A UBS teardown estimated the BYD Seal’s (premium version) gross margin at roughly 16%. These cars are selling for $50k in Thailand. These data points suggest BYD is leveraging vertical integration, not selling the Seal at a loss.
I used to think the same way until this year on a trip to Asia. I was genuinely surprised by the range of new Chinese cars. Not just the low-cost models, but truly impressive, high-end vehicles with super innovative designs. I am very pro local manufacturing. But as a builder at heart, I have to admire the builder innovation energy coming out of Chinese auto companies. This wasn't just centrally planned... Its clear innovation.
At end of the day, Chinese companies still have to compete with each other which drives price down (so much so that CCP recently stepping in to try to make it less cut throat). Granted strategic industries like auto that eventually coalesce into oligopolies might coordinate / collude to set prices better, but IMO PRC manufacturing is too big for that - 20 country sized provinces trying to build their own champions. What we have seen is PRC companies start climbing value chain, i.e. anker going from entry to premium tier, but every step along the way some other Chinese company comes along and fills out the low end.
A UBS teardown estimated the BYD Seal’s (premium version) gross margin at roughly 16%. These cars are selling for $50k in Thailand. These data points suggest BYD is leveraging vertical integration, not selling the Seal at a loss.
I used to think the same way until this year on a trip to Asia. I was genuinely surprised by the range of new Chinese cars. Not just the low-cost models, but truly impressive, high-end vehicles with super innovative designs. I am very pro local manufacturing. But as a builder at heart, I have to admire the builder innovation energy coming out of Chinese auto companies. This wasn't just centrally planned... Its clear innovation.