#181 Build Your Dreams (BYD) in the USA

BYD, a Chinese automaker, achieved remarkable success in the electric vehicle (EV) market, particularly in its home country, where it emerged as the leading EV brand with record sales exceeding 3.02 million units in 2023. This success was underpinned by a strategic focus on EV technology, enabling BYD to leapfrog competitors who were entrenched in traditional combustion engine technology. By concentrating on battery technology, which constituted a significant portion of EV manufacturing costs, BYD capitalized on a crucial opportunity and gained a competitive edge.

However, penetrating the highly competitive US market posed substantial challenges due to the dominance of established players like Tesla, Chevrolet, Nissan, and Ford, along with regulatory, perception, and trade barriers. Recognizing these hurdles, BYD adopted an alternative strategy, shifting its focus to electric buses. This decision was strategic as it allowed BYD to leverage its expertise in EV technology while tapping into a less crowded niche market.

Despite initial obstacles, BYD successfully navigated the complexities of the US market by establishing operations in Elk Grove Village, Illinois, San Francisco, California and  Lancaster, California. By complying with “Buy America” requirements and incorporating a significant proportion of US content into its buses, BYD not only met regulatory standards but also demonstrated a commitment to local manufacturing and employment. Moreover, BYD’s inclusive hiring practices, including a Community Benefits Agreement, helped foster goodwill and support from various stakeholders.

By adhering to US laws and regulations while simultaneously investing in local manufacturing and workforce development, BYD effectively overcame barriers to entry and secured substantial contracts with municipalities across the US. This case underscores the importance of strategic adaptation and localization in international business expansion, illustrating how companies can overcome market obstacles through innovative approaches and compliance with local regulations.

In essence, BYD’s success in penetrating the US market serves as a compelling example of how a well-executed market penetration strategy, coupled with a commitment to compliance and localization, can enable firms to thrive in foreign markets despite significant challenges.

(Case written by Agassy Manoukian)

Thanks! You've already liked this