BYD founder Wang Chuanfu’s fortune is around $15 billion.
By Laura King
Wang Chuanfu grew up an orphan in one of the poorest regions of China. He is now one of the richest people in China and his company BYD has just surpassed Tesla in global sales of electric cars.
From getting Warren Buffett’s backing to winning the electric vehicle race, this is Chuanfu’s story.
It’s a fairytale for the modern era: an orphan from one of the poorest regions in China became the billionaire founder of the world’s leading electric car manufacturer.
BYD vehicles are now sold in more than 60 countries and the company has just unseated Tesla from the top spot as the world’s largest electric vehicle maker, selling more than 42,000 vehicles surpassing its US rival last year.
But the protagonist of this story, Wang Chuanfu, has often gone unnoticed. Instead, BYD ‘s nearly 30-year history gives us a glimpse into its strategic thinking, its ability to adapt, and its vision.
The story of origin
Born in 1966 in the agricultural province of Anhui, eastern China, Chuanfu was raised by his older brothers after the death of his parents, both rice farmers.
He got a scholarship to study chemistry at Central South University, then known as Central South Industrial University, and later earned a master’s degree in battery technology at the General Research Institute of Nonferrous Metals in Beijing, now known as GRINM Group.
Wang Chuanfu is a chemist by training.China Photos/Getty
After a few years as a government researcher, Chuanfu moved south to Shenzhen, a growing center of innovation thanks to its designation as a Special Economic Zone.
There, Chuanfu, 29, and his cousin, Lu Xiangyang, founded a mobile phone battery manufacturing company and called it BYD.
Chuanfu has said in interviews that the name meant nothing at the time. Since then he has acquired two very appropriate nicknames: “Build Your Dreams” and “Bring Your Dollars.”
Success with the mobile battery
Within four months they had an office building and a factory thanks to a $300,000 injection from their cousin , according to The Wall Street Journal .
From the beginning, BYD had a clear strategy: emulate successful products and keep costs as low as possible.
Instead of expensive machinery, Chuanfu hired a huge staff on short-term contracts, allowing it to avoid wage increases, according to the Journal .
In 2002, BYD dominated the rechargeable battery market. Its clients included Motorola , Nokia , Sony Ericsson and Samsung . Chuanfu had also entered the Forbes Chinese rich list .
Early disruptor
The following year, Chuanfu purchased bankrupt state-owned automobile manufacturer Tsinchuan Automobile and renamed it BYD Auto.
Together with BYD electronics, which manufactures batteries and components for mobile phones, these two subsidiaries constitute the company’s main operations.
In 2005, BYD launched a sedan called F3. It was much cheaper than the Toyota Corolla it resembled and topped the sales charts in China at the end of the decade .
Warren Buffett’s endorsement
Charlie Munger greets BYD founder Wang Chuanfu in 2010.Visual China Group via Getty Images
In the late 2000s, Warren Buffett wanted to take advantage of the growing demand for automobiles in China and, on the recommendation of his partner Charlie Munger, looked at BYD.
Referring to Chuanfu, Munger stated that he told Buffett: “This guy is a combination of Thomas Edison and Jack Welch: somewhat Edison-like in solving technical problems, and somewhat Welch-like in getting what he needs to do. I’ve never seen anything like it.”
Apparently, during a visit to its facilities, Chuanfu took a sip of battery fluid to impress investors and demonstrate how clean its batteries were, according to the Journal.
Reluctant to part with a large part of his company, he rejected Berkshire Hathaway’s initial offer to buy 25% of BYD . The principles of Chuanfu were well regarded. In 2008, Berkshire Hathaway invested $232 million in BYD.
The backing attracted the attention of investors around the world and accelerated the company’s rise. BYD earned $5.1 billion and Chuanfu topped the Forbes China rich list for the first time in 2009.
Wang Chuanfu meets with Arnold Schwarzenegger, then governor of California, to announce his new base in Los Angeles.ROBYN BECK/Getty
Ability to adapt and concentrate
Unlike high-profile personalities like Elon Musk or Jack Ma, Chuanfu has always stayed out of the spotlight, avoiding unwanted scrutiny.
“It’s never about feeding an ego. I think everything points to the vehicles, they always point to the company,” Tu Le, founder of the consulting firm Sino Auto Insights, told Business Insider.
After a slight decline in sales, BYD is back on track.
It obtained public transportation contracts in the Chinese cities of Shenzhen and Hunan, as well as in Amsterdam, Frankfurt and Los Angeles, according to Bloomberg.
BYD is now the world’s largest manufacturer of battery electric buses , with more than 50,000 on the road worldwide and more than 1,000 vehicles on the road or in production in the United States. It has a huge factory in Lancaster, California that makes buses and other vehicles, such as trucks and forklifts.
Since 2009, the automaker has also benefited from billions in Chinese subsidies and indirect aid to nurture electric vehicle startups.
Chuanfu is worth $14.8 billion, according to the Bloomberg Billionaires Index, ranking 132nd 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 turn a profit.
Chuanfu was one of the first Chinese business figures to start producing masks during the pandemic, according to the South China Morning Post , becoming the largest manufacturer in the world in a few months.
Rivalry with Tesla
Tesla CEO Musk mocked BYD cars in an interview with Bloomberg in 2011, saying, “I don’t think they have a great product.
After months of analyst speculation, BYD has taken the crown of the world’s largest electric car maker from Tesla, which means Musk is probably no longer laughing.
Earlier this year, he responded to the old clip, saying: “That was many years ago. Their cars are very competitive today.”
And although BYD is now worth about $78 billion , it is only a tenth of Tesla’s market value.
Additionally, BYD has its sights set on markets outside China, with plans to build its first European factory in Hungary. In November, its managers stated that they wanted to achieve a 10% share of the global electric vehicle market, excluding the US and Europe, according to the Financial Times.
To do this, sales abroad should go from 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 become an increasingly dominant force: “I would take away the car company label. It is one of the best-managed companies in the world, period.”