Low Entry Barriers in Electric Car Market

Lynne Kiesling

Very interesting story in today’s Wall Street Journal about BYD, a Chinese firm manufacturing electric vehicles. One of the most interesting points in this article: despite the global economic downturn, BYD is increasing its operations, first in China and then planned for US and Europe, because entry barriers are lower in the electric vehicle market than in the internal combustion vehicle market.

Mr. Wang’s strategy: capitalizing on the electric car’s low barriers to entry. Few products are as complex to develop and produce as gasoline-powered automobiles, which are assembled with thousands of precisely engineered parts. But electric cars use only basic motors and gearboxes, and have relatively few parts. Aside from perfecting the battery itself, they’re far easier and cheaper to build — and that makes for a level playing field.

“It’s almost hopeless for a latecomer like us to compete with GM and other established auto makers with a century of experience in gasoline engines,” said Mr. Wang in an interview, pacing and juggling calls in BYD’s headquarters on the outskirts of Shenzhen. “With electric vehicles, we’re all at the same starting line.”

BYD has other factors working to their advantage — low labor costs, innovations in battery technology — but the demand for electric vehicles is still not particularly large or particularly intense. The article also discusses the constraint that battery technology presents, and some of the innovations that BYD and others are doing to relax those constraints.

One thought on “Low Entry Barriers in Electric Car Market

  1. Lynne,
    Glad to see you extend this story onto the radar of other readers.

    I am Editor of a site The Energy Roadmap.com – where we’ve been making a very different case for electric vehicles for many months now. The real opportunity for the industry is changing how we build cars, not fuel them.

    We written extensively on wheel based electric motors, drive by wire systems and next generation energy storage beyond batteries. The vision of the future is a skateboard chassis (e.g. GM Autonomy) that decouples body updgrades (aftermarket sales) from propulsion system.

    So– I was thrilled when I saw the front page of the WSJ today on the subway.

    Finally manufacturing gets its credit as a major driver of disruption!!!

    I am eager to see the conversation evolve beyond the set of incremental solutions of improving efficiency, better batteries, et al.

    It’s hard to imagine batteries and ‘plugging’ in as the platform for the 21st century. While I can respect people being burned by the hydrogen hype cycle in 2003-2008, it would be short-sighted to ignore the steady development of non-battery solutions. I think it’s likely that next generation electric vehicles will be based on the integration of batteries, fuel cells and capacitors.

    The auto industry needs to shift its revenue streams away from ‘build, sit on lot until sold’ model of the combustion engine.

    In any event– just a few thoughts to consider.

    And as a PA native, I’m hoping for a Philly-Steelers Superbowl…!

    Enjoy your feeds!

    Garry Golden
    The Energy Roadmap.com

Comments are closed.