BYD, Quality Controversies and Internal Conflicts Cast 'Red Light' on Overseas Expansion

Electric Vehicle Demand Slows, Vehicle Defects, Organizational Conflicts
Over 10,000 European Stock Vehicles at Year-End
Acceleration of Expansion into Mexico and Latin America Presents Opportunities

According to the Wall Street Journal (WSJ) on the 11th (local time), China's BYD, which surpassed Tesla last year to become the world's top-selling electric vehicle manufacturer, is facing difficulties in expanding into overseas markets.

WSJ pointed out that the growth momentum BYD showed when dominating the domestic market is not appearing in overseas markets, citing weak demand for electric vehicles, vehicle quality control issues, and internal organizational conflicts as the main causes.

[Image source=Reuters Yonhap News]

It is reported that BYD's management has judged that achieving the internal goal of selling 400,000 units outside China this year has also become difficult.

WSJ highlighted the high defect rate of BYD vehicles. Recently, in Japan, BYD vehicles arrived with dented surfaces or peeling paint. In Europe, vehicles with mold were found. In January, a fire broke out on a BYD bus in London, prompting UK authorities to recall about 2,000 buses. The authorities revealed that the investigation found issues with the vehicle's heating, ventilation, and air conditioning systems.

Despite these situations, BYD's management reportedly maintained a passive stance on problem resolution, stating that the after-sales correction system for exported vehicles is not suitable for the large-scale business model BYD aims to build. Additionally, there were reports of backlash from employees due to the management's immature capabilities, such as assigning sales targets to overseas branches without sufficiently considering local circumstances.

At a meeting late last year, a BYD European branch executive clashed with headquarters management by urging realistic sales targets and quality improvements considering local conditions. In response, BYD Chairman Wang Chuanfu reportedly began directly intervening in the operation of the European branch, questioning the European management's drive. An anonymous company insider forecasted that "as of the end of last year, more than 10,000 BYD vehicles were stocked in warehouses in Europe, and losses are expected as the certification to sell in the European Union is about to expire."

However, WSJ evaluated that the sustained demand in electric vehicle markets in Mexico, Brazil, and Australia, which are emerging as major export countries for BYD, is a positive factor. In particular, with the opening of an air route connecting Mexico City and Shenzhen, China, next month, BYD's expansion into the Latin American market is expected to gain momentum. Shenzhen, known as China's technology hub city, is the base where BYD's headquarters and production plants are located.

According to Mexico's Ministry of Economy, China's direct investment in Mexico reached a record high of $587 million (approximately 770 billion KRW) in 2022. Especially for BYD, it has started searching for a business site capable of producing 150,000 units annually to use Mexico as a U.S. export hub and a new domestic market.

This content was produced with the assistance of AI translation services.