From 'Battery King' to Dreaming of an 'Electric Vehicle Empire': China's BYD [Hidden Industry Story]

Chairman Wang Chuanfu, Known as the 'Battery King', Entered the Auto Market in 2003
Chairman Wang Chuanfu Became 'China's Richest' in 2009
"Executing What Is Thought" - Bold Management Philosophy

Wang Chuanfu, Chairman of BYD (left), and Warren Buffett, Chairman of Berkshire Hathaway, USA (right). Photo by BYD Official Website

[Asia Economy Reporter Heo Midam] Warren Buffett, chairman of Berkshire Hathaway, known as the "investment genius," purchased a 10% stake in a Chinese electric vehicle company in 2008, during the height of the global financial crisis. The unexpected investment drew worldwide media attention to this company. At the time, the company was unfamiliar to many, leading some to question Buffett's investment decision. This unknown company is none other than BYD (比亞迪·BYD), an indispensable group in the Chinese electric vehicle market. After it became known that Buffett had invested in BYD, its stock price soared nearly tenfold, attracting global attention.

Since then, BYD has faced several challenges but experienced rapid growth as China's electric vehicle market accelerated. BYD's efforts have been recognized, and it is now cited as a representative example of an innovative company in China. Ultimately, Buffett's choice was proven correct. What was the appeal of BYD that caught Buffett's eye?

◆ Why did Chairman Wang Chuanfu, the "Battery King," become the "Electric Vehicle King"?

Founder Wang Chuanfu (王傳福) was born in 1966 into an ordinary rural family but was a gifted individual with a sharp mind and perseverance. However, around the age of 13, his father passed away, and during middle school, his mother also died, causing the family’s financial situation to deteriorate significantly. Although he considered dropping out of school, thanks to his older brother's support, he was able to graduate from the Department of Metallurgical Physical Chemistry at Central South University.

Afterward, Chairman Wang entered a master's program at the Nonferrous Metals Research Institute in Beijing, where he earned a master's degree with a research thesis on batteries, developing his expertise. In 1993, Wang was appointed as the head of a battery company under the research institute, taking charge of company management. This experience led him down the path of entrepreneurship.

He particularly recognized the rapid increase in mobile phone users in China at the time and was confident that the battery sector would experience tremendous growth in the future. Based on this conviction, Wang borrowed 2.5 million yuan (approximately 400 million KRW) from a relative in 1995 to establish BYD, focusing on rechargeable mobile phone batteries. Wang bet his life on the potential of batteries. His prediction that battery demand would surge proved accurate.

Initially, BYD started in a rundown garage in Shenzhen with 20 employees, but by 2001, it had climbed to second place in the global battery market share. By successfully developing China's then-barren battery industry, Wang earned the nickname "Battery King."

[Image source=EPA Yonhap News]

Having established a foothold as a battery company, Wang entered the automobile market in 2003. He acquired an automobile company in Shanxi Province that was struggling financially and focused on producing electric vehicles that would synergize with the existing battery business. This was based on his conviction that accumulated battery technology would ultimately be applied to electric vehicles.

Subsequently, supported by the Chinese government's automotive industry policies, BYD's sales doubled annually from 2004 to 2009. As the company thrived, Wang's personal wealth grew, and in 2009, at the age of 45, he became the richest person in China.

However, rapid growth also brought problems. BYD, which peaked in sales in 2009, began to decline after 2010 due to its rapid expansion in a short period. At that time, issues arose in production and sales systems, and to make matters worse, in 2012, a BYD electric vehicle caught fire, causing casualties. Subsequently, the stock price fell, and media reports labeled it as "Buffett's headache."

Wang personally stepped into development to overcome this crisis. As an engineer, he directly participated in creating the F3 automobile, which played a significant role in raising BYD's profile. Having been called the "Battery King," Wang's success in the electric vehicle business led to him being dubbed the "Electric Vehicle King" in China.

Wang Chuanfu, Chairman of BYD
Photo by EPA Yonhap News

◆ Chairman Wang Chuanfu, who prioritized "price-to-performance"

BYD's growth is closely related to Wang's management style. BYD initially set a principle of "selling electric vehicles at half the price of other companies." They launched products with similar performance to other cars but at about half the price. Through this strategy, BYD expanded its recognition.

Notably, BYD was the only company that sourced all three major components of electric vehicles?battery, motor, and electronic control unit (ECU)?in-house, enabling cost reduction. The Chinese government's full support played a significant role in this process.

Wang's spirit of challenge is also the foundation of BYD's growth. His words, "I execute what others think, and I dare to think what others cannot," reveal his bold management philosophy.

◆ BYD's January performance soars... "A strong start"

BYD's early-year performance also rose compared to the same period last year, signaling a strong start. BYD's electric vehicle sales in January reached 20,178 units, an increase of about 183% year-on-year. The vehicle production volume in January was 47,618 units, up 82.85% compared to the same period last year.

Earlier, the second half of last year's performance also improved significantly. In November last year, BYD's electric vehicle sales were 26,690 units, a 137.9% increase year-on-year.

Especially, the Han electric vehicle, launched in July last year, surpassed 10,000 units sold in November and sold about 9,000 units in December, closely trailing Tesla's Model 3 in sales volume.