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Chinese EV Maker BYD Said To Build Vietnam Component Plant

Chinese EV Maker BYD Said To Build Vietnam Component Plant

VinFast will face competition on home ground when Chinese electric vehicle (EV) maker BYD Auto Co builds a plant in Vietnam to produce car parts, Reuters learnt — in a move that would reduce the company’s reliance on China and deepen its supply chain in Southeast Asia as part of a global expansion. 

The investment in northern Vietnam would exceed US$250 million, one of the people said, expanding parent BYD Co’s presence in Vietnam, where its electronic unit produces solar panels. The move underscores a wider trend by manufacturers to reduce their exposure to China amid trade tensions with the United States and production disruptions caused by Beijing’s previous COVID-19 lockdowns. BYD did not comment on the report.

The Xian-based carmaker, which outsold rival Tesla Inc in EVs by more than two to one in China last year, has been expanding elsewhere in Asia, including Singapore and Japan, and Europe. Backed by Warren Buffett’s Berkshire Hathaway, BYD makes both plug-in hybrids and pure electric vehicles.

Like Tesla, BYD controls much of its supply chain, including battery production, a strategy that sets it apart from established automakers. The company announced in September it would build an EV assembly plant in Thailand with annual capacity of 150,000 cars from 2024.

By investing in Vietnam, BYD is looking to add capacity, control costs and diversify production from its operations in China, where demand has been strong. Talks are said to be underway to select a site for the Vietnam plant. One said construction was planned to start by mid-year.

Augmented Presence

It was unclear what components BYD would build in Vietnam and whether it would include batteries or battery packs. BYD’s planned investment and a US$400 million project by digital display maker BOE reported said that it would equal more than a quarter of the US$2.5 billion Chinese companies invested in Vietnam all of last year.

U.S. corporations such as Apple Inc and their suppliers, such as Taiwan’s Foxconn and China’s Luxshare, have also been seeking alternative production hubs, with neighbouring Vietnam one of the main options. BYD is now joining the cohort of manufacturers getting a slice of Vietnam for cost-effective measures.

It is looking to lease 80 hectares (200 acres) of industrial land, more than doubling its footprint in Vietnam, where its electronic unit rents 60 hectares, a second source said. The Vietnam plant will export components to the assembly plant to be built in Thailand, one source said.

The operation in Vietnam could also serve the local market, mostly through maintenance services and spare parts for BYD vehicles imported from China, one source said. That would pose a direct challenge to VinFast, a Vietnamese EV maker that began selling cars in 2019 and plans to expand in the United States and Europe. Consumers will be spoilt for choice given it is not any ordinary EV titan entering the turf, but a maker with a reputation on par with Tesla’s in its home ground.

In December the U.S. Commerce Department found that units of BYD and other Chinese companies were circumventing decade-old U.S. tariffs on Chinese solar cells and panels. If finalised in May, that finding would mean those companies would be subject to duties on products made in Vietnam and some other Southeast Asian countries. Finally, the million-dollar question will be whether the tariffs make financial sense.

Source: Reuters



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