Retracing BYD's Success from Battery Maker to New Energy Vehicle Industry Leader: The Importance of Local Governments and Access to the State

Chinese automaker BYD has made the news in recent years for outselling Tesla. Despite not starting out as an automaker, BYD is now a leader in the new energy vehicle industry, with competitors and foreign automakers buying electric vehicle batteries from BYD. This thesis examines how a private start-up managed to achieve such phenomenal success in China’s highly competitive new energy vehicle (NEV) market comprising not only private start-ups, but also foreign brands and state-owned manufacturers which are likely to receive stronger support from the state. This thesis argues that local governments, especially in Shenzhen where BYD was founded, played a crucial role in BYD’s success. Local governments provided BYD with not only monetary support, but also bureaucratic backing and market access. In addition, BYD was not merely a passive beneficiary of state policies that have supported the development of the NEV industry over the past decade; BYD succeeded in lobbying authorities for policies that were favorable to its development. This was made possible through BYD Chairman Wang Chuanfu’s involvement in several platforms that granted him access to local government leaders and the opportunity to deliberate policies. Other factors such as the presence of like-minded national leaders and Wang’s political savviness also worked in Wang’s favor. This study shows that successful as BYD is today, and while acknowledging its cutting-edge technology, what makes a private enterprise successful in China is not simply the individual brilliance of the entrepreneur or the enterprise itself. Having good ties with the state remains important in China’s mixed economy, where private enterprises remain very much dependent on state support, at both the local and central levels. Local government support is probably more important at the initial stages, as companies have to be successful at the local level before they gain the attention of the central government. Successful trials at the local levels also give the central government more confidence to expand any local initiative nationwide.