Wang Chuanfu (right) has managed to outdo Elon Musk and Tesla with his BYD brand cars. Universal Images Group; China Photos/Getty Images
Wang Chuanfu grew up as an orphan in one of the poorest regions of China.
Today he is one of the richest people in China and his company BYD has just overtaken Tesla in global electric car sales.
Here is Chuanfu’s story – from the support of star investor Warren Buffett to the preliminary victory in the race for market share for electric cars.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by an editor.
It’s a fairy tale for the modern age: an orphan from one of China’s poorest regions rose to become a billionaire and founder of the world‘s leading manufacturer of electric cars. BYD’s vehicles are now sold in more than 60 countries, and the company just knocked Tesla off the top spot as the world‘s largest electric car maker by selling 42,000 more cars than its U.S. rival last year.
But the man at the center of the story, Wang Chuanfu, has often flown under the radar. Instead, BYD’s nearly 30-year history gives us insight into its strategic thinking, adaptability and vision.
The origin story
Chuanfu was born in 1966 in the eastern Chinese agricultural province of Anhui and was raised by his older siblings after his parents, both rice farmers, died.
He received a scholarship to study chemistry at Central South University, then called Central South Industrial University, and later earned a master’s degree in battery engineering at the Beijing Non-Ferrous Metal General Research Institute, now known as GRINM Group.
Chuanfu has a master’s degree in battery engineering. China Photos/Getty
After a few years as a researcher for the government, Chuanfu moved south to Shenzhen, which became a growing innovation center thanks to its designation as a special economic zone. There, 29-year-old Chuanfu founded a cell phone battery manufacturing company with his cousin Lu Xiangyang and called it BYD.
Chuanfu hat said in interviewsthat the name didn’t stand for anything back then. The company now has two apt nicknames: “Build Your Dreams” and “Bring Your Dollars”.
Success with cell phone batteries
Within four months, thanks to a $300,000 cash injection from his cousin, they had an office building and a factory, reported the “Wall Street Journal”.
From the beginning, BYD had a clear strategy: imitate successful products and keep costs as low as possible. The goal was to copy products from companies like Toyota, Sanyo and Sony, but make them cheaper than their Japanese suppliers.
Instead of expensive machines, Chuanfu hired a large number of employees on short-term contracts and was able to avoid wage increases, the Journal reports.
By 2002, BYD dominated the rechargeable battery market. His customers included Motorola, Nokia, Sony Ericsson and Samsung. Chuanfu also made it onto the Forbes list of the richest Chinese people.
Early disruptor
The following year, Chuanfu bought struggling state-owned automaker Tsinchuan Automobile and renamed it BYD Auto. Together with BYD Electronics, which produces batteries and components for mobile phones, these two subsidiaries form the company’s main business.
In 2005, BYD launched a sedan called the F3. Far cheaper than the Toyota Corolla it resembled, it topped sales charts in China through the end of the decade, the Journal reported.
Help from Warren Buffett
Charlie Munger, Warren Buffet’s late right-hand man, with Wang Chuanfu. Visual China Group via Getty Images
In the late 2000s, Warren Buffett wanted to capitalize on the growing demand for cars in China and became aware of BYD at the recommendation of his partner Charlie Munger.
About Chuanfu Munger said to Buffett: “This man is a combination of Thomas Edison and Jack Welch – similar to Edison when it comes to solving technical problems and similar to Welch when it comes to doing what he has to do. I’ve never seen anything like it.”
During a factory tour, Chuanfu reportedly drank battery fluid to impress investors and prove how clean his batteries were, according to the Journal.
However, reluctant to part with a large portion of his company, he rejected Buffett’s Berkshire Hathaway’s initial offer to buy 25 percent of BYD. Chuanfu’s principled approach was viewed positively. In 2008, Berkshire Hathaway invested $232 million in BYD.
The support caught the attention of investors worldwide and accelerated the company’s rise. BYD gained $5.1 billion in value and Chuanfu made its first appearance in 2009 List of the richest Chinese people from Forbes.
Wang Chuanfu mit Arnold Schwarzenegger.
ROBYN BECK / Getty
Adaptable and focused
Unlike prominent figures like Elon Musk or Jack Ma, Chuanfu has consistently stayed out of the spotlight to avoid unwanted attention.
“It’s never about feeding an ego. I think they all point to the vehicles, they always point to the company,” Tu Le, founder of consulting firm Sino Auto Insights, told Business Insider.
After a slight decline in sales, BYD has gotten back on the right track. Loud Bloomberg The company received contracts for public transport from the Chinese cities of Shenzhen and Hunan as well as from Amsterdam, Frankfurt am Main and Los Angeles.
BYD is now the world‘s largest manufacturer of battery-electric buses with more than 50,000 vehicles on the road – including in the USA. The company has a huge factory in Lancaster, California, where it produces buses and other vehicles such as trucks and forklifts.
A bus from BYD 2018 at a trade fair in Hanover. Shan Yuqi/Xinhua via Getty
Since 2009, the automaker has also benefited from billions of dollars in Chinese subsidies and indirect support to encourage emerging electric carmakers. But that’s not to say that Chuanfu’s achievements can’t compete with those of the world‘s best entrepreneurs.
“I would argue that he would be very successful in any country where he wanted to start a business. He is no less ambitious than Jeff Bezos, Elon Musk or Steve Jobs. Look at the output,” Tu told BI.
According to that Bloomberg Billionaires Index Chuanfu is worth $14.8 billion and is number 132 on the billionaire list.
The company controls every part of its manufacturing process. This approach paid off during the pandemic when BYD managed to avoid supply chain issues and still make a profit.
According to the “South China Morning PostChuanfu was one of the first Chinese entrepreneurs to start producing masks during the pandemic and within months became the world‘s largest manufacturer.
Rivalry with Tesla
Tesla CEO Musk mocked BYD’s cars in a 2011 Bloomberg interview, saying, “I don’t think they have a great product.” After months of speculation from analysts, BYD has taken Tesla’s crown as the world‘s largest electric car maker decreased, which means Musk probably isn’t laughing anymore.
Earlier this year, he responded to his previous comments by saying: “That was many years ago. Nowadays their cars are extremely competitive”.
Der BYD Atto 3.
Richard Bord / Getty
And although BYD is now worth about $78 billion, that’s only about a tenth of Tesla’s market value.
Next, BYD is eyeing markets outside of China and plans to build its first European factory in Hungary. In November of this year, company management said, according to “Financial Times“that it is aiming for a ten percent share of the global electric car market, excluding the USA and Europe.
To achieve this, overseas sales would have to increase from around 240,000 vehicles this year to more than two million.
Expert Tu Le says that if the past decade is anything to go by, BYD will only become an even more dominant force: “I would peel off the label of being an automobile company. It’s one of the best-run companies in the world, period.”
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