BYD Lands Deal to Supply Uber 100,000 EVs, Fuelling Its Overseas Expansion Drive
In a significant boost to its global expansion plans, Shenzhen-based BYD, the world's largest electric vehicle (EV) maker, has secured a major contract to supply 100,000 EVs to ride-hailing giant Uber. This partnership comes at a crucial time for BYD, which has been facing trade barriers in developed markets due to punitive tariffs imposed by the US and the European Union (EU) on Chinese car exports.
A Strategic Move for Global Penetration
The announcement, made on Wednesday evening, marks the largest supply contract BYD has secured outside mainland China since 2022. This deal underscores BYD's growing popularity worldwide, driven by its affordable pricing and superior battery performance. The EVs will be introduced to various markets, including the Middle East, Canada, Australia, and New Zealand.
Uber stated that the collaboration aims to reduce the total cost of EV ownership for its drivers, thereby accelerating the adoption of EVs on its platform globally. "The companies aim to bring down the total cost of EV ownership for Uber drivers, accelerating the uptake of EVs on the Uber platform globally, and introducing millions of riders to greener rides," Uber said in a statement.
Overcoming Trade Barriers
BYD and other domestic Chinese EV manufacturers have been grappling with trade barriers in developed markets. In May, the US quadrupled tariffs on Chinese-made EVs to 100 percent, while the EU imposed additional duties ranging from 17.4 to 37.6 percent in July. Despite these challenges, BYD's partnership with Uber is a testament to the quality and competitiveness of its vehicles.
Uber highlighted that the partnership will provide drivers with access to "best-in-class pricing and financing for BYD vehicles" on its platform. The companies also plan to explore discounts on charging, vehicle maintenance, insurance, and lease offers based on market conditions in different regions. Additionally, they will collaborate on future BYD autonomous-capable vehicles to be deployed by Uber.
A Vote of Confidence
Qian Kang, who owns car components businesses in Zhejiang province, believes that the deal reflects Uber's endorsement of BYD's vehicles and opens the floodgates for other fleet businesses for the Chinese carmaker. "It somewhat dispels the gloom in China's electric car sector, which is mired in overcapacity," Kang said.
This partnership is not BYD's first significant international deal. In October 2022, BYD formed a partnership with German car rental company SIXT, which agreed to buy 100,000 EVs from the Chinese carmaker over several years. BYD, known for its battery-powered cars priced around 100,000 yuan (US$13,830), dethroned Tesla as the world's largest EV maker in 2022 by unit sales, with most of its sales derived from the mainland.
Accelerating Internationalization
BYD has been accelerating its internationalization efforts since 2023, actively promoting its vehicles in markets like Southeast Asia and Latin America. Last year, the company exported 242,765 units, accounting for 8 percent of its global total, with exports jumping 334 percent from 2022.
Wang Chuanfu, chairman and president of BYD, announced in March that the company expected to deliver 450,000 units to overseas customers this year, an increase of 85.4 percent year on year. HSBC noted in a research report that exports made a disproportionately higher contribution to BYD's earnings due to higher margins and a more favorable pricing environment.
Cost Advantage and Innovation
Chinese carmakers have a significant cost advantage over global rivals in building EVs, thanks to a fully developed supply chain that drives strong manufacturing capabilities. Stephen Dyer, Greater China co-leader and head of Asia automotive practice at global consultancy AlixPartners, highlighted that a Chinese-made EV costs 35 percent less to produce than those from other carmakers.
BYD's blade lithium-iron-phosphate battery packs have been particularly well-received for their increased energy density and enhanced resistance to overheating. These innovations, coupled with strategic partnerships like the one with Uber, position BYD as a formidable player in the global EV market.
In conclusion, BYD's landmark deal with Uber not only bolsters its overseas expansion drive but also underscores the growing recognition of Chinese EV technology on the global stage. As BYD continues to navigate through trade barriers and market challenges, this partnership serves as a critical milestone in its journey towards becoming a leading global EV manufacturer.