Biden’s “Inflation Reduction Act” supports the local electric vehicle industry, and Chinese electric vehicle giant BYD slows down its expansion in North America

Chinese electric vehicle giant BYD (BYD) has been expanding globally recently, hoping to challenge Tesla’s global leadership in electric vehicles. However, sources pointed out that BYD may be more cautious about expanding in the United States because of the Adopt a series of local electric vehicle support programs.

According to Reuters , two sources pointed out that in addition to entering the European market, BYD also began to study how to establish a U.S. distribution network for the latest electric models last year. How many physical stores are evaluated and recommended.

In addition, according to a BYD insider, BYD has been hearing news that it is expected to exhibit a new generation of pure electric vehicles (BEV) at this year’s Global Consumer Electronics Show (CES) in Las Vegas. And plug-in hybrids (plug-in hybrids), but in the end did not see the actual release.

Biden supports the development of local electric vehicles, causing major companies to slow down their expansion plans in the United States

The tense relationship between the United States and China, the anti-China sentiment of the Americans, and a series of preferential policies for local electric vehicles and batteries offered by the Biden administration have forced BYD to readjust its policy of expanding its territory in the United States.

U.S. President Biden signed the Inflation Reduction Act (IRA) on August 16, 2022, which contains a number of energy transformation related plans, including imposing regulations on the source of battery materials, and electric vehicles produced in foreign countries will not be able to obtain 7500 Dollar tax credits, etc.

On October 19, the U.S. State Department announced that it will fully fund the mining of electric vehicle batteries and related minerals in the United States, and expects to increase the sales of electric vehicles in the United States to 40% to 50% by 2030.

The report quoted a source as saying that the senior management of BYD has not yet approved the plan to eventually expand the US market. “BYD has adopted a cautious attitude towards the US.” With how turbulent the whole world is right now, it’s clearly not a good time.”

Not only BYD has restrained its expansion ambitions in the United States, but the Chinese battery giant CATL has also slowed down its investment plans for battery factories in the United States and Mexico because they are worried that the “Inflation Reduction Act” will greatly increase the cost of raw materials.

The American company HAAH Motors Holdings also tried to import cars produced by China’s Chery Automobile Company, and proposed a plan to set up a factory in the United States, which could also increase employment opportunities for the United States. Unable to raise sufficient funds, the plan was suspended in 2021.

BYD’s one-stop production system, the long-term goal is still in the US market

The report quoted two sources who pointed out that BYD’s leaders discovered that BYD’s cars still had some defects five years ago, and believed that they were not ready to enter the global market at that time, so they made a general change in direction.

BYD gained a leading position in China by launching its latest series of electric vehicles, such as the Han series and Tang series, and then began to expand its territory in Norway, Australia, the United Kingdom, Brazil, Costa Rica, Germany, Japan, Mexico and Singapore , making BYD’s comprehensive sales of pure electric vehicles and plug-in hybrid vehicles rank first in the world by 2022.

The report also mentioned that the global consulting firm LMC Automotive believes that it is possible for BYD to sell more than 3 million vehicles in 2030. Although most of the current sales stay in China, BYD can still provide attractive and reasonably priced vehicles in the market. of pure electric vehicles.

Zhang Wei, the 10th largest shareholder of BYD, is even more optimistic. He predicts that the sales target of 3 million vehicles will be achieved by 2025, and the target of annual sales of 10 million vehicles will be reached by early 2030.

Zhang Wei explained that the reason why he is so optimistic about BYD’s prospects is that, unlike other competitors, BYD can independently complete most of the battery and electric vehicle system requirements. It can not only purchase battery materials from Chinese mines, but also manufacture semiconductors and batteries by itself. It contains the key power management chip.

Zhang Wei said bluntly: “In addition to the windshield and tires, BYD can almost independently build an electric car. In this regard, BYD is already in a better position than Tesla.”

LMC analyst Al Bedwell also said, “BYD’s highly vertically integrated battery supply chain provides a significant price advantage, which is the main reason for BYD’s rapid expansion in China.” The report also mentioned that two Japanese Toyota (Toyota) ) officials admitted that BYD’s car development costs are about 20% to 30% lower than those of Japanese automakers.

The report quoted a source as saying that although BYD is currently taking a cautious approach to expanding in the United States, in the long run, BYD will still focus on the American auto market. “The United States will play a key role in promoting the global strategy.”