How BYD founder Wang Chuanfu went from orphan to billionaire EV empire builder, beating out Elon Musk's Tesla
Universal Images Group; China Photos/Getty Images
- Wang Chuanfu grew up as an orphan in one of China's poorest regions.
- Now one of China's richest people, his company BYD has just overtaken Tesla in global EV sales.
- From winning Warren Buffett's endorsement to winning the EV race, here's Chuanfu's story.
It's a fairytale for the modern age: an orphan from one of China's poorest regions rose to become the billionaire founder of the world's leading producer of electric cars.
BYD's vehicles are now sold in more than 60 countries and the company has just kicked Tesla off the top spot as the world's biggest EV maker, selling 42,000 more cars than its US rival last year.
But the man at the center of the story, Wang Chuanfu, has often flown under the radar. Instead, the almost 30-year history of BYD gives us glimmers into his strategic thinking, adaptability, and vision.
Origin story
Born in 1966 in east China's agricultural Anhui province, Chuanfu was raised by his older siblings after his parents, both rice farmers, died.
He got a scholarship to study chemistry at Central South University, known back then as Central South Industrial University, and later received a master's degree in battery technology from the Beijing Non-Ferrous Metal General Research Institute, now known as the GRINM Group.
China Photos / Getty
After a few years as a government researcher, Chuanfu moved south to Shenzhen, a growing innovation hub thanks to its designation as a Special Economic Zone.
There, 29-year-old Chuanfu and his cousin, Lu Xiangyang, founded a cellphone battery manufacturing company and named it BYD.
Chuanfu has said in interviews that the name didn't stand for anything at the time. It's since acquired two apt nicknames: "Build Your Dreams" and "Bring Your Dollars."
Cellphone battery success
Within four months, they had an office building and a factory thanks to a $300,000 injection from his cousin, The Wall Street Journal reported.
From the start, BYD had a clear-cut strategy: emulate successful products and keep costs as low as possible.
The goal was to replicate products made by the likes of Toyota, Sanyo, and Sony, but make them cheaper than their Japanese suppliers.
Instead of expensive machinery, Chuanfu hired a huge workforce on short-term contracts, enabling him to avoid wage increases, per the Journal.
By 2002, BYD dominated the rechargeable battery market. Its customers included Motorola, Nokia, Sony Ericsson, and Samsung. Chuanfu had also made it onto the Forbes Chinese rich list.
Early disrupter
The following year Chuanfu purchased failing state car manufacturer Tsinchuan Automobile and renamed it BYD Auto.
Together with BYD electronics, which manufactures batteries and handset components, these two subsidiaries comprise the company's main operations.
In 2005, BYD launched a sedan called the F3. It was far cheaper than the Toyota Corolla it resembled and topped sales charts in China by the end of the decade, the Journal reported.
Warren Buffett's endorsement
Visual China Group via Getty Images
In the late 2000s, Warren Buffett was looking to capitalize on the growing demand for cars in China and, on the recommendation of his partner Charlie Munger, turned his attention to BYD.
Referring to Chuanfu, Munger said he told Buffett: "This guy is a combination of Thomas Edison and Jack Welch — something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it."
During a tour of their operations, Chuanfu reportedly took a sip of battery fluid to impress investors and prove how clean his batteries were, according to the Journal.
Reluctant to part with a large chunk of his company, however, he turned down Berkshire Hathaway's initial offer to buy 25% of BYD.
Chuanfu's principled approach was viewed positively. In 2008, Berkshire Hathaway invested $232 million in BYD.
The endorsement caught investors' attention worldwide and accelerated the company's rise.
BYD gained $5.1 billion in value and Chuanfu topped Forbes China's rich list for the first time in 2009.
ROBYN BECK / Getty
Adaptability and focus
Unlike high-profile personalities such as Elon Musk or Jack Ma, Chuanfu has consistently kept out of the limelight, avoiding unwanted scrutiny.
"It's never about feeding an ego. I think they all point back to the vehicles, they always point back to the company," Tu Le, founder of Sino Auto Insights, a consulting firm, told Business Insider.
After a slight downturn in sales, BYD found itself back on track.
It won public transport contracts from the Chinese cities of Shenzhen and Hunan, as well as deals with Amsterdam, Frankfurt, and Los Angeles, per Bloomberg.
BYD is now the world's biggest maker of battery-electric buses with more than 50,000 on the road globally, and more than 1,000 vehicles on the road or in production in the US. It has a huge factory in Lancaster, California that makes buses as well as other vehicles such as trucks and forklifts.
Shan Yuqi/Xinhua via Getty
Since 2009, the automaker has also benefitted from billions in Chinese subsidies and indirect assistance to nurture emerging EV companies.
But that's not to say Chuanfu's achievements don't measure up to the world's top entrepreneurs.
"I say he'd be very successful in any country that he wanted to create a company in. He's not any less ambitious than Jeff Bezos, Elon Musk, Steve Jobs. Look at the output," Tu told BI.
Chuanfu is worth $14.8 billion, according to the Bloomberg Billionaires Index and is in 132th place on the list.
The company controls every part of its manufacturing process. This approach paid off during the pandemic when BYD managed to avoid supply chain issues and still made a profit.
Chuanfu was one of the first Chinese business figures to start producing masks during the pandemic, per the South China Morning Post, becoming the world's largest manufacturer within months.
Tesla rivalry
Tesla CEO Musk laughed at BYD's cars in a 2011 Bloomberg interview, saying "I don't think they have a great product."
What do you think of BYD?
— Tesla Owners Silicon Valley (@teslaownersSV) May 27, 2023
Elon Musk starts laughing… have you seen their cars ?
pic.twitter.com/aSvcqmOAo8
Following months of analyst speculation, BYD took Tesla's crown as the world's largest manufacturer of electric cars, meaning that Musk likely isn't laughing anymore.
Earlier this year, he replied to the old clip, saying: "That was many years ago. Their cars are highly competitive these days."
Richard Bord / Getty
And while BYD is now worth about $78 billion, that's only about a tenth of Tesla's market value.
Next, BYD has its eye on markets outside China with plans to build its first European factory in Hungary. This November, executives said that it wanted a 10% share of the global EV market, excluding the US and Europe, per the Financial Times.
That would require overseas sales jumping from about 240,000 vehicles this year to more than 2 million.
Tu Le adds that if the last 10 years are anything to go by, BYD will only become a more dominant force: "I would subtract that label of being an automotive company. It's one of the best-run companies in the world, full stop."
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