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Warren Buffett Approved: How the Elon Musk Tesla Master Plan has been validated by China's BYD
Posted on August 14, 2016 by Matt Pressman
Future plans for Tesla have been, in a sense, pre-approved by the world's most renowned investor, Warren Buffett. How? According to Fortune, "Eight years ago Buffett invested $232 million for a nearly 10% stake in BYD (Build Your Dreams), a Chinese company that makes lithium-ion batteries and electric cars... [with] divisions making electric buses, and with plans to get into other forms of urban transportation." And BYD is already in the energy storage and solar business. Sound familiar? "Musk and Buffett see the energy and transportation sectors changing in similar ways, and, over the past few years, their companies have increasingly... [focused on] both solar energy and electric cars."
Above: On different sides of the globe, two companies, Tesla and BYD, are both pushing clean energy and vehicle electrification forward (Source: Bidness Etc)
The similarities don't end there: "Musk’s vision for the energy industry is well-known by now... he published his Master Plan Part Deux in which he outlined how a combined Tesla [TSLA] and SolarCity [SCTY] would create a clean energy powerhouse that makes and sells solar panels and batteries, as well as electric vehicles of all types including buses and semis... [while] BYD’s vehicle ambitions have long been more sweeping than Tesla’s, which has divisions making electric buses, and with plans to get into other forms of urban transportation."
Above: Both Elon Musk and Warren Buffett make the cover of Fortune Magazine to showcase an electric vehicle future (Source: Fortune)
Greentech Media* reports that Elon Musk's, "vision was probably best captured in Tesla’s announcement of its offer to acquire SolarCity: 'We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.' In fact, Tesla would be the second such company. China’s BYD (short for “Build Your Dreams”) has already built Elon’s dream — and has done so profitably." To that end, let's take a look at how Buffett's investment in BYD shows that Musk's vision has already been vetted, tested, and successfully implemented by BYD.
Passenger vehicle EVs
BYD not only outsold Tesla last year, but its planned growth this year is higher. (It’s on track to meet those projections, too, with BYD China having sold 47,000 electric passenger cars through Q2.)... [but] The Model 3 could help Tesla catch up to BYD in 2018/2019. [Note: BYD sells plug-in hybrid electric vehicles unlike Tesla who sells 100% "pure" electric vehicles].
Above: Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett at the launch event for BYD's M6 vehicle in Beijing (Source: Business Insider)
BYD produced 10 gigawatt-hours of lithium-iron phosphate (LFP) batteries last year in its 10-gigawatt-hour factory, and it is now building a second manufacturing facility. It expects to produce 16 gigawatt-hours in 2016, keeping pace with Tesla’s growth rate... [However] despite Tesla having half the battery scale as compared to BYD... [Tesla] has a lower cost per kilowatt-hour [and Tesla has far grander plans with its spectacular Gigafactory].
Above: BYD has been ramping up its battery production (Source: BidnessETC)
BYD claims to dominate the North American energy storage market and had deployed more than 295 megawatts/295 megawatt-hours across 66 countries at the end of Q2. [Note: Tesla has massive plans for the stationary storage market that will have an expanding footprint worldwide).
Above: BYD has been aggressively moving into stationary energy storage (Twitter: @MattJurjevich)
BYD’s photovoltaics division reached 1 gigawatt of annual production in 2014. While its [solar] panels aren’t particularly high-efficiency — 18 percent compared to [soon to be Tesla] SolarCity’s target of 22 percent. [Note: Elon Musk has also announced an innovative solar roofing strategy and greater attention to aesthetics and beautiful design.]
Above: BYD's strategic approach (Sildeshare: Longboard)
BYD has four electric-bus manufacturing facilities and shipped its 10,000th unit this year, with a further 7,000 units on order. Recently, its winter trial for EV buses successfully concluded in Edmonton, Canada (average daily January high: 17º F). A multi-bus/solar panel/1-megawatt energy storage project (geared toward limiting demand charges) with another city even farther north may soon emerge. [Note: Tesla's bus plans are not completely clear at this time, but, a mini-bus looks like the vehicle Musk has confirmed thus far.)
Above: BYD's electric bus (Source: InsideEVs / Photo: Rick D.)
BYD has offered electric delivery vans since 2014 and has expanded into short-haul trucks; it has also entered the construction market... [and it] is large and growing with each purchase and product line extension. [Note: Tesla also has plans for semis and pickup trucks as well.]
Above: BYD T9 Class 8 truck utilizes the first battery that was purpose-built for vehicle electrification, it boasts 100+ miles of range (Source: CleanTechnica)
It goes without saying that Tesla has an autonomy advantage over the rest of the auto industry... Autonomy is the only category where BYD [does not yet have a foothold].
Above: BYD and Tesla share similar green strategies (Image: Country Caller)
When analyzing Elon Musk's recent Tesla Master Plan, it's obvious that there are parallels with BYD's overarching strategy. As evidenced above, BYD may even have a slight head start in a few areas. That said, Tesla's Gigafactory, battery technology, and electric vehicles are far more advanced in a myriad of ways. In fact, BYD hasn't even fully committed to 100% electric vehicle tech — they're still introducing gas-powered plug-in hybrid vehicles. To that end, media chatter about BYD being "ahead" of Tesla is questionable. But the company has preceded Tesla in a number of like-minded initiatives.
Above: Tesla and BYD vehicles parked next to one another (Flickr: Pooi Wang Chan)
So when financial analysts and media pundits claim there is no precedent for Tesla's future plans to integrate solar, battery storage, and an expanding electric vehicle portfolio, they're wrong. Across the globe, BYD has established a similar blueprint that, in many ways, validates Tesla's approach. Just look at BYD's clean tech strategy. It's abundantly clear that Warren Buffet has put his money into something that Elon Musk also believes will represent the future of energy.
*Source: Greentech Media