BYD Betting On Plug-In Hybrids Over BEVs For Private Use

3 years ago by Mark Kane 15

BYD Qin

BYD Qin

The pure-electric BYD e6 Taxi and k9 Transit Bus

The pure-electric BYD e6 Taxi and k9 Transit Bus

MarketWatch recently had the opportunity to talk with Wang Chuanfu, BYD chief executive officer.

As we know from earlier posts, BYD already delivered some 6,600 Qin plug-in hybrids in the first half of the year in China and received orders for thousands of electric buses. Revenue from selling e-buses are expected to exceed $1.6 billion this year.

However, BYD has struggled to expand production capacity to meet demand and noted strong decline in the traditional-auto business sales.

Wang Chuanfu believes in New Energy Vehicle, however he’s targeting plug-in hybrids for private use and battery electric vehicles for fleet use.

MarketWatch: “Tesla’s Elon Musk believes that purely electric cars are the future. You were also a supporter of electric cars in the past, but you seem to have made some adjustments recently. Can you talk about this?”

Wang Chuanfu: “BYD is promoting purely electric buses for public transportation, but plug-in hybrid vehicles for private use, since the latter do not rely on charging stations too much. It is a mistake to use hybrid vehicles for public transportation. The plug-in hybrid model is designed to account for purely electric cars’ inability to drive long distances. Public buses in cities have no need to drive long distances.”

“Most private cars drive 40 kilometers [just under 25 miles] every day. Our Qin model can run 70 kilometers on an electric supply and switch to fuel for longer distances. Such a design meets the demand of urbanites and has been accepted by the public.”

“It is impossible for the government to build as many charging stations as gas stations. What it can do is build enough charging stations within a certain distance and gradually expand the coverage nationwide. Hybrid cars fit the transition period. In the future, plug-in hybrid cars will account for 70% of private new-energy vehicles, while purely electric cars take up the other 30%. Small batteries with high energy storage for use in automobiles will not be available for around 30 years.”

“There is lots of interest in the game. The oil and many traditional industries oppose the development of electric cars because it is an evolution of the traditional automobile industry. In China, the inadequacy of charging facilities also hinders the development of electric cars, adding to the public’s concerns.”

“Thus, plug-in hybrid cars are a product of compromise under the current circumstances. It is likely to become the mainstream product in the next 20 years. In their product plan for the next five years, Volkswagen, and BMW, both put more emphasis on hybrid cars than purely electric cars.”

Wang Chuanfu noted that in the first few years of electric car development, the company found many difficulties “a lack of policy support, the weak quality of products and low public acceptance“. Even some taxi drivers in Shenzhen were afraid to drive EVs because there could be some “radiation” (oh yeah, just give me a good old gas guzzler enveloped by a fume shield).

Now, after implementation of new policies and incentives, BYD expects a boom in EV market:

“I didn’t expect that the opportunity would come so fast. The next three to five years will be a golden period for BYD’s growth. We must seize it. Production capacity being unable to meet demand will be a temporary problem because we were cautious in the beginning. We only sold several thousand F3DM models in a few years, but now we have sold several thousand Qin models within one month. By the end of this year, we will improve our electric-car production capacity.”

According to the interview, BYD received orders for 5,000 buses for city public transportation and already delivered 4,000.

Interesting is the possibility of significant cost reduction with scale:

“There is no other country like China that has issued so many policies to support new-energy vehicles. I think there will be a lot of strong new-energy companies emerging in China. We don’t need to introduce technologies from overseas because we are almost on the same level.”

“In 2013, new-energy-car sales in China reached 20,000. It is expected to reach as many as 50,000 this year. If one car model could have sales of more than 100,000 units, its costs will be significantly lower. If costs can be reduced by 30% to 40%, it is time for the state to withdraw its subsidies. But before that, the subsidies are necessary.”

MarketWatch

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15 responses to "BYD Betting On Plug-In Hybrids Over BEVs For Private Use"

  1. Mint says:

    Everything he says makes sense.

    The 70/30 split sounds about right as well, but I think Tesla will make pure EVs more popular in the short term.

    Once automakers get serious about plugins and stop charging so much of a premium over regular hybrids (i.e. less than $300/kWh extra), PHEVs will take over.

    1. GeorgeS says:

      LOL. my reaction was that what he said is illogical.

  2. GeorgeS says:

    I would say this article should prompt some lively discussion.

    I must say this is not exactly what I would expect to hear from BYD.

    The Chinese are the biggest users of electric bicycles. I would think a small daily EV that was low cost would be the next step.

    However, there appears to be more urban chinese living in housing complexes where it is not so easy to install your own charger for their EV.

    Seems like that policy could be easily changed by the chinese government. Simply require multi family dwelling to put it in.

    1. GeorgeS says:

      on the other hand we drive a Prius and a Volt so I guess I agree.

    2. James says:

      When people in China buy a car, it typically takes one year of income or more, and most families have only one car. They really want a multitask car with long distance capability, use it for travel, visiting relatives a thousand of miles away, etc. PHEV makes more sense for them. E-bike is totally different, it costs only a week of income on average, and it competes with bikes driven by human power, which have no advantage in range.

      For fleets, they can buy different vehicles for different task, and use EV only on tasks that fit them. That’s why targeting BEV to fleet is more reasonable.

  3. Take a look at sales of BEVs and PHEVs (tomorrow after Ford reports) and you’ll see the ratio is not 30% BEVs to 70% PHEVs. It actually tips slightly toward BEVs over PHEVs.

    The reason is not about “miles driven per day”, but the “cost per mile”! Owners would rather spend a bit more towards larger battery that could be used 90% of time vs. an ICE that might be used 5-10% of the time (even if it doesn’t meet all needs).

    While most vehicles are driven under 40 miles 80% of the time, being able to drive 120-150 miles will cover 90% of trips without needing public infrastructure … perhaps 95%+ with public infrastructure.

    The 25 miles per day quoted by BYD would only result in ~9000 miles per year. Much less than the average 12-15,000 miles driven in the US per year,

    Once a 120-150 mile BEV, expect we’ll see PHEV sales drop off. eg: The BMW i3 sales remain consistent from Aug to Sept while other PHEV sales decreased … having a 75-85 mile range (REx & BEv) puts it in the BEV category.

    1. ModernMarvelFan says:

      “having a 75-85 mile range (REx & BEv) puts it in the BEV category.”

      Strange classification…

    2. DaveMart says:

      Major markets such as California and Norway heavily load incentives towards BEVs, so drawing conclusions on customer’s actual preferences after these incentives are phased out is difficult.

    3. Mikael says:

      Wehn you’re dealing with early adopters then you can get rates like 50/50 for BEV/PHEV. But when the big mass is going to get involved the PHEV’s will outsell the BEV’s by a very large margin.
      70/30 might not even be enough in favor of the PHEV’s.

  4. David Murray says:

    I definitely think the PHEV is an easier sell to the average person who isn’t ready to commit to the BEV yet. Right now most of the people buying plug-in cars are still considered early adopters. But to branch out to a wider audience, PHEV is the answer.

  5. ffbj says:

    Well of course he is going to say it makes sense, sense that is decision they have made.
    No one is going to say our future course is incorrect. I think 1 part of the equation, that electric buses are best use of the electric propulsion, the other part that electric personal transportation is inferior to phev. Certainly for specific applications, inner city driving, ev’s are still superior. Plus the status quo will not remain so. Still the crossover phev will be around for many years. Also Chinese have fewer in house, at home, charging opportunities.

  6. QCO says:

    As painful as it may sound, it does make sense for the current situation.

    For closed routes, including buses, city and commercial vehicles, the distanced traveled is controlled and BEVs make total sense. We should be thankful this is becoming widely recognized.

    But consumers still have significant use variations that make an 80 mile EV a tougher sell. There are always a couple of days a month where an unpredicted journey exceeds the range, especially in a physically large city (DFW comes to mind). PHEV/EREVs let you go electric (affordably) with peace of mind for the unexpected. It’s a big step forward that should be embraced.

    The inevitable large scale charging infrastructure investments coming will swing the mix toward BEVs eventually. Some California cities may already be there, but the rest of us have some way to go.

  7. Cavaron says:

    You gotta love the Chinese… they have 180 mile BEVs like E6 and the Denza EV, and I heared the Chinese people even need official approval for leaving the province they live in. You could think, that 180 miles should work then.
    And come on, the communist party can’t install simple plugs along the roads? No need for fancy chargers with payment, it’s communism, right?

    I guess the old saying is right:
    Yes, communism could work in sahara desert, but they would run out of sand very soon.

  8. MDEV says:

    I own a S85 but I agree that PHEV is what is needed to educated the majority of the people about EVs. Once they get use to drive 95% on battery power (50-70 miles) the transition to pure electric 200 miles plus will be a piece of cake.

  9. JRMW says:

    PHEV will likely be a needed stepping stone. Get people on PHEVs, get them used to driving Electric.

    Over time as the AER increases, people will find that they use the ICE less and less. At some point they’ll realize they hardly use it at all. At that point they’ll dump the ICE.

    I personally think that BEVs will take over when they come at a small premium to ICE and have real world range of >150 to 250 miles in all conditions. (Winter driving uphill against the wind both ways with the heat blasted)