It’s a gamble—but as sales of its EVs soar overseas, it could pay off big time
Costfoto/NurPhoto via AP This story first appeared in China Report, MIT Technology Review’s newsletter about technology in China. Sign up to receive it in your inbox every Tuesday.
For people who have been watching BYD for a long time, it won’t be surprising that the company has just ventured into a new field.
The Chinese electric-vehicle maker has been particularly good at expanding into different, related businesses. Not only can it make high-performing and safe batteries for cars, but it also does almost everything in house, from designing car chips to mining lithium and other materials. The fact that it has subsidiaries in every step of the EV supply chain enables the company to keep its costs down and sell cars at more competitive prices.
Now, to pull that off once again, BYD is starting a sea freight business. As I just wrote in a story published today, the company is assembling a fleet of at least eight car-carrier ships that will transport BYD cars from factories in China to sell in Europe, South America, and other markets.
BYD has had a meteoric rise to become the Chinese EV sector’s poster child in recent years, and 2023 was particularly good for the company. It sold 3 million electric cars and plug-in hybrid models last year, up from 1.8 million in 2022. BYD managed to beat Tesla to become the world’s top-selling EV company in the fourth quarter of 2023.
While the majority of those cars were sold in China, BYD’s export business has been expanding significantly. It exported over 240,000 cars in 2023, more than a fourfold increase from 55,000 cars in 2022; and the latter number was itself more than a fourfold increase from 13,000 in 2021.
But one thing has been getting in the way of these bonkers numbers: the lack of car-carrier ships internationally. A bust cycle in the international shipping industry since 2008, the technological challenge of making ships greener, and the fact that existing vessels are often already reserved by automakers in other countries—these factors have collectively resulted in ever-rising costs to hire a ship that can transport Chinese EVs abroad.
So Chinese companies like BYD and SAIC Motor are following in the footsteps of Japanese and Korean automakers: they’re building, chartering, and managing their own fleets of ships. This January, one boat operated by BYD and another operated by SAIC Motor set sail for the first time, between them carrying over 10,000 vehicles toward Europe.
These two massive ships are a symbol of just how competitive and successful China’s EV industry has become. And that’s likely to continue for some time, as other countries and traditional car brands are belatedly playing catch-up.
This is not to say China’s EV industry has nothing to fear. As I’ve laid out in previous articles, there are still factors that could slow down or even derail the export of Chinese EVs. Geopolitics is a major one. For example, in Europe, where many of the new car-carrier ships are heading, there’s already an anti-subsidy investigation against Chinese cars going on, which could end up making it much more costly to sell there.
Chinese companies going into sea shipping should note at least one cautionary tale from recent history. Before BYD, there was another Chinese car company called Chery, which started exporting its cars in the 2000s. In 2007, it acquired a shipbuilding company for the exact same reason: it wanted to increase the capacity to ship cars abroad. But the financial crisis doomed Chery’s burgeoning export business, and it didn’t build its first ship until a decade later.
Chery is still around today. It has made the pivot from gas to electric cars and is competing with BYD both domestically and in the export market. But its ill-fated shipbuilding attempt could be a lesson for other Chinese companies that are now making similar moves: even though the future looks bright, building and maintaining these massive ships is a risky, expensive business if their car sales don’t keep up.
Do you think it’s the right decision for companies like BYD and SAIC Motor to build their own car-carrier fleet? Tell me your thoughts at firstname.lastname@example.org .
Catch up with China 1. The White House plans to cut off Chinese entities’ access to American cloud services to train AI models. (Reuters $)
2. Some legislators in the US want to reactivate the Justice Department’s China Initiative. (NBC News)
The controversial program was built to protect national security. But it strayed from its focus and ended in 2022. (MIT Technology Review) 3. Another proposed bill in Congress seeks to ban Chinese biotech firms from federal contracts. (South China Morning Post $)
4. After an almost five-year import freeze on Boeing’s 737 MAX, Chinese airline companies have restarted purchasing the controversial jet model. (Reuters $)
5. The Chinese movie market used to be a cash machine for Hollywood blockbusters. Not anymore. (New York Times $)
6. The Taiwanese government is funding efforts to build its own Chinese AI model that’s free of China’s political influence. (Bloomberg $)
Meanwhile, US spies want an AI model of their own to use against China without leaking national secrets. (Bloomberg $) 7. Elon Musk has praised Chinese electric vehicles, again. He says Chinese EV makers will “pretty much demolish” most competitors if there are no trade barriers. (CNBC)
Lost in translation Another type of device is getting an AI transformation in China: student tablets. Commonly called “learning machines” (though they have no connection to machine learning), these are tablets specifically designed to tutor children in school subjects, supporting functions like electronic dictionaries and virtual classes. According to Chinese outlet IQ Tax Research Center, many of these sorts of products have embraced AI in the past year, including devices made by China’s leading AI companies like Baidu and iFlytek.
However, some parents have found these “AI-powered devices” prone to errors and inaccuracies. For example, one user mentioned that a math problem was solved with different answers each time the AI explained it. Others felt the educational content recommended by the AI was not always suitable for their children’s needs. At the end of the day, these “learning machines” are often still inadequate, despite how they are marketed.
One more thing Do you stick to reserving dinner at restaurants with 4.5+ stars on Google? In China, some young people have had too many disappointing experiences chasing after viral restaurants with inflated reviews. Instead, they are starting a trend of choosing restaurants with review scores around 3.5. Their justification? “If a restaurant can survive for decades with such a low review, there must be something really special about it,” one comment on social media reads. It’s also about rebelling against the ubiquitous digital platforms that dictate where everybody goes, reports China’s Lifeweek magazine.