BYD plans to invest US$4.1Bn in a battery factory and lithium project in Yichun, Jiangxi province.

The battery factory will have an annual capacity of 30GWh while the lithium project will enable BYD to produce 100ktpy of battery-grade lithium carbonate. BYD is the third battery player developing capacity in Yichun, following CATL (50GWh) and Gotion High-Tech (30GWh). 

BYD was founded in 2003 and has grown to become one of China’s national champions in terms of new energy vehicles.  The company produces a wide variety of passenger and commercial vehicles as well as automotive components.  Earlier this year, BYD overtook Volkswagen to become the world’s third-largest automotive player by market cap.  The company now only lags second-place Toyota and first-place Tesla. 

BYD was the world’s third-largest manufacturer of EV batteries in H1 2022.  In 2020, the company spun out its EV battery and automotive parts units into its FinDreams subsidiary and launched its “Blade” lithium-iron-phosphate (LFP) battery.  Recent reports suggest that Blade batteries are now being supplied to Tesla. This will reduce Tesla’s reliance on its current suppliers.  CATL is currently Tesla’s key LFP supplier, while its nickel-based cathodes are mostly sourced from Panasonic and LG Energy Solutions. 

BYD is often credited as being the world’s first vertically integrated EV maker, with the capability to manufacture battery cells and IGBT transistors, two of the most expensive components in an EV.  This trend (and BYDs ability to absorb higher battery materials costs) partially explains its outperformance of many of its peers in 2022.  The company appears set on doubling down on this competitive advantage.  In early June, reports suggested that BYD intends to buy six lithium mines in Africa, while this latest news will see lithium capacity added in China.