Chinese Government Subsidies Play Major Part In Electric Car Maker BYD’s Rise

South Korea’s Samsung group apparently bought into China auto maker BYD as a way of improving its prospects in China, where it has struggled against government protection of the local industry. If that’s the case, it could hardly have picked a better partner, for BYD has been one of the principal beneficiaries of government largesse, emerging as a state champion in electric vehicles and hybrids on its way to becoming the world’s largest electric car manufacturer.

BYD sold 58,000 electric and plug-in hybrids last year. New energy vehicle sales were up more than two-and-a-half times from 2014 , and BYD’s popular Qin and Tang models give it an 80% share of China’s plug-in hybrid market.

The Shenzhen-based auto maker announced July 21 that Samsung, South Korea’s largest chaebol, bought a 2% stake in BYD for $450 million as part of a share placement that saw the car- and battery-manufacturer raise almost $2.2 billion, funds that will be used to expand its electric vehicle production.

Electric and plug-in hybrid car sales in China quadrupled to 351,000 last year. Government subsidies have played a big part in that surge. Consumers receive a range of subsidies and other perks when they buy electric and hybrid vehicles. But BYD, too, benefits from lavish government support, support that has played a key role as it has established its global lead in electric vehicles.

Originally published in Forbes. Can be accessed here.

China’s BYD and Korea’s Samsung: Can Two Battery Kings Forge a Profitable Partnership?

News that South Korea’s Samsung Electronics plans to invest in China’s leading electric vehicle maker, BYD , raises the prospect of a powerful alliance that could grab pole position in the world’s fastest-growing e-vehicle market.

The two companies announced that they were exploring a tie-up that would see Samsung take a big stake of a planned secondary stock offering by BYD. BYD would not confirm a South Korean press report saying that Samsung would spend about 3 billion yuan (just shy of $450 million) for a 4% interest in BYD as part of the deal.

The planned investment would bring together two northeast Asian manufacturing powerhouses, each with a strong, even cultish,  corporate culture.

Samsung is by far the bigger company – it is the flagship company of South Korea’s most powerful business group – but it doesn’t have much of a track record in taking a small minority stake in a sizeable Chinese company. Samsung is also a substantial battery maker in its own right, with one of its group companies (Samsung SDI ) the world’s largest producer of lithium-ion batteries. Samsung, led by second-generation owner Lee Kun-Hee (see photo gallery below), is having difficulty cracking the Chinese electric auto market. Although Samsung built a battery plant in China it has not had success in getting on a government-approved procurement list for electric-vehicle batteries in China.

Originally published in Forbes. Can be accessed here.