Amidst the rapid growth of Chinese electric car manufacturer BYD in its unique domestic market, analysts warn that its expansion strategy is beginning to reveal its limitations amid increased global competition in the electric vehicle industry.
The Korea Automobile Research Institute released a report titled ‘The Light and Shadow of BYD’s Global Expansion Strategy’ on the 25th, underscoring the uncertain external conditions and the absence of a robust brand image as notable constraints for BYD.
The report anticipated that the company’s competitiveness could diminish if leading countries such as the United States and the European Union imposed stricter regulations on battery origins, rare minerals, and vital components specifically aimed at BYD.
The report also noted that if BYD expanded its production overseas, it would encounter management risks from varying labor conditions and organizational cultures across different countries.
A differentiated brand image was also cited as hindering BYD’s growth.
The report highlighted, “While BYD has addressed pricing challenges by excelling in rapid volume competition within China’s favorable market, it has been conservative in its approach to building a brand identity.”
The report cited data from the Automotive Industry 2024 Ranking report by the brand valuation agency Brand Finance, which placed BYD’s brand value at $12.1 billion in 2023, ranking it 12th globally. In contrast, in the same survey, Tesla ranked second with a brand value of $58.3 billion.
The report also anticipates that the effectiveness of BYD’s growth strategy will face scrutiny as competition in the global electric car market intensifies in the next 2-3 years.
The report suggested that while BYD is expected to increase its sales volume and become a major player in the automotive industry in the coming years, uncertainties persist regarding the sustainability of this growth and its long-term impact on the automotive landscape.
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