The incredible rise of Chinese Tesla rival BYD

Wang Chuanfu and a cousin founded BYD in 1995. Then a 29-year-old government researcher, Wang came from a family of rice farmers. He earned a university scholarship and eventually moved to the Special Economic Zone in Shenzhen to start his new company.

The "YD" in the name comes from Yadi, the village in Shenzhen where the company was originally located, according to one South Korean newspaper. The "B" was added later, supposedly as a promotional tool. Wang has said in interviews that, taken together, the "BYD" name didn't stand for anything in particular.

It was only later that Wang derived the slogan "Build Your Dreams." The company has also acquired another nickname: "Bring Your Dollars."

The company's original business wasn't cars. It was cellphone batteries. BYD challenged established Japanese suppliers Toyota and Sony by providing a cheaper alternative. By 2002, companies like Motorola, Nokia, Sony Ericsson, and Samsung were all using BYD batteries.

BYD moved into the car business after buying Xi'an Tsinchuan, a failing state-owned automaker that was then an arm of defense contractor Norinco, according to the South China Morning Post.

The company launched its first car in 2005. The BYD F3 was a compact sedan that resembled the Toyota Corolla. It sold for as little as 40,000 yuan, or about $5,850.

Billionaire investor Warren Buffett was one of the high-profile names to take interest in BYD early on. Looking to invest in China's booming car market, Buffett toured BYD's headquarters.

While the Berkshire Hathaway tycoon was there, Wang reportedly took a sip of battery fluid to prove how clean his batteries were, according to The Wall Street Journal. Buffett was so impressed by the experience, he offered to buy 25% of the company.

Wang declined that offer, but Buffett was not deterred. Berkshire Hathaway acquired a 10% stake in BYD — for $232 million — in 2008.

The company debuted its first fully electric vehicle, the e6, in 2010. Benefiting from Chinese government subsidies, it was able to compete with its Japanese counterparts.

But not everyone was impressed. Tesla CEO Elon Musk, in a 2011 interview, laughed when he was asked whether he considered BYD a serious rival to Tesla.

"Have you seen their car?" he said. "I don't think they make a good product. I don't think it's particularly attractive. The technology is not very strong."

BYD established itself as one of the top automakers for hybrid vehicles in China in the 2010s. Its most popular offering was the Qin, introduced in 2012, which became one of the bestselling cars in China.

That wasn't the only offering that propelled BYD to prominence, however. The company also released the Tang, a hybrid SUV, and partnered with Daimler AG (now Mercedes-Benz) to make its Denza line.

Even though most of its sales in the fourth quarter of 2023 came from the Chinese market, BYD made headlines across the globe when it seemingly did the impossible — it unseated Tesla as the world's top seller of electric cars.

The Chinese automaker rode the EV wave on the back of its new Seagull, which debuted for 73,000 yuan (about $10,000), as well as its Song, Qin Plus, Dolphin, Yuan Plus, and Han EVs.

Tesla reclaimed the crown in the first quarter of 2024, though both companies saw steep declines in their sales.

For a time, it looked like we were just a few years away from getting Chinese electric cars in the United States. A BYD executive said as much in 2017, and the company even hired Leonardo DiCaprio as a brand ambassador for English-speaking customers.

Since then, BYD has expanded overseas. The Chinese automaker is planning a factory in Mexico — alarming US officials — and even created its own shipping fleet in a bid to cut down on export costs.

But the company says it has abandoned its plans of selling its EVs to Americans. Analysts have pointed to geopolitical tensions and trade barriers between the two countries, as well as the slumping demand for EVs in the United States.