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Back to the right track: a lesson from BYD

by Chen Guangzu

Chen Guangzu is a member of the China Automotive Industry Consultative Committee, an organization of retired automotive executives. Chen started working in 1954 at First Automobile Works, China’s first automobile manufacturing factory founded a year earlier. Over the years Chen has worked at senior positions at the Ministry of Machinery Industry, China Automotive Components Corp. and China Automotive Engineering Consultancy Corp. before he retired in 1998. Editor


BYD has hit a bump on its road of fast expansion, drawing doubt over its growth outlook. But every company has its highs and lows – even a global auto giant may have more serious problems. Some industry analysts and the media are overreacting to what seems to be a temporary setback for the automaker.

Three reasons may account for BYD’s current plight. First, its chairman Wang Chuanfu is a newcomer to the auto sector. Courageous, enterprising and capable as he is, Wang has yet to understand in depth the automobile assembly business. He failed to keep guard against rising risks.

Besides, BYD has pursued an all-inclusive development model, opening plants nationwide without sharpening its competitive edge in the core business of vehicle assembly. It repeated an old mistake made by First Automobile Works years ago.

Lastly, BYD has taken electric vehicle research and development somewhat too lightly. In fact the global auto industry has yet to make breakthroughs in key EV-related technologies.

It takes time and patience for EV manufacturing to become a mature industry, something that cannot be done overnight. BYD’s failure can serve as a good lesson for other Chinese automakers that attempt to venture into this field, where development is still chaotic and prospect is still unclear.

It will be a critical year in 2012 when the EV manufacturing is expected to transition from a pilot stage to commercial production. Consensus on some major issues is likely to be reached paving the way for a sustainable growth of the EV industry.

In 2012, the Chinese government is to unveil policies governing the development of the EV industry, including EV standards. These policies are seen to be of more strategic significance than government subsidy. Priority should be given to the research and development of core technologies concerning key auto parts, batteries, electric motors and electronic control systems.

Significant progress needs to be made on power batteries. For a BYD electric sedan with a battery as heavy as 300 kilogram, room for improvement is huge. The government should map out a clear plan for power battery development and start research on the next-generation batteries.

EV manufacturing is not as simple as adding battery to a regular car. Systematic study is urgently needed on the overall performance and safety issues of EVs. Also, research should be focused on applying information technologies to EVs. Modeling experiments should be done in a more comprehensive manner in order to provide scientific data for both theoretic study and practical application. In April, a Chinese-made electric taxi caught fire while operating in Hangzhou. It is not an accident unpreventable, but a safety loophole left over by incompetent vehicle design.

The electric vehicle has been listed as a strategic emerging industry in the national plan. Low-speed EVs, despite their demand in the low-end market and growth prospects, should not become the mainstream of the EV industry.

Rewritten by Ray Jing based on author’s article at


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