Chinese electric car manufacturers want to find a way out of the price war with takeovers and alliances. The Chinese industry leader BYD expands its main business with electronic components with a billion dollar acquisition. BYD is acquiring smartphone manufacturing facilities from Jabil Circuit for around $2.2 billion, the company announced on Monday.
BYD Electronic is thus strengthening its customer base, its product portfolio and its division with smartphone components. Circuit board maker Jabil says the sale will allow it to further invest in its electric car, renewable energy, data center and other parts business.
Apple is also a customer
BYD is currently best known for its electric cars and has around China the long-standing industry leader Volkswagen knocked out of the top spot. However, the roots of the company lie primarily in the business with components for electronic products such as smartphones or laptops. “For BYD, it’s a reminder that they are more than just a dominant EV maker,” said Tu Le, founder of consulting firm Sino Auto Insights. Among other things Apple is one of the company’s customers.
Jabil recently combined its production facilities in Chengdu and Wuxi into a separate division, which is now going to BYD. Citi experts said they expect BYD to continue expanding its business with Apple. BYD is likely to rely on loans and a capital increase for financing.
Xpeng takes over development from Didi
Meanwhile, BYD rival and Volkswagen partner Xpeng is acquiring the car development arm of ride-sharing service Didi for up to $744 million. In the agreement, Xpeng pledges to launch a new-brand compact car in 2024, which should be in the price range of around 150,000 yuan ($18,000). Currently, the Xpeng cars cost at least 200,000 yuan. “As an electric car startup, we are not as experienced in cost management in the 150,000-yuan segment as Volkswagen and other established automakers,” said Xpeng CEO He Xiaopeng, 45. The partnership with Didi ensures a certain sales volume at the beginning. The vehicle, which bears the project name MONA, is also to be sold to individual customers. Xiaopeng expects sales of at least 100,000 vehicles per year.
Didi has set up its own car development division, fueling speculation that it will go into vehicle production. The decision to form an alliance with Xpeng now suggests that a different path should be taken. Weaker demand and excess capacity are making it difficult for newcomers like Didi to enter the market. Yale Zhang of consultant Automotive Foresight said Xpeng will also benefit from the deal because the sedan developed by Didi could also sell well to other customers. “It looks like a very good strategic move.”
With the Volkswagen’s China boss wants to join Xpeng Ralf Brandstätter save the business in the most important car market. Brandstätter announced at the end of July that the VW brand will expand its specially developed electric portfolio in 2026 by two models that are being developed together with the Chinese manufacturer Xpeng. How dramatic the group is and how VW’s most important manager wants to turn the tide, read here
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In the Chinese car market a price war is currently raging, instigated by Tesla in January. With 41,000 electric cars sold, Xpeng currently has a market share of almost 2 percent – in comparison, BYD sold 550,000 vehicles and Tesla 294,000. Xpeng CEO He said in April he expects only eight automakers could survive in the Chinese market by 2030, up from 65 at the moment.