China’s car exports have boomed in the past two years, while Tesla has struggled.
According to Quartz (QZ), China’s largest electric car company, BYD, is buying a fleet of ships and plans to open a marine logistics service segment to serve the auto business. This is considered a signal contrary to Tesla when the US electric car company is having to reduce selling prices in China due to declining sales in December 2022.
Specifically, BYD has purchased at least 6 large cargo ships with a capacity of thousands of cars each. Over the past two years, the pandemic and supply chain disruptions have caused congestion and shortages of cargo ships, forcing BYD to “play big”.
QZ newspaper said that with the move to buy the above ship, BYD is likely not only used to transport cars for sale but also provide logistics services for other car manufacturers with the same needs.
According to the Wall Street Journal (WSJ), Tesla had to cut prices by 6-13% for the Model 3 and Model Y models in China, making the Model 3 line up to 30% cheaper than the same product in America.
Contrary to the situation of having to lower prices, which rarely happens at Tesla, is the story of the lack of export cargo ships of the Chinese auto industry. The story of BYD building a fleet of ships is just one of many.
In July 2022, China’s state-owned SAIAC Motor Corporation had to cooperate with COSCO shipping company and Shanghai International Seaport Group (SIPG) to establish GYCCT Car Transport Company.
QZ newspaper said that for Chinese auto businesses, expanding transportation capacity from home is a key step in their expansion strategy to the world, especially in the context of the country’s car exports boom in the past 2 years.
Data from the General Administration of Customs of China shows that the country’s total auto exports in the third quarter of 2022 reached $12.7 billion, five times higher than the same period in 2020.
However, the report of the shipping service Claksons showed that in the same period, the growth of shipping capacity in the world lagged far behind.
According to Changjiu Logistics, out of 750 shipping enterprises in the world, China only owns 1 company with 10 cargo ships capable of transporting far across the Pacific Ocean to the US.
As a result, it is difficult for Chinese car sellers to find ways to bring goods to foreign markets, especially the US and Europe.
“With the current growth of auto exports, finding a cargo ship to sell is also facing many difficulties,” state news agency Xinhua reported.
For the companies that found the business to carry the goods, the price was too high because of inflation and lack of supply, leading large corporations like BYD to decide to set up their own fleets.
Although it has not made any public statements, its subsidiary BYD Auto Industry has expanded its business registration to shipping, freight, international shipping services, loading and unloading goods at ports…
BYD’s rise has taken many by surprise, as it started out making batteries for smartphones, then it started spreading to other electronics and eventually electric vehicles. Although not as pioneering in the electric vehicle segment as Tesla, BYD’s development of an ecosystem around this product is said to be effective when it does not have to depend on other suppliers.
“BYD has professionalized the most fundamental technologies of the electric vehicle industry, such as batteries or internal electronics,” BYD President Wang Chuanfu told Forbes.
BYD is currently looking to buy Lithium mines in Africa, and signed a long-term supply contract with Chile as a key material for electric vehicle batteries.
In fact, this group has become the world’s leading manufacturer of electric vehicle batteries, supplying products to rivals such as Tesla or Toyota. According to the plan, BYD will expand production of electric vehicle batteries from 285 GWH in 2022 to 445 GWH by the end of this year.
“BYD is probably the most powerful electric vehicle vertical ecosystem developer in the world. There is no company in the world that is willing to buy a whole fleet of ships to carry cars to sell… From the example of electric batteries, we can see that sooner or later BYD will become a service provider shipping services to rival carmakers,” US-based analyst Lei Xing told the “China EVs and More” program.