BYD started operations in March at its production base in Brazil, the first electric vehicle plant outside of Asia. Not long ago, BYD also announced that it would expand its investment in Brazil to 5.5 billion reais (about 1.1 billion US dollars), an increase of 83%, nearly doubled.
The BYD "Dolphin" PLUS version has rolled off the production line in the Latin American market.
Domestic cars are taking off in the world, and everyone likes to see it, but there are always people who are in their hearts. Many people will want to ask, why is Brazil? What is BYD trying to do?
Last year, when many second- and third-tier cities in China were looking forward to BYD being able to put into production locally to save the local economy, BYD officially announced that it would go to Brazil to build factories, which was like a "stab in the back" for these cities. This time, the investment in the Brazilian factory has almost doubled, and many people in China will be confused.
Not to mention the uncomfortable things, at the time of the "new troika", new energy vehicles are exported in a big way, which not only effectively promotes the "dual circulation" development pattern, but also can earn a large amount of foreign exchange, which is simply a matter of "hello, hello, hello, everyone". Even if it is said that Brazil has low labor costs and vast land, the continent is so vast, is there no city that can match Brazil?
Before answering this question, let's take a look at what BYD is planning.
In general, BYD's doubling of investment in Brazilian factories this time has a strong smell of gunpowder.
Let's start with the size of the investment. According to local media reports, the total investment in Brazil has reached 73.9 billion reais (about 14.8 billion US dollars) in the past three months, which can be seen in the investment fever in the Brazilian automotive industry. In dollar terms, General Motors, Volkswagen, Hyundai, and Toyota invested about $1.4 billion, $1.8 billion, $1.1 billion, and $2.2 billion, respectively, while BYD increased its investment this time, which also reached about $1.1 billion, which is enough to compete with several traditional auto giants.
In fact, BYD only planned to invest 3 billion reais at first, but after the beginning of this year, the world's auto giants have increased production investment in Brazil, and General Motors, Volkswagen, Hyundai, and Toyota Motor Group have entered the game.
Not to mention foreigners, even its brother's Great Wall Motors also began the transformation of the production line of the Brazilian factory last year, and other Chinese car companies are also eyeing it, which has caused BYD to become more and more nervous, and hurriedly doubled its investment to accelerate production, hoping to seize the opportunity. It is no wonder that Li Ke, vice president of BYD, previously said that BYD's arrival "stirred" the Brazilian market.
Let's look at BYD's specific layout. BYD has three main factories in Brazil, of different types. The first is "a production plant mainly engaged in electric bus and truck chassis", including commercial buses, which are the main models that BYD has always exported;
The second is a new energy passenger vehicle production plant, which BYD rarely invested in overseas in the past, and only landed it for the first time in Thailand in 2022, with the main purpose of building a "real estate sales" model to help reduce costs.
The third is a processing plant specializing in lithium iron phosphate battery materials. Lithium iron phosphate battery technology is BYD's housekeeping skill, and BYD has also put into production a number of production lines including lithium iron phosphate batteries in Brazil before, with rich management experience.
Then look at the upstream and downstream of the industry. For example, in terms of battery production, BYD's many battery factories built in Brazil and the new lithium iron phosphate battery factories have laid the foundation for a stable supply chain needed for localized production. The old facilities of the production site complex will be used by suppliers to help produce new car components. Moreover, South America is rich in lithium resources, and BYD also has ideas in locking in the supply of raw materials. Bloomberg has also reported that BYD is considering acquiring lithium assets in Brazil.
From the above three aspects, it is not difficult to see BYD's intention to put into Brazil - to establish a "Brazilian enterprise" to achieve localized production, reduce production costs, deepen the Brazilian market, and even enter other countries in Latin America.
Brazil is the largest automotive market in Latin America and the sixth largest in the world, with a population of more than 200 million, excellent resource endowment and great economic growth potential. More importantly, the current situation of the Brazilian auto market is very similar to the Chinese auto market more than 20 years ago - a BYD "Tang" new energy vehicle can be sold for more than 700,000 yuan in Brazil.
What's more, Brazil's investment environment in recent years has not been bad, and last year the tax system was simplified, and the international rating agency Standard & Poor's also upgraded Brazil's sovereign credit rating from BB- to BB, with a stable outlook.
What about the other major countries in Latin America?
Brazil's advantages are "all set off by its peers". Mexico is most famous for its "too far from heaven and too close to the United States," with serious crime breeding, a grim security situation, and a serious "long-arm review" by the United States; although Argentina is rich in lithium mines, its economy fluctuates markedly, and the situation is extremely unstable.
Compared with Argentina and Mexico, Brazil is more friendly to China and more stable in society, and it is not surprising that China's new energy vehicles have entered Latin America and chosen Brazil as a starting point.
According to the analysis of people familiar with the matter, BYD wants to enter the Latin American market and eventually enter the United States, Brazil's localized production is of great importance, and many Chinese companies have entered, the industrial chain has gradually stabilized, and the relationship between government and business has also been established, and the foundation is very good.
Brazilian President Luiz Inácio
Employment is important and directly linked to people's well-being in life. In fact, part of BYD's Brazilian plant is actually the original Ford plant. After Ford withdrew its production lines from Brazil a few years ago, the Brazilian government was unable to find a suitable home, and the impact of the epidemic caused the local employment situation to be grim. Because of this, Brazilian President Luiz Inácio Lula personally promoted BYD's acquisition of the Ford plant last year, which is indeed full of sincerity, and also shows the sense of crisis that Ford's departure has brought to the Brazilian government.
The former Ford Industrial Park purchased by BYD. (Photo/Bloomberg)
BYD's $1.1 billion investment may not be high compared to the international auto giant, but it is not small for a small remote city, which can drive huge employment scale and economic benefits, thereby increasing social well-being and stabilizing social order. "Ford closes in Brazil, China's largest electric car maker comes to the rescue", this is the headline of a Bloomberg report, which also confirms the entry of Chinese car companies into the Brazilian market, at least everyone is happy to see it.
To a certain extent, BYD's advertising slogan "Build Your Dream" has also entered the Brazilian market, and it is indeed the dream of Brazilians. From this point of view, the "Chinese Dream" and the "Brazilian Dream" are, in the final analysis, people's dreams of a better and happier life, and they have a lot in common.
The world needs the "next China". But looking at the world, I am afraid that there is no country with the sustained and fierce economic explosiveness of China in the early days of reform and opening up. While the potential of regional organizations such as ASEAN and the African Union is not bad, no single country, including Indonesia, India, the Philippines, Brazil, and Mexico, can be seen as the "hope of the whole village" in the region, but in terms of its driving effect on the world economy, none of them can become the "next China".
It is precisely for this reason that "the next China is still China" is still an "ironclad fact" for many multinational companies such as Apple. However, for Chinese new energy vehicle companies that are still fledgling on the overseas track, the next China must no longer be China - at least not only on China. Only by opening up the pattern and setting the right mentality can we truly realize the global take-off of Chinese enterprises.
Source丨"Trend Capture" WeChat public account