Tesla Motors Inc Batteries Face Threat From Buffett-Backed BYD

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Tesla Motors Inc Batteries Face Threat From Buffett-Backed BYD
Unsplash / Pixabay

Tesla will face new competition going forward as Build Your Dreams, popularly known as BYD, makes a push towards plug-in cars. The Warren Buffett backed Chinese firm is already producing all-electric buses in America.

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BYD ramping its battery capacity

BYD is striving towards gaining a global foothold. The Chinese company will also compete with Tesla’s gigafactory with a battery business of its own. According to a report from Reuters, BYD will clock around 10 GWh of battery production capacity by the end of the year, and by 2020, it is expected to have around 34 GWh of production capacity, in line with the 35 GWh expected from Tesla’s gigafactory. At present, the Chinese company has around 6 GWh of capacity every year for the next five years.

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BYD is not the only company that is ramping its battery capacity. Foxconn, a major supplier of the iPhone, is also spending hundreds of millions on a new battery factory. Apple, on the other hand, is poaching battery engineers from companies such as A123 Systems, and Samsung recently purchased Magna’s battery production division.

More competition for Tesla

Imergy Power Systems, which is into Vanadium flow batteries, launched its latest product, the EPS250, which is a battery system that has the capacity to deliver up to 250 kW with a one megawatt-hour capacity.

Tesla has already announced that they will be entering behind-the-meter storage. Herve Mazzocco, Imergy’s VP of Solutions, also, wished “Good Luck” to Tesla CEO Elon Musk, adding “Tesla’s technology is useful and has its place. You won’t be seeing flow batteries in cell phones, laptop computers, or electric cars, so there’s still a good market for Li-ion.” However, for stationary energy storage, flow batteries are a better bet and offer a longer life cycle, Mazzocco told Engineering.com.

Li-ion battery technology is used in a slew of devices, suggesting a further drop in price with improvements in technology. However, it is still to be seen if Li-ion will be able to outperform flow batteries in non-mobile applications.

So going forward, Tesla and partner Panasonic will have to put up a fight for becoming the largest battery producer against BYD and others in line.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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54 COMMENTS

  1. More importantly, instead of outlawing direct sales, why not just allow ALL manufactures direct sales? If the Big Three don’t want to sell that way, well, that’s their prerogative. Freedom is the ally of the consumer. Restrict choice and the price goes up or worse: you’re just not allowed to buy what you want. I would call that corruption. But hey, maybe that’s just me.

  2. I wouldn’t use Chinese contractors for any projects. The Chinese businesses and contractors do nothing but misrepresent themselves. If they would neglect their own people, they would definitely neglect their responsibilities as contractors if they think they can get away with it.

  3. Well actually, If you want backseat cup holders, they have plenty of options from getting executive seats with built in back seat cup holders to a backseat cup holder accessories. So Tesla addressed even that lol

  4. It’s childish to think you can just wish your adversaries away; engaging them so that you can keep track of every move they make is a better policy.

  5. BYD already makes an affordable PEV the Qin (OK it’s not a Tesla,but who needs to go 0-60 in 4 seconds anyway). They already make the home battery storage, they already make solar panels. And they do it under ONE company. As soon as I can get a package deal with solar on the roof ,battery storage in the garage and a decent affordable PEV in the driveway, sign me up. I’m afraid Tesla will run out of money before they can bring the Model 3 to market. That’s the only car that might be appealing to the masses.

  6. That’s a data point, but a more valid data point is an actual owner satisfaction survey done by Consumer Reports where Tesla Motors score highest among 270 cars on the USA market. 98% of Model S owners are so happy with their purchase that they like to purchase the car again if they had to.
    Modern people who are used to smart devices with multi touch and likes simplicity will find Model S far superior to more traditional cars with a dashboard full of various mechanical controls. The Model S navigation feature is far better than any other car mostly because the screen is big enough to really see places.
    Also, no other car company is listening to their customers as much as Tesla Motors and only Model S is getting continuous upgrades for free based on actual complaints. So if you go back to those complaints that were done directly to Elon Musk, did you notice he listened and things are coming out improved in the very cars that people owned a year ago? It’s amazing actually. No other car company does it. You might complain about a feature missing in some BMW, but if BMW takes notice, you wont get the feature before you replace it with another BMW.

  7. The AIIB is a completely different ball game. Infrastructure development in the ASEAN region is very robust, and Chinese companies are generally the most competitive with regards to contract execution and construction materials and equipment supplies. Countries that turn to the World bank and IMF for Financing are usually persuaded (i.e. compelled by the contract terms) to hire Western companies and buy equipment from Western companies. China has for many years been trying to increase its stake as well as its influence in both institutions but Republicans in the US congress have blocked Obama’s bill that would have made it possible for China and other countries to do so. Left with no choice, China decided to create a rival institution and in good faith invited the US and other countries to join as founding members. To date the US still hasn’t decided whether to join which is unfortunate because the ASEAN region is the place to be.

  8. You make claims of how positive China is, but you do not back it up with good reasoning. This tells us that you got nothing to claim.

    Foreign businesses in China are getting unfair treatment compared to local businesses, and extraordinary fines are being levied. China can’t help being itself- dishonest and corrupt brokers.

    Say goodbye, China!

  9. So why is it that card carrying members of the National Automobile Dealers Association (dealers and their salesmen), troll these boards spread Fear Uncertainty and Doubt about Tesla? Why should the NADA fear a small company like Tesla selling its cars direct?

  10. and GM made cars for years before Tesla, and look who now makes the number one car in a the country two years in a row according to consumer report? Tesla does. Tesla is headed by one of the most remarkable thinking this country has seen for a long time. if you want to second guess him go for it.

  11. Poor people can’t really afford a new car anyway, so they aren’t really in the market. Profit margins are also lower on low end vehicles. Tesla knows exactly what they are doing.

  12. Affordable beats luxury items, why do you think Toyota and GM are the biggest car companies and not Mercedes and Bentley etc. I would consider a tesla in the same market as those cars, just a niche market. There is less rich people than poor people you know…..

  13. That is a BIG misunderstanding by people. Yes, Apple does make their phones in China, but what they make in China are the most basic stuff of the phone. The most advanced stuff in the phone like the processor is made by Samsung plant in the USA. Chinese are great for basic manufacturing but advanced manufacturing is a different story. China at the moment lacks advanced manufacturing.

    That is why if you look at the technology in BYD batteries, and the Tesla batteries. BYD batteries are far more inferior in energy density and power. That said, BYD is unlikely to be competing with Tesla as BYD is aiming at low end while Tesla is aiming at medium-high end.

  14. You mean the full page ad where the customers were fully happy with their car and saw why it had the highest customer satisfaction of any car on the road but had a few minor things they wanted addressed and Tesla addressed them?

    The Tesla seats are comfortable, but if you want more padded seats, there is a new option for Next generation seats.

  15. The battery market will see a lot of growth, but anyone who has seen BYDs technology and thinks it is a threat to Tesla is kidding themselves. BYDs battery cells are FAR less energy dense than Tesla’s they don’t compare competitively. BYD is making batteries for the Chinese market where it will get government incentives. On a world stage, it isn’t competitive.

  16. A friend of mine owns one (a model S). It’s really fun to drive – ( when you’re not going too far ) and it’s very fast. But – it’s not as comfortable or user-friendly (e.g. seats adjusting to drivers, etc.) as his Lexus and BMW.

    I haven’t seen him drive the Tesla in months and I can understand why. The whole ergonomics of his Lexus and BMW are much nicer than the Tesla. The only thing the Tesla has that seems cool is the computer .. and that seems more like a gimmick than a feature. I prefer his cars or my Infiniti any day over it any day.

    p.s. – you must have missed the full page ad taken out by Tesla owners about a year ago complaining about the car directly to Mr. Musk about missing features, etc.

  17. BYD is bad news for Tesla. The Chinese are a force to be reckoned with. Combine a BYD powered EV that’s been charged with Hyper X 2 double sided solar panels and it’s game over.

  18. Aman Jain. What is the MSRP of a BEV bus that BYD manufacturers for the US market? Is the BEV bus company a profitable subsidiary?

    I understand the need for a “provocative” headline to attract readers and commenters. But seriously? I am happy to hear
    that BYD and others are ramping up production with an eye on BEVs. China will certainly need large domestic suppliers for their growing EV business. While I do not feel Tesla is threatened, the gigafactory has an advantage BYD and
    other s don’t have – Tesla as a customer. Tesla is the only manufacturer that is 100% behind BEVs. The others, maybe yes-perhaos- maybe no. I suspect the GM Bolt is a PR smokescreen and at best a compliance vehicle. Truth be told there isn’t a single BEV manufacture that is
    earning a profit from BEVs –yet.

    IMO, the stationary batteries that are charged by solar panels will ultimately be a more profitable business for Tesla. Imagine being able to power your home, charge your cars, and go off the grid!

    BTW, thank you China. 10% of California’s air pollution blows over from China.

  19. The founding of the AIIB is not a “desperate” move on China’s part. You have to be in a position of strength, power and confidence to do that, so I don’t know what the heck you’re talking about.

    China in fact is transferring much of the manufacturing to some of the ASEAN countries but we’re talking about low end products. High, mid end, and high tech will remain in China.

    And if the Chinese really warm up to Tesla, and sales take off, Musk will seriously consider building a factory there.

  20. Elon Musk said it once and I repeat it here, that he welcome EV competition, he is well prepared for it. The more EV in the market the better it helps Tesla. Period.

  21. Its only a niche market because their are few home storage options and they’re all expensive. In a few years that won’t be the case. Musk will be packaging Solar City panels with gigafactory batteries for off-grid home storage. The utilities are playing by the Koch bros handbook and are targeting solar owners for high fees and in doing so they’ve signed their own death warrants. People are looking to get HOME STORAGE batteries ASAP. Now they’ll be losing customers AND losing the extra energy they put back into the grids during peak times.

  22. It’s the the other way round my dear friend. Buffet and BYD were in the battery business for years before Tesla moved in and took over the show. As a matter of fact BYD was founded as a battery manufacturer; that they’re now trying to catch up with Tesla is not a good sign because as you very well know, Tesla’s battery business like its car business, is still gearing up for performance. All battery manufacturers are rushing to catch up with the Giga-factory; it’s great for the consumer because this means a tripling or quadrupling of battery supplies in the near term, resulting in reduced prices and hence cheaper EVs. The Author seems to imply that such a large supply of batteries by other manufacturers is a threat to Tesla but it’s a false alarm. At full capacity, the Giga-factory will produce only enough batteries for about 500k cars, but with Tesla’s projection of over 1000k cars by 2025, in addition to stationary batteries for energy storage, a second or third Giga-factory is almost a certainty. And I’m not just guessing because Elon Musk said so himself when Tesla started ground works at the Nevada site even before the tender offers had been completed.

  23. @Spec9 I don’t see it that way. It seems to me that behind the meter gives more reliable power for the customer when problems hit. You can put storage on the grid side of the meter at a central location but then you are at the mercies of the weather and other natural disasters.

    By placing local storage at the load you can lose transmission lines, transformers or power from the grid and you are still able to survive. You may not have 100% functionality but you can see at night, you can heat or keep cool water and food and communicate with the world. These are all benefits to behind the meter storage that the utility can’t match.

    On top of that by controlling the peak load the baseline requirements are more easily and cost effectively managed meaning potentially cheaper power for all.

    Just my thoughts on the concept.

  24. Apple and other Western companies that are left in China will soon transfer their manufacturing in ASEAN. The good times are over, China. You have been found as warmongering, therefore you will pay big economic loses.

    China’s higher labor rates and unattractive polluted landscapes and waters are more than enough to discourage businesses in China. On the other hand the Phil with its clean air and attractive beaches offer cheaper labor, better educated English-speaking and younger labor pool, plus abundant sunlight for renewable energy source. Do the math and you get an obvious answer why China is now losing manufacturing.

    Tesla will be manufacturing in the Phil when they look into Asian factories.

    China’s recent founding of AIIB is looked upon as desperation move on its part. For a country to use its money to invest in ASEAN which are its competition is seen as throwing the towel of surrender. China knows, investment on the neighbors are better investment than in its own country.

  25. You are right, but Chinese car companies are rapidly improving as consumer expectations is increasing and they are pushed to get better. It’s not about what China can do or not, but really about what their customers expect. You can make the best products, e.g. a modern iPhone, in China, if you wish to do so.

  26. Don’t be too convinced of that. Chinese manufacturing can do great products today. For example, Apple products are made in China. BYD actually makes pretty good cars and I have enjoyed driving in them in China. I was especially impressed by the dashboard display that looked very modern (Shenzhen EV taxis).

  27. What a pile of rubbish. China is a great place for manufacturing but less so a great place for innovation. BYD has a good chance of becoming a major global brand I believe, but so has Tesla Motors. Possibly in the future, Tesla Motors will continue to be the leading car company on EV innovation while BYD will offer the most affordable EV cars. If EV succeeds, lots of traditional car companies will lose big time.

    Elon Musk is the most visionary company leader of the USA today and Tesla Motors the company we should be most proud of. It has put a lot of other car companies to great shame through creating a really remarkable car in record time beating everyone else even on the key parameters involved in car R&D. The list is quite impressive:

    It’s #1 highest ranked car in several reviews e.g. by Consumer Reports “best car ever” and most recently again scored “best overall car” for 2015

    It’s #1 highest ranked car of cars in the US market in terms of customer satisfaction among 270 cars currently available with 98% of owners wanting to buy it again

    It’s #1 car in terms of the quality of service and repairs found in a recent study of repair centers in the USA

    It’s #1 safest car based on NHTSA data and per real road statistics still with no person having been killed in it

    It’s #1 in acceleration of ANY sedan (P85D model goes from 0-60mph in 3.2 seconds)

    It’s #1 car in terms of EV range effectively eliminating the need for driving to gas stations for most people

    It’s #1 car in terms of battery swap timing that can be done much faster than filling a gas tank (90 seconds demoed)

    It’s #1 in lowest noise relative to performance (691hp) also leading to superior signal to noise ratio (SNR) for your car stereo

    It’s #1 in highest “fuel” efficiency near 90mpg(e) relative to performance (691hp)

    It’s #1 sedan in terms of efficient space (front cargo included) and up to 7 people

    It’s #1 car in terms of low air drag coefficient of any car you can purchase making high speed driving more efficient

    It’s #1 coolest car on connectivity and technology e.g. a large multi touch display perfect for mapping your trip and free OTA software feature upgrades

    It’s #1 car in terms of low cost of driving after purchase (incl. free super chargers)

    It’s #1 car in terms of drivetrain simplicity with only approx. 20 moving parts (condition for long-term good reliability and low cost of service)

    It’s #1 most popular car among celebrities today

    It’s #1 most talked about car

  28. Ah China, can build a better anything. BYD was car company that I predicted to take over GM and Chrysler closed dealer lots and start selling cars here in America, after Owebama made the deal with China to bailout the 2 of the small 3 in 2008.

    Anything that will take down Tesla and the no original visions or ideas Elon Musk is fine with me.

  29. They keep trying to do this FUD (Fear Uncertainty and Doubt) about the battery market. Just because Buffet invested does not mean he is backing anything. He is just investing and thinks they will make money is all it is. And BYD probably will make some money in China backed as they are by the Chinese Govt. Doesn’t relate to other things at all. Just that he thinks they are possibly a good investment. This stupid headline keeps popping up like it means something.

  30. . No one wants to buy Chinese product specially if there are better alternatives. Tesla will have the whole world as buyers, while BYD will only have China.

  31. No, it is really not. Yes, it is good to reduce demand-charges for some businesses but that is a pretty niche market. Storage should really be grid level for it to be used most effectively.

  32. Bring it on . . . the more the merrier. I hope BYD has some nice inexpensive automotive Li-Ions. But their cars have been pretty rubbish so far.

  33. “behind-the-meter storage”

    THAT is where the money is. Sure, everybody has a car and that is no doubt a big market. but everybody has an electric bill. today you can sell solar power bact to the grid in most states, but at a pathetic rate. Much better if you can accumulate power all day in your home battery and use it at night.

    Businesses could use power stored in off-peak times to meet surge capacity, reducing their maximum amp draw from the grid, making the whole grid more reliable. Power companies could even use batteries to help meet peak capacity on critical branches. Economical storage would be a world-changer.

  34. BYD doesn’t exactly have a reputation for high quality cars. The best review I can find for one say it’s “lackluster”. Watching news segments from China I see that the Chinese people FAR prefer imports from Japan, Europe and the USA (Buick, if you can believe it) to their domestic products. If even GM can beat BYD’s quality, I don’t think Tesla has anything to worry about.

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