BYD Executive Vice President and CEO of BYD Americas Stella Li sits down with Yahoo Finance Anchor Akiko Fujita to discuss the global EV market, the company's lack of involvement in the US market, and BYD's performance among Chinese consumers.
Li shuts down any plans for expansion in the US: "It's an interesting market but it's very complicated if you're talking about EV, and then I think the US market is a little bit slowdown on electrification and there are a lot of confusing, also very complicated, so we're saying, 'No... we don't have plans to come to the US."
When asked if political complications play a role in that decision, Li responds: "Everything is complicated. Politics are complicated... and it's confusing for the consumer, and then they don't know which to choose."
BYD is a big contributor there also. We went there. Then we start become maybe the top 10, the number 10s, like the largest brand in Brazil with only like an electric car and a PHEV. So then this kind of story is happening in Thailand and also Israel and also other countries. So we see this kind of story, this kind of similar pattern. For the EV adoption, start was slow but now jump. And then we're fast growing in every other countries.
AKIKO FUJITA: So you're saying you think BYD can compete in all those markets you just mentioned.
STELLA LI: Yeah, yeah, yeah, yeah. Yeah. For sure, because the Chinese market is the most competitive market. If you are the winner in the most competitive market, why not you cannot win in other market? It's just about the timing issue.
AKIKO FUJITA: Can you keep the costs as low as you have in China as you expand abroad because that's been one of the big propositions from BYD is that you are able to offer a really, really cheap price point for those consumers who are looking to make the transition. Can you keep those costs low outside of China?
STELLA LI: Yeah. But I need to correct your comment here. So BYD is not only offer affordable price. But we offer most advanced innovative technology.
AKIKO FUJITA: So you're competing on innovation, not necessarily price point anymore. That's the evolution of BYD.
STELLA LI: Exactly. So we almost everybody in our consumer recognize BYD is more like a technology company instead of like a cheap car manufacturer. So we are a technology company. Plus, the car design you see is very stylish and very modern.
AKIKO FUJITA: As you look abroad, I know BYD has been expanding its manufacturing footprint too. You've announced a factory in Hungary, one in Thailand.
STELLA LI: Yeah. The Thailand one was the operation by end of June.
AKIKO FUJITA: How long until you have a factory in Mexico?
STELLA LI: We have manufacturing. We already officially start manufacturing-- building the facility in Brazil. So we now have a team to invest in where the location to set up Mexico manufacturing. So maybe by second half of this year, we can officially announce our plan to invest in Mexico.
AKIKO FUJITA: So you'll make the announcement in the second half of this year.
STELLA LI: In the second half. But our target is that we build the facility in the south or central region. Our target is to build this facility only mainly support Mexican market. It's not to build that Mexico-- it's not to build that manufacturer to support us. We're not planning to come to us.
AKIKO FUJITA: No plans to come to the US.
STELLA LI: No, no, no.
AKIKO FUJITA: Why not?
STELLA LI: It's too complicated. It's an interesting market. But it's very complicated if you're talking about EV. And I think the US market is a little bit slow down on electrification and a lot of confusing. Also very complicated. So we think no. Let's hold. We don't have plan to come to US.
AKIKO FUJITA: The politics are complicated.
STELLA LI: Everything is complicated. Politics complicate. Charging infastructure complicate. And then it's confusing for consumer. And then they don't know which to choose. So then I think--
AKIKO FUJITA: What do you mean when you say it's confusing for the consumer?
STELLA LI: Here in US is you have too many confusing noise, speech from different politic. This can bring a lot of confusing to consumer, and also to auto manufacturers. They are not eager to invest.
AKIKO FUJITA: You don't think they're eager to invest.
STELLA LI: No, because I read the news. Always see, oh, this now this company hold their investment or EV. That company holds their investment on the battery manufacturing. A lot of topic we don't know what's happening. But in China, the message is strong. If you are not investing for electric car, you are out. You will die. You have no future.
AKIKO FUJITA: So let me challenge you on that because I think the White House would argue, yes, China has had a lot of success on EVs. We are trying to accelerate this adoption to going electric. You've got the Inflation Reduction Act that does put forward incentives. It does put forward subsidies as well. When you think about where China is right now, what, 35% roughly penetration for EVs versus the US which is at 7%. Is the Inflation Reduction Act enough to get it to that? Or do you see fundamental differences in the approach between the US and Chinese market in government and the government push?
STELLA LI: Fundamentally different. In China, the government will push that like as policy. Also, will help for the policy. So as long as you produce in China-- not produce in China. As long as you produce electric car, then consumer will get the benefit. It's like galvanize. Then you boost a lot of companies to compete.
But the US policy was the IRA-- actually, this is have a lot of restriction with the Chinese supplier here. And then this bring a lot of complexity to the current EV manufacturer. As you may know, for the battery technology, for a lot of technology, China supply chain is a key player. If you trace them all from the cell to the raw materials, China is 70% of the supply chain. But now for IRA, a little bit too complicated for any OEM to achieve that target.
AKIKO FUJITA: So you're saying it's not an all-in approach.
STELLA LI: It's not all in. It's not all in. They should be all in. And then they should be open. Remember why US is competitive, strong. Because we are open market. We welcome everybody to come here, to have free competition. And there is a capital market. But now it's become more protected market.
AKIKO FUJITA: Let me ask you this because you say that you have no interest in coming to the US. But as you know, given your growing presence in Mexico, there's a lot of American car companies that are taking note saying, BYD, Chinese carmakers are knocking at the door into US entry. And I want to read you a few things that we've heard from some leaders in the EV space. Elon Musk recently saying that Chinese automakers will pretty much demolish most other car companies without trade barriers. Those are his words.
You heard the Stellantis CEO saying the Chinese offensive is the biggest risk that companies like Tesla and Stellantis face. And then you had Jim Farley from Ford recently saying, if you can't compete fair and square with the Chinese around the world, then 20% to 30% of your revenue is going to be at risk because of the cost advantage. Do you agree with that assumption here that if those trade barriers aren't in place, the Chinese can compete fair and square and actually win this market.
STELLA LI: So I kind of have a different opinion. First, for example, BYD invest manufacturing in Mexico is mainly focused on Mexico market. So that's the reason we are not even considering any [INAUDIBLE] state. A lot of US brand, all their manufacturing are in the north because it's easy to cross the border. But for BYD, we are more looking for the place within 200 kilometers radius from the Mexico city. So we are more targeted local market. Yeah.
So that's BYD strategy. We are not really planning to come to US. Then second, I think this is a similar story. If you're thinking about the auto history maybe 20, 30 years ago when Japanese came to US. It's the same. Japanese are going to kill us.
But in the end, still we have like a local brand. If they participate in competition, they will find a way out. They will be winner. Then any foreigner come from Japan, from Korea, they only share a portion of the business. So I think for electric car, they are little bit overreact on the-- a little bit too scared about a kind of Chinese competition. But I think it's some kind of a game. You need other participate or you are behind. You will be out. So the solution doesn't matter.
AKIKO FUJITA: What do you mean by that? You have to participate or you'll be out.
STELLA LI: Yeah. It's like protection.
AKIKO FUJITA: Talking about in the US market, or you're talking about in general?
STELLA LI: US market. And also, some people only focus on US market, give up all other region. So a lot of OEM brand here, if they don't participate the global competition to be better, they will be out. And the trade protection will not help you. I never believe trade protection will help any company because if you see the who are the winner, it's the company who really change to get all technology will be the final winner. Yeah.
AKIKO FUJITA: That was BYD's Executive Vice President Stella Li. And you can catch our full conversation on our website yahoofinance.com.
