BYD Auto Co, a Chinese electric vehicle manufacturer, plans to construct a factory in Vietnam for producing car components. This move aims to diversify the company’s supply chain in Southeast Asia as part of its global expansion strategy, and to decrease its dependence on China.
The investment in Northern Vietnam for this project is expected to exceed $250 million. This move will also expand the presence of BYD Co, the parent company, in Vietnam, where its electronic division currently produces solar panels.
BYD Auto Co, a Chinese electric vehicle manufacturer, plans to construct a factory in Vietnam for producing car components. This move aims to diversify the company’s supply chain in Southeast Asia as part of its global expansion strategy, and to decrease its dependence on China.
The investment in Northern Vietnam for this project is expected to exceed $250 million. This move will also expand the presence of BYD Co, the parent company, in Vietnam, where its electronic division currently produces solar panels.
BYD, a company backed by Warren Buffett’s Berkshire Hathaway, produces both plug-in hybrids and pure electric vehicles, and like Tesla, controls much of its supply chain, including battery production, which differentiates it from traditional automakers.
In September, the company announced plans to construct an EV assembly plant in Thailand with an annual capacity of 150,000 cars starting in 2024. By investing in Vietnam, BYD aims to increase capacity, manage costs and diversify production away from its operations in China, where demand has been robust.
Sources, who wish to remain anonymous due to the confidential nature of the discussions, have confirmed that negotiations are ongoing to determine the location for the Vietnam plant. According to one source, construction is expected to begin by mid-year.
It is currently unclear what specific components BYD plans to manufacture in Vietnam, including whether or not it will include batteries or battery packs. The company’s proposed investment, along with a separate $400 million project by digital display maker BOE, would amount to more than 25% of the total $2.5 billion invested by Chinese companies in Vietnam in the past year.
Many US corporations, including Apple and its suppliers such as Foxconn and Luxshare, have also been seeking alternative production locations, with Vietnam being a popular choice. BYD plans to lease 80 hectares (200 acres) of industrial land, significantly expanding its presence in Vietnam, where its electronic unit already rents 60 hectares.
The Vietnam plant will reportedly export components to a separate assembly plant to be built in Thailand. It may also serve the local market by providing maintenance services and spare parts for BYD vehicles imported from China, which could pose a direct competition to local EV maker VinFast.
It’s worth noting that in December, the US Commerce Department found that BYD and other Chinese companies were circumventing decade-old US tariffs on Chinese solar cells and panels, meaning those companies would be subject to duties on products made in Vietnam and other Southeast Asian countries if the finding is finalized in May.
