Frank Deutsch
General Manager
BYD México
View from the Top

Electrifying the Heavy Vehicle Market

Thu, 09/01/2016 - 10:32

Q: How did BYD shift its business line from making batteries to manufacturing cars?

A: BYD is still the leading rechargeable battery maker in the world but we have become an electric company with an automotive business area. BYD is working on energy storage projects and we plan to increase the capacity of our battery production over the next two to three years, transitioning from 10GW to 15GW production capacity. We see the automotive industry as the perfect vehicle for our battery and electric motor technology. We are the only heavy vehicle OEM in the global market that can manufacture its own batteries, electric motors and the controls that run them. After we decided to use our iron-phosphate batteries in transportation, we immediately acquired a company within the automotive segment. Batteries that can withstand up to 4,000-5,000 charging cycles and have average lifespans of 13.5 years have been inserted into our vehicle lines. Once they become obsolete for vehicle usage, they can be reused for wind and solar energy storage.

Q: What is BYD’s global strategy for its automotive segment?

A: Demand for our gasoline passenger vehicle comes mostly from China. Even though BYD sells these vehicles in the Latin American and South Asian markets, major consumers like Brazil, the US, Mexico and Europe are protected markets, making it extremely difficult for external players to gain recognition. Our hybrid and electric vehicles have proven to be very attractive, pushing us to promote them in different markets. Nonetheless, the peso fluctuations’ impact on import volumes has significantly restricted us as prices have risen beyond the consumer’s purchasing power.

Q: What does BYD identify as Mexico’s biggest opportunities?

A: Regardless of the specific energy strategy in a given country, demand for electric vehicles is rising globally. A perfect example is Saudi Arabia. Producing and exporting petrochemical products does not change the fact that the country is a primary pollutant. If we also take Mexico’s fuel prices into consideration, we can present a solid argument for hybrid and electric vehicles.

Q: How is BYD pushing for better conditions, such as governmental incentives for hybrid and electric vehicle usage and infrastructure?

A: Some minor incentives have been created for electric light vehicles — no emissions verifications are needed, for example — but this is not enough. Germany just passed a new regulation wherein users receive a €5,000 (US$5,500) discount when purchasing an electric vehicle (EV). The Federal Electricity Commission (CFE) is evaluating the implementation of charging facilities in the country, which may slowly add pressure to increase the market. Public transportation is a dramatically different scenario because charger networks are not essential. Our batteries have a 250km autonomy range, which will be expanded to 300km by 2017. That will be plenty for the standard application of our vehicles. Even though there are clients who will exceed this, we can design a solution to fit them. Our vehicles are slightly more expensive than comparable products but the benefits are much greater, reducing costs over a product’s lifetime.

Q: How is BYD reaching out to these companies and what support has BYD received from the government?

A: The problem we have faced in public transportation is that few companies are government-owned. Having a concessionary system leads to excess bus supply as union fees are awarded on a monthly basis. This creates a private interest to expand the number of owner-operators in the city. BYD needs to engage directly with a financially stable operating company to reverse the owner-operator plan. The Metrobús project is the clearest example of how government input can quickly change the city’s culture and improve traffic flow.

We are in the process of picking three strategic customers that will help us expand here by showcasing our product lines. But, transport companies are still lacking the right incentives in Mexico. Washington’s policymakers had a clear strategy to reduce polluting emissions and they implemented electric transport using resources channeled from both federal and state governments, as well as from private organizations.