Wang Chuanfu isn’t afraid to throw curveballs at investors. In fact, the Chinese billionaire seems to like it.
Twenty years ago, Wang unveiled plans for his BYD group to buy a failing state automaker that had been trying to develop a sideline missile-making business.
His logic: rip gas-guzzling internal combustion engines out of cars and replace them with batteries. For BYD shareholders who thought they had invested in a more mundane cellphone battery maker, the strategy “seemed loaded with wild ambition,” according to one analyst.
But six years later, Wang pulled off a coup when Warren Buffett invested $232 million in BYD. This week, Wang’s vision – and Buffet’s bet – was validated when BYD snatched the crown of most popular battery-powered car maker from Tesla.
Half-year sales figures showed BYD – short for “build your dreams” – sold more vehicles than Tesla. About half of the cars currently sold by BYD are plug-in hybrids that China considers “new energy vehicles” alongside pure battery and hydrogen models.
By dethroning Elon Musk, Wang also achieved what General Motors, Ford and Volkswagen failed to do.
“Even Musk underestimated it,” said Tu Le, managing director of Beijing-based consultancy Sino Auto Insights. “But there is no doubt that his ambition matches his peers or competitors. »
BYD’s success has propelled the Shenzhen-based company, still little known outside of China, to the front lines of a battle for survival among automakers as more vehicles around the world are electrified and automated. .
Wang, who last year ranked as the 22nd richest person in China with a fortune of more than $25 billion, is at the center of escalating competition between China, the United United and Europe for access to resources, control of supply chains and ownership of consumer goods. data that will shape the future of the automotive industry.
The 56-year-old, who has carefully aligned himself with Beijing’s long-term political ambitions under President Xi Jinping, must also continue to navigate what can be a highly political and unpredictable business environment in China.
It’s a stark contrast to his upbringing, which according to a biographical note published by Beijing research group Gavekal, was far from well off as the second youngest in a family of eight children in Wuwei County. , in the eastern province of Anhui.
After her parents’ death, her siblings’ hopes for social advancement fell on Wang’s promise as a student. He got a place at a non-ferrous metal research institute in Beijing, first to study, then to teach. In Beijing, an idea began to germinate: nascent Chinese battery producers could – and should – compete with Japan.
Frustrated by the state-run organization’s lack of dynamism, Wang moved in the mid-1990s to Shenzhen in southern China, just as it was transforming from a sleepy fishing village into a global manufacturing center. Massive migration from rural areas gave the city’s factories the cheap labor they needed to compete with rivals in Japan, Korea, and Taiwan.
While Wang is willing to defy convention, in the two decades since BYD he has in some ways followed a well-established path among successful East Asian companies of separating Japanese and American products and finding ways to replicate the underlying technologies. Like many Chinese manufacturers, the group has denied numerous allegations of intellectual property theft.
However, Wang and his top aides told a group of university researchers in 2018 that it was during BYD’s early years, making batteries and other components for Siemens, Nokia and Motorola, that they received a boost. key lesson on manufacturing. Seemingly minor and innocuous problems in small components, multiplied by a large number of suppliers, had a cumulative effect: the phones did not work.
Accordingly, BYD embarked on a process of mastering technologies from its finished batteries to lithium and nickel mines.
Today, BYD’s vertical integration — controlling the supply chain from minerals to computer chips used in vehicles — is considered world-class by industry executives and analysts.
Rival automakers have for several years been frustrated by logistical bottlenecks and shortages of critical parts. BYD, meanwhile, produced its own automotive chips and sold its own batteries to competitors including Tesla.
Many of Wang’s billionaire class built their empires on the back of property development and infrastructure that required both debt and political connections.
Since Xi took power in 2012, China has stepped up efforts to reduce its reliance on major imports, including oil and computer chips. Xi has also made the development of clean technologies a national political priority with implications for the country’s security.
“Our assessment is that Wang enjoys a favorable relationship with the Xi administration due to his strong investment in Chinese industry, particularly the high-tech sector, especially given rising geopolitical tensions,” said Alex Payette, Managing Director of Cercius Group, a specialist consulting firm. on Chinese political risk.
Wang’s importance to Xi’s ambition stems, in part, from BYD’s position as China’s second-largest producer of electric vehicle batteries behind CATL. It is also among the cheapest electric car and battery manufacturers, according to research by Bernstein.
As a leader, Wang was praised by employees for his relative austerity and work ethic, as well as rewarding loyal staff with stock options. BYD has hit several billionaires among its top team who have been with it since it founded the group in 1995 at the age of 29.
“He said there was no work-life balance for his generation of Chinese business leaders,” recalled an auto industry executive who met him on several occasions. “He works all the time. »
Yet Wang also displayed a ruthless streak – not an unusual trait among heads of family business empires across Asia. He is referred to internally simply as “the President”.
“Our company has only one voice and it cannot have another,” he once told a Chinese business magazine.
Although he has sold more vehicles than Musk so far this year, many analysts believe Wang has yet to be fully tested, especially as Chinese automakers launch an aggressive campaign to open up overseas markets.
BYD’s sales have mainly been low-priced models in the Chinese domestic market. Deepening the challenge facing BYD, the United States and its allies are stepping up sanctions on Chinese companies amid fears over their growing global tech dominance and ties to the People’s Liberation Army.
Still, those who have followed Wang’s rise caution against betting against “the president.”
“He’s the quiet, unassuming genius you might pass on the street without noticing,” said Michael Dunne, a former GM executive and China industry expert. “That would be a mistake. »