Plus: Should that dog be there?
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Today’s briefing: |
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Good morning Intriguer. To some, the Chinese EV giant BYD seemingly exploded onto the market overnight. But BYD’s success actually developed over many (seemingly random) chapters across more than two decades.
It started as a battery business, then diversified into electric vehicles and renewables, with a little dabbling in other modes of transport (and even face masks during the pandemic).
It’s the ultimate tale of seizing the opportunity / self-reinvention / evolution (a la Pokémon), and we’ll dive into all the highlights in our top story today.
PS — Thanks to those who tuned into Intrigue’s fascinating session with the legendary Fareed Zakaria! Don’t miss our upcoming chat with Pulitzer Prize-winning Anne Applebaum, this Monday! It’s free to join online here.
When China’s Wang Chuanfu switched from making batteries to cars back in 2003, he didn’t even know how to drive one. His investors were furious.
And they might be feeling similar vibes this week after he offered discounts of up to 34% on 22 BYD models until the end of June. Yay for Main Street, boo for Lujiazui Street, which sent the world’s biggest EV-maker’s stocks immediately tumbling 8.3%.
But there’s more to the Build Your Dreams story right now.
In China…
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Consumer demand is sluggish
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Competition is intense (Li, Great Wall, Geely, Chery, Xiaomi)
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The local EV market is already saturated (half of all new car sales), and
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China’s dealerships are now overloaded with inventory.
So Wang and his business partner and wife Stella Li decided to slash prices, betting their sheer scale would help them withstand a temporary price war sacrificing profit for market share. And the scale they’re looking for leads us…
Abroad…
With trade barriers rising and BYD already blocked from the US market during the Biden presidency, Wang has now expanded aggressively into Europe and Central Asia, via billion dollar investments in Turkey, Hungary, Thailand, Indonesia, Brazil, and beyond (with thousands of jobs promised at each location).
There are signs Wang’s big bet is already paying off, with reports emerging last week that BYD has now surpassed Tesla in Europe, seemingly shrugging off the EU’s tariffs that were intended as a brake on China’s local EV resurgence.
And interestingly, Wang is not just expanding horizontally across borders, but also vertically up and down his entire supply chain:
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In Brazil, he’s bought two plots in the country’s vast ‘Lithium Valley’, and
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In Chile, he nearly pulled the trigger on an entire lithium plant for $290M.
But as Wang pushes this omnidirectional strategy, he’ll need more capital to keep the ball rolling, particularly as he hits political and logistical hurdles like…
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A ban in India (where the commerce minister just said BYD is “not welcome”)
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China-imposed delays on its Mexico plant (citing fears the US will steal the tech!)
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A labor conditions lawsuit in Brazil (alleging “slavery-like conditions”), and
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Rising fears in the EU that BYD will white-ant the big European automakers.
So, who cares? BYD, a firm founded a decade before Beijing even identified EVs as a strategic sector, is revealing how China’s companies are navigating today’s trade wars by:
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Owning entire supply chains
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Sidestepping the US entirely
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Investing in third markets to keep other capitals onboard, and
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Innovating (BYD just announced a battery with a 5-minute charge time)
So sure, BYD has (like China’s other EV-makers) benefited from a cool ~$230B or so in mostly unlawful state subsidies. But that’s just part of the story.
Intrigue’s Take
Intriguers are located all over the world (even on transoceanic cargo ships, hi 👋), but most are in the US. That means, while BYDs are now roaming the streets in just about every major city abroad, many Intriguers might never have actually seen one up close.
Anyway, the story of BYD’s rise feels to us like a mix of big bets and missed signals.
First on the big bets, while BYDs were once rough enough to trigger a hearty Musk laugh, they now rival Teslas in many respects, thanks partly to big bets like:
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Wang’s big battery bet back in the 1990s, his big auto pivot in 2003, and his big design bet in 2016 (hiring Audi’s famous Wolfgang Egger)
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Wan Gang (China’s then tech minister) then made a big bet on EVs in 2009, solving what he saw as China’s uneasy reliance on both foreign cars and oil, and
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President Xi then backed both those commercial and national bets via his Made in China initiative, shrewdly sensing the strategic value of all that underlying tech.
The cumulative result has seen China come from nowhere to overtake — in just four years — the US, then Japan, and then Germany, to become the world’s top auto exporter. It’s now making more cars than the rest of the world, combined. And it’s not an easy sector, either — ask Apple, which invested $10B over a decade before abandoning EVs altogether.
As for missed signals? US policymakers woke up to this existential trend years ago when they moved to block BYD’s entry to the US. But beyond Tesla, it’s not clear America’s big automakers have made the most of that stay of execution — their share of international markets keeps shrinking, while they keep doubling down on the US market instead.
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Meanwhile, elsewhere…
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🇺🇸 UNITED STATES – Court blocks Trump’s tariffs. Comment: All those trading partners now negotiating a reprieve? They just got one for free. But while any appeal plays out, Trump likely has short-term options to replace his tariffs (eg, via ss122, 232, and 338 of the Trade Act), while he cooks up more targeted tariffs via s301 (this requires an investigation first). Meanwhile, some in Trump’s team (Bessent) might nudge him to take this offramp, blame the courts, and regroup for a different strategy, though that feeeeeeels unlikely. |
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🇨🇳 CHINA – US to revoke Chinese student visas. Comment: Yet another development with massive ramifications: China is America’s second source of international students, so the university sector will feel this on their bottom line first, before the impacts flow through to the broader US tech ecosystem, which has long relied heavily on attracting the world’s best and brightest (up to half the world’s top AI researchers have ties to China). |
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🇮🇱 ISRAEL – UN criticises chaotic aid rollout. |
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🇪🇺 EUROPEAN UNION – Brussels wants members to cut water usage. |
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🇰🇭 CAMBODIA – One dead in Cambodia-Thailand border clash. Comment: It’s a reminder that, even among relatively friendly neighbours, long-simmering territorial disputes can quickly turn deadly. As we hurtle towards a more multipolar world, more capitals will shoot their shot. |
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🇲🇽 MEXICO – Voters to start electing judges. Comment: In one of those plot twists even Hollywood couldn’t concoct, a member of El Chapo’s defence team is now running for election as a criminal court judge (another of his lawyers went on to drop an epic debut album). |
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🇲🇳 MONGOLIA – PM’s lavish son triggers protests. |
Extra Intrigue
Intrigue’s commodities corner is back
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Nuclear: Ukraine is calling in the UN nuclear watchdog over reports Russia is constructing power lines to connect Ukraine’s occupied Zaporizhzhia nuclear plant to Russia’s own grid.
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Metals: Asia’s EV battery makers apparently hoover up 94% of the world’s battery metals.
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LNG: Australia has now approved a 40-year lifespan extension of its biggest LNG plant to 2070.
Dog of the day
A stray dog casually became the first visitor to cross the Romania-Hungary border after Romania officially joined the EU’s Schengen Area earlier this year. The scene quickly went viral, and the lucky pup ended up getting adopted by a former customs officer.
Today’s poll
Which company do you think will have the most impact this decade? |
Yesterday’s poll: How do you feel about international education's impact on host countries?
💰 It's a key economic export (43%)
🖊️ It's a key cultural export (40%)
🏠 It's straining local communities (10%)
💸 It's straining local economies (7%)
✍️ Other (write in!) (1%)
Your two cents:
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💰 E.J.S: “I am a current Ph.D. student. More than half of my program is international students. Said program would cease to exist without international students, as would many others.”
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🖊️ D.S: “One of the best forms of soft diplomacy, developing people to people links, cross-cultural appreciation, and so much more.”
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💸 R.H: “The story in Canada is that foreign students have exacerbated the housing shortage.”
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✍️ E.K.H: “I studied abroad in Dublin 7 years ago. I think of the thousands of euros I spent over those few months on food, lodging, entertainment, travel, etc. But I also think about the housing crisis Dublin had at the time, and the friends I met there in cutthroat competition for apartments.”