the total sales of electric vehicles in China have increased in the first half of the year. This rise in enrollment is due primarily to the policies being initiated by the government of the people’s Republic of China. Through the grant of subsidies, the government of the asian giant wants the population purchase electric vehicles in place of the traditional combustion engine. the main reason is The enormous pollution that suffer from some of the major cities of the country.
BYD is a car manufacturer with capital and chinese headquarters in Shenzhen. However, it is not a car manufacturer chinese more. It is the manufacturer that leads the world sales of electric cars, ranking even ahead of Nissan and its Leaf. This position was achieved thanks to a range formed by models such as the BYD E6 or BYD Tang. In this way, the firm has been able to reach a market share of 14 per cent across the world. The following brands that share the market of electric cars are Tesla and Nissan, both with 9 percent of the global market.
The strategy that is being conducted by BYD to lead the global market for electric cars is in the vertical integration backward. What, what that means for the vertical integration backward? The answer is very simple. When a company specializes in the manufacture of a product, must have the close collaboration of suppliers that will help design and provide the necessary components for the marketing of the product designed.
however, when the value chain of a product is very wide, the margins are reduced, and therefore, the company, or trademark in this case, becomes dependent on its suppliers, putting in danger their business idea. Well, BYD has decided that it will not only manufacture electric cars, but that is also going to manufacture the main components that form, and the battery is one of them.
In this way, the research carried out by BYD rolled back, for good and for bad, only in the company and in this way a direct competitor (Tesla or Nissan) benefits of its technologies. Something that might happen if the design and manufacture of its batteries would be carried out by external suppliers, which can be avoided with the strategy of vertical integration backward.
Source – BYD