected cars with Chinese hardware or software, underscoring a fear in US national security circles that internet-connected cars could become tools of Chinese surveillance or cyber warfare. In October, the EU slapped a 17% tariff on BYD’s EV imports, part of a probe into government subsidies in the Chinese auto industry. According to a recent study by Germany’s Kiel Institute for the World Economy, BYD receives “particularly high subsidies,” and China as a whole spends anywhere from three to nine times more than other democratic, market-based economies on subsidies.
Like many Chinese executives, Li bristles at the notion that BYD owes its success to government largesse and calls subsidy accusations “completely groundless.” BYD is so formidable because it’s emerged victorious from China’s brand of state-led capitalism, which weeds out weak or inefficient players by forcing them to compete in a protected, carefully calibrated sandbox. For Li, that victory was hard won, the result of grit and determination. “They cannot beat us and can only attribute our success to other factors,” she says. “We’d rather just show our muscles than make explanations to them.”
This is what I have been so impressed with. They aren’t doing huge shows, fancy rollouts, they just move to another country and take all of their market share. I’ve been mocking EVs for as long as I can remember, and I still don’t have much use for one. However, at the price point and range that BYD is offering it becomes an alternative. It isn’t a rich plaything that every rich person tells poor people they should buy so they can greenwash their child labor guilt away. Shifting the emissions from the auto exhaust to the mining dump truck that toils away for the copper and rare earth minerals isn’t a shift for the better. It’s just different. Sitting and charging your vehicle for 45 minutes before you can keep driving is just silly. But if you drive three miles to work and live in a house that can handle an electric battery fire, then knock yourself out.
BYD is not just a better car, it has reduced many of those problems. Again from Coppola and Lee, “March 2020. Only a few months earlier, Tesla had opened its Shanghai gigafactory, suddenly making EVs desirable and cool in China in a way that a decade of government incentives hadn’t. That summer, when BYD rolled out its new all-electric Han luxury sedan priced just above $32,000, it was clearly no knockoff; the company had hired expensive designers from Europe, led by former Alfa Romeo and Audi designer Wolfgang Egger. With its European style, 375 miles of range, leather seats and high-end driver assistance features, the Han comfortably undercut rivals on price and became a hit. Egger’s team of more than 1,000 designers would allow him to keep up with the frenetic product cadence of the Chinese car market, pumping out new vehicles or refreshes in as little as 18 months versus what is usually a three- to four-year cycle in the US and Europe.”
Damnation. They are better at making cars, their batteries have better range, are less prone to fire, and can reiterate in 18 months while Tesla has a stale offering? Musk kissing the Don’s ring seems more like the end of the Godfather to me and less like election help. Musk delivered Rogan on the eve of the election, and he delivered $150 million cool hard cash to Don. The Don will keep that promise I am betting. Musk will get cover while he tries to figure out what to do with Wang and Li. Here is the real kicker from Coppola and Lee and it is Wang kicking Musk in the ass. “Inviting BYD into the US market now could be catastrophic for Detroit automakers. At the moment, they can’t match the price or the technology packed inside, and it’s unclear when or how they will. They’re taking their first, tentative steps toward fully electric cars, and protectionism will buy them some time. But auto CEOs around the world have been disabused of the notion that BYD’s low prices can simply be attributed to subsidies. Even Musk, who scoffed at BYD cars in the past, has stopped laughing. In 2023, UBS AG did a teardown of the BYD Seal sedan, a challenger to the Tesla Model 3, and found that about 75% of the parts were made in-house, giving BYD a 25% cost advantage over American and European carmakers.”
BYD is doing what Tesla has promised to do and they aren’t promising it and not delivering. They are selling cars and moving product. They are taking countries by storm, not auto shows. The fancy flashy gets the upper tranches of society and those companies will often have a long-lasting place in the market. Ferrari, Lamborghini, Porsche are brands that have stood the test of time. Perhaps Tesla can pivot back to its roots under the original founders Martin Eberhard and Marc Tarpenning. Musk joined the company when they raised their first round of funding, but their idea of an electric Tesla roadster shaped like a Lotus might end up being the only place for Tesla when BYD is through. Musk bought his way into the company and then has done very good job with it, but its most special feature is its stock price. Mercedes has a faster one at a higher price tag. The Rivian truck is a much better-looking option than the cyber monstrosity. Let’s not even talk about the Ford and GM models of electric vehicles because the amount of red ink spilled on them has truly been amazing. As a taxpayer, I can’t wait to bail them out again for their malinvestments.
This all brings us back to the best bang for your buck and it’s the option you can’t have. Do people like the car? Does it have Henry Ford appeal? Can the everyman afford it? Does it provide value, not virtue signaling? Can it become the vehicle of the masses? Here is what Coppola and Lee described in other countries starting with Brazil with a car called the King named after Pele, “After only three months on the market, BYD’s King soared to near the top of the sales charts for the country’s bestselling sedans, surpassing the Honda Civic.” Here’s what they wrote about the company when Covid hit, “Unlike the rest of the global auto industry, BYD avoided factory shutdowns and supply chain snarls. It had a steady supply of chips made by its semiconductor unit and an abundance of masks for Chinese workers living in tightly controlled on-campus dormitories. “When everybody else was lying flat during Covid, our factories were running 24 hours,” Li says. “When everybody else is having a work-life balance, we only have work balance.” BYD’s electric and hybrid vehicle car sales rocketed from just under 180,000 in 2020 to 1.86 million in 2022, giving Wang and Li the cash to fund a new overseas push.”
The customer is always right. Trump is wrong. Musk is wrong. And Europe is wrong. The people of a free country should be able to buy the best product. These tariff walls mean that Americans and Europeans get to spend more money for a lesser product. This is the opposite of capitalism and why the tariffs will fail. When Trump dreams about the glory days of President McKinley using tariffs and the US not having an income tax, that’s when the US were the innovators, we were the ones designing and building the best cars, the best equipment, the best appliances. Those days have gone the way of a pancake backside. It was because we were the factory of the world, we were the ones that had an industry worth protecting. Now it seems like overpriced union jobs, stock prices, and politicians’ back sides are the only thing tariffs are protecting.
Remember back to the glory days of Ford and Chevrolet and the muscle cars of the late 50s and 60s. The big loud fast cars were cool; they were gas guzzlers, but no one seemed to mind because the economy was good. Then came the oil shocks of the 70s, and the inflation that followed. Suddenly every bad ass was commuting to the factory in a Toyota shitbox because it was all he could afford, and the Toyota was simply the better car for the everyman. This was easily in the lifetimes of men and women that lost their lives fighting the country whence the cars came.
We haven’t even fought China yet, but we are putting up great walls reminiscent of theirs. If we had to fight a war, do you think the country with the factory of the world that can produce something better faster and cheaper wins or the side with DEI policies, too big to fail seat cushions, and the traditional overpriced American labor. American union labor just got a 25% increase in pay over 4 years or so and that followed a 6% annual raise for the last 4. That’s pretty high wages for building something that no one wants, isn’t competitive, and is left to beg the Don to build a wall. The wall isn’t to keep immigrants out, its to keep capitalism out, because we have been losing at that game quietly for some time now.
That’s ok though, American pride and the price of stocks are still intact.
Sincerely Yours,
C Thomas Printer
On this date in history… 254 years ago to be exact, George Grenville, the English politician who decided to tax the American colonies which led to the founding of the US, died in London.
Also born on this date… Robert Louis Stevenson, the author of Treasure Island, no relation to the casino.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.