Elon Musk has almost 100% name recognition worldwide. Wang Chuanfu (王传福), the founder of BYD which just beat Tesla in global electric vehicles sales, is virtually unknown in the west. Even in China, he is only well-known in the business circle and has a low profile otherwise compared to the more flashy tech entrepreneur, Jack Ma, or the more cosmopolitan investor-turned-founder, Kaifu Lee.
Whether you think China’s mass production of EVs and other renewable energy products is a net-positive for dealing with climate change, or an evil “onslaught” on the west, BYD’s global impact is hard to ignore and cannot be wished away. Its batteries have been powering millions of cell phones long before it started making cars. Its EVs can be now seen on the streets of every Chinese city, and quite a few European and Latin American cities. Its battery-powered buses are transporting commuters in Hyderabad, Bogotá, and the Los Angeles International Airport. It is also making electric SkyRails (subway in the air) that may soon appear in São Paulo’s skyline. Oh, and it supplies batteries to Tesla too.
Wang Chuanfu, the pudgy-faced chemist-turned-entrepreneur, is the main, if not the sole, reason why BYD, which meant literally nothing when the company was incorporated in 1995, became BYD, which now means “Build Your Dreams.” The late Charlie Munger called him a “genius”. Yet, there is no comprehensive biography (that I’m aware of) about the man. (Musk, on the other hand, has at least three about him.)
Since BYD took the global throne of EV sales from Tesla, there has already been more ink spilled in the western media on BYD in the last month than in the last 10 years. And predictably, much of the narrative is becoming political, from The Economist characterizing it as a threat to the west, to the U.S. Commerce Secretary calling Chinese EVs export a national security concern.
Before things get politicized further, Wang Chuanfu’s American-esque, rags-to-riches journey ought to stand on its own. So here is my telling of the Wang Chuanfu story.
Poor and Independent
Wang was born in February 1966, to a peasant family with five older sisters, one older brother, and one younger sister. His birthplace is called Wuwei (无为) in Anhui province in the central interior of China, a town whose name can literally be translated to “no achievement”. (无为 is also part of the Taoist principle of 无为而无不为, which roughly means “after carefully examining all factors, do nothing and let the world unfold according to its natural course.” In this sense, Wang’s later unlikely accomplishment is all the more appropriate.)
His father made his living as a carpenter. His mother was a stay at home mom, taking care of the eight children. Wang’s father died when he was 13. His mother died when he was about to graduate from junior high. The family fell on hard financial times during these years, so his older brother dropped out of high school to work and support the family. Meanwhile, Wang’s five older sisters were married off and his younger sister was given up to foster care.
It is difficult to describe just how poor Wang’s upbringing was and how much the cards were stacked against him to amount to anything. In fact, his plan was to get into a vocational high school, not university, because it was easier in the early 1980s in China to get a job with vocational training. But the year he applied was the same year that his mother passed away, so he was affected by the loss and didn’t get in. Instead, he ended up in a normal high school that inadvertently paved the path for him to eventually attend a university. Even though he could have dropped out, his older brother insisted on supporting him financially, so he could focus on studying, get into a university, and bring the whole family out of poverty.
As the story goes, because Wang had no guidance or tutelage from his parents or anyone else, he read a lot of books on his own and developed some early muscle as an independent thinker. He had no choice. He ended up going to Central South University of Technology in the neighboring province of Henan as a chemistry major. In his own telling, Wang did not even remember applying to this school. His first choice was the Hefei University of Technology in his home province to study wireless technology, because he liked playing with radios as a kid, but he didn’t get in.
The habits and worldviews that Wang picked up as a poverty-stricken young man ended up seeping into every dimension of BYD – an extremely cost-efficient mass manufacturer that prefers to make everything with its own bare hands.
Initially, Wang pursued an academic route. After university, he got into the master’s program at the Beijing General Research Institute of Nonferrous Metals (now called China Youyan Technology Group) to continue studying chemistry. He was then fast-tracked to lead a research lab and took on graduate students.
Then things got interesting.
In early 1992, China’s then-retiring preeminent leader, Deng Xiaoping, made his famous visit to southern China to keep the momentum of “reform and opening up” going and pushed the central government to, among other things, designate Shenzhen as an experimental Special Economic Zone (SEZ). Following the wave of southward entrepreneurial activities, in 1993, the Beijing research institute where Wang was working started a joint venture battery company in Shenzhen. Wang was sent to Shenzhen to be the general manager of this company, because, after all, he was the chemistry expert who should know a few things about making batteries.
The assignment did not go well. The partners of the joint venture were fighting, and Wang couldn't get much done, despite a very promising market opportunity in making all kinds of rechargeable batteries (cell phones were just taking off). So he left and started BYD.
With a 250,000 RMB loan from a cousin who worked in finance, Wang incorporated BYD in Shenzhen in 1995, where nothing was built and anything was possible. Registering a similar company in Beijing would have been a huge hassle, but in Shenzhen as a pilot SEZ, it sometimes took as little time as one day to form a company. Thus, there were a ton of companies being incorporated. In a rush, Wang chose B(比) Y(亚) D(迪) – three random Chinese characters that meant nothing together – because it was a name that wasn’t used yet. He optimized the first character’s pinyin for being earlier in the English alphabet, so the name could be seen earlier at a trade show or conference. (Jack Ma picked Alibaba for the same reason.)
Back then, the global leaders in battery manufacturing were Japanese giants – Sanyo, Panasonic, Phillips. Sanyo, in particular, was the company Wang aspired to and wanted to beat. But BYD was poor and could not afford any of the advanced equipment or assembly lines that Japanese manufacturers were using. So Wang reverse-engineered the manufacturing process, broke it down into small pieces, then hired very cheap human labor – the only advantage China had at the time – to work on each of those pieces to build cheaper batteries by hand. It was the most literal implementation of “human as a cog in a machine.”
Wang also flexed his chemistry training and caught up quickly in terms of battery technologies, from nickel-cadmium, to nickel-metal hydride, to lithium. BYD quickly caught up on all three types of batteries, while producing them at a fraction of the cost compared to its Japanese competitors. Its early investment in lithium-based batteries, along with Wang’s penchant to reverse engineer, would feature more prominently later in our story when BYD decided to make EVs.
During this first phase of BYD, it also caught a macro break – the 1997 Asian financial crisis. While it ravaged every single Southeast Asian country, this crisis also drove global battery prices down 20-40%. Japanese producers began losing profit fast and were on shaky grounds. BYD, on the other hand, was cheap to begin with. With China emerging relatively unscathed from this crisis, BYD was well-positioned to fill the void of the global battery market with its ultra-low, labor-intensive cost structure. BYD also had a lot of hustle. Early employees would carry suitcases of batteries, travel abroad to different markets, and knock on the doors of potential big customers, like Motorola, without making appointments.
It all worked out. By the early 2000s, BYD became a global leader in all types of rechargeable batteries that went into cell phones and other appliances, and beat Sanyo.
Also in the early 2000s, BYD began getting noticed by investors that would eventually lead it to Warren Buffett.
The company went public in 2002. That same year, Li Lu, the Tiananmen-protest-leader-turned-value-investor bought a stake with the money that Charlie Munger entrusted him to start Himalaya Capital. In his last interview on CNBC before his passing last year, Munger recounted the story.
Li Lu found BYD and made it one of his first investments. It was not something Munger would have done, because he still considered it a small risky outfit, but since he gave Li Lu money to manage, and the amount was, in Munger’s words, “fiddling money” for his standard, the risk was low. To Munger, investing in BYD in 2002 was akin to writing a VC check into an early stage startup – high probability of going to zero but with infinite upside.
Munger nonetheless admired Wang Chuanfu the person – someone he considered a “genius” with great engineering aptitude who works 70 hours a week. He would also soon learn of Wang’s independence and stubbornness, a trait that made his and Li Lu’s wager look like a terrible idea for a time, but set it on the path to become one of the best performing investments ever.
Let’s Make Cars
In January 2003, BYD bought a local carmaker called Qichuan Motors. Qichuan was so bad that the only worthwhile asset from that acquisition was the license it held, which BYD could now use to make its own cars.
Wang has had his eyes on the massive Chinese car market, and this was his way to move into it. His investors, however, were not pleased with this expansion. Li Lu, Munger, and just about everyone inside and outside the company opposed it. BYD’s stock price tanked by one-third during this acquisition.
But Wang didn’t care. For one reason or another, he acquired an immense confidence in his ability to reverse-engineer, vertically-integrate, then mass-produce just about anything. To learn how to make cars, he bought 50 or so second-hand cars from all the best foreign brands, took them apart, and learned how to make cars – a tale he has been fond of sharing in interviews since.
Similar to his admiration for (and desire to compete with) the big Japanese battery makers, he admired Toyota the most and tried to compete with it. The admiration was so strong that the first models of BYD cars, which were still powered by gas engines, looked almost exactly like Toyota Corolla’s and were ruthlessly made fun of for being blatant copycats.
Wang chugged along and forged ahead undeterred. His ultimate goal was to make electric vehicles of all types – cars, buses, other commercial vehicles – so making cars, even crappy ones to begin with, was just something he needed to do to reverse-engineer and learn, a playbook he already executed successfully once with making batteries.
To put the timing in context, Tesla was incorporated in July 2003, a few months after BYD bought Qichuan Motors. And Elon Musk would not come into the picture until February 2004, when he made an investment into Tesla’s Series A round using his PayPal-to-eBay acquisition winnings.
Technically, Wang was into making cars before Musk was.
Warren Buffett’s investment in BYD is a well-told story. Buying 225 million shares for $230 million dollars in 2008, when BYD was trading at barely more than $1, it is one of the best examples of Buffett’s “buy and hold” strategy working its magic. Buffett did not begin selling until 2023 – 15 years after his initial purchase. He is still holding more than half of his original stake, at the time of this writing.
However, there are two details to the Buffett-BYD love story that are less well-known and provide interesting colors to Wang Chuanfu’s personality.
First, Wang rejected Buffett’s initial overture to buy BYD, because the Oracle of Omaha wanted to buy a bigger stake than Wang was willing to give up. Despite the obvious benefits of capital infusion and stamp of approval from the greatest investor of all time, Wang stubbornly treated BYD like his baby, his kingdom, and his calling that couldn’t be so easily sold to the highest or most famous bidder. In the end, Buffett was only able to acquire about 10% of BYD.
Second, the branding effect of Buffett’s investment was a benefit Wang exploited fully, and it almost ruined the company. The investment raised BYD’s profile and brand recognition not just outside China, but inside China as well. More Chinese people at that time have heard of Buffett but not BYD – a fact that may still be true today.
Riding on the momentum of this investment, Wang would become Buffett’s chaperon and consigliere every time he visits China. He would arrange for Buffett to visit not only BYD’s headquarters in Shenzhen, but also BYD’s other facilities in Beijing, Xi’an, and other areas. BYD became the lens in which Buffett would see a lot of China, while Wang basked in the glow.
This momentum would take Wang’s ambition, and perhaps some hubris, to a whole new level, as he pushed the rest of BYD into hyper and unsustainable growth mode.
Rough Road to EV King
Before BYD claimed the top spot of global EV sales, Wang had to navigate it through two bruising and humbling setbacks, each of which could have tanked the company. The first one was so disastrous it got the “gate” treatment (as in Watergate). The episode was known as “Dealership Exodus Gate” (or “退网门” ).
From 2009 to 2010, buoyed by Buffett’s investment and branding, Wang set BYD on an aggressive expansion path to make and sell as many cars as possible in China. Although Wang was an engineering and mass production savante, force-feeding BYD cars, which were not of the best quality nor had any brand premium at the time, turned out to be a terrible move. BYD had no problem pumping out tens of thousands of cheap cars. But Wang’s sales target – doubling year over year – forced its sales teams to in turn force dealerships across the country to take on more BYD inventories and higher sales targets of their own.
But not enough consumers wanted BYD cars. Demand overall was also weakening at the time when every country was, in one way or another, dealing with the aftermath of the Global Financial Crisis. Thus, major dealerships started rejecting BYD cars and severing relationships with the company in droves, from Sichuan, to Hunan, to Shandong, and beyond.
By mid-2010, “Dealership Exodus Gate” was in full swing, BYD slashed its sales guidance, implemented mass layoffs, and Wang was humbled. He realized that treating dealers like minions, while making cars with no brand value was not going to work, even with Buffett’s blessing. Unlike batteries, which few consumers know of or care about the brand or manufacturer, cars are prized possessions that convey social status and prestige.
BYD had to become a brand, not just an efficient producer of cheap, affordable cars.
Luckily, China soon began embracing so-called “new energy” initiatives nationwide, with government policy and subsidies supporting renewable energy projects and products of all kinds. BYD was able to quickly transition to ride along this new wave, with its battery-making roots and long-held ambition to make electric vehicles. It soon released hybrid and fully electric cars, as well as buses and other commercial EVs later on.
Without the timing of government support for renewable energy, it’s hard to know how long BYD would have needed to recover from the dealership mass exodus, or survive at all. It’s fair to say that Wang made a major mistake and caught a big break. The second setback came in the form of a foreign threat, namely Tesla’s entrance to China.
Tesla first started selling EVs in China in 2014. It commanded brand premium, conveyed social status, and produced high-performing EVs with solid range – three things BYD did not have. Tesla’s were coveted by many, but affordable to only a few, due in large part to China’s high tariffs on foreign-made cars. This barrier gave BYD and other domestic EV makers some room to survive by continuously catering to low-end, cost-conscious consumers.
All that changed in 2019, when Tesla opened its Shanghai factory. Musk’s creations could now both be made and sold in China. This meant Tesla cars could avoid the tariffs and lower prices to compete with the likes of BYD. That year, BYD sold 20% less vehicles than the previous year. Its earnings fell by almost half. Wang Chuanfu was in survival mode again.
The subsequent turnaround was, in many ways, Wang tapping into his roots as a chemist and BYD’s roots as a battery maker. To fix BYD EVs’ lack of range and improve safety concerns, Wang came up with a new design concept that became the Blade Battery – a new form factor that could pack more power density and release heat faster than the standard battery pack modules. BYD’s adaptive and vertically-integrated manufacturing line quickly churned out prototypes of Lithium Iron Phosphate (LFP) Blade Battery.
Recall earlier in our story when BYD invested in lithium battery technology to beat out its Japanese competitors in the early 2000’s? That expertise would come in handy. At that time, LFP batteries were not popular among EVs because they lacked power and range. The more popular chemistry composition was Nickel Manganese Cobalt (NMC), which could pack more energy, enable longer driving range, but was less safe because it could heat up and explode.
By packing more LFP-composed power into Wang’s blade-shaped design, which allowed for more density and a larger surface area for cooling, the LFP Blade Battery achieved a nice middle ground that enabled longer range than conventional LFP block batteries, a bit less range than NMC batteries, with way less heat during an accident. In one industry standard test called a “nail penetration test”, LFP Blade Battery emitted no smoke nor fire and reached a temperature of 30 to 60°C, conventional LFP battery reached a temperature of 200 to 400°C, while NMC battery reached more than 500°C and burned violently.
A Workaholic Patriot
It is important to note that BYD’s success in China, especially vis-a-vis Tesla, was due in no small part to both government support and, increasingly, government restrictions on Tesla sales, as either a national security concern or simply a piece of leverage in the souring US-China relations. However, Wang Chuanfu’s ingenious technical design and the entire company’s ability to quickly switch gears to adapt and compete should not be discounted either.
To this day, Wang still spends 60-70% of his time on technology and product development, no doubt his comfort zone. His ambition goes well beyond making vehicles. He is spending lots of time and money making electric-powered SkyRails, yet another inspiration he took from Japan, just like Sanyo and Toyota. (Wang was impressed by the Tokyo rail system’s capacity to move millions of people and see rails in the sky as the next evolution of urban transportation.)
He is also deeply patriotic. He infused that patriotism in the branding of BYD EVs, with models named after different imperial dynasties (Han, Qin, Tang, etc.) when most of his competitors named their models with letters and numbers to sound cooler or more western. In an interview he gave two years ago, Wang vividly recalled two business trips he took – one to the US, one to the UK – where customs officers demanded to see his return flight tickets to make sure he would leave, even though he spoke little English, had no intention of staying, and was only visiting to set up local subsidiaries and create jobs. He felt insulted. It is the kind of indignity that just about every Chinese traveler has experienced at some point. It is the kind of indignation that is now fueling Wang Chuanfu to scale beyond China, so “Made in China” is respected.
This patriotic pride surely plays well domestically in China. But it won’t work when marketing to an American audience. To blend in and assimilate, BYD Americas’ official website is full of pictures and slogans featuring its local investments and its diverse, capable, and ultimately American workers, to soften and adapt its image. It looks just as patriotic, but in the Star-Spangled Banner tradition. If you click on the “Learn More About the BYD Story” button, and Ctrl-F for “China”, nothing will come up.
A man with no other discernible interests, Wang is still ultra-focused on building BYD. BYD is his life’s work. More precisely, BYD is his life. He has no other businesses – no rocket company, no social media app, no side investments. His life partner is rumored to be Stella Li, an early hire of BYD, who played a key role in pushing BYD batteries abroad in the 90s and now heads BYD Americas.
“Dealership Exodus Gate” was a business execution problem. Competition against Tesla was a technology problem. What Wang will face next in order to take BYD to the next level is a geopolitical problem that has been decades in the making. It will require more words, more finesse, and less inventive chemistry composition and hardcore engineering. It is probably not the kind of wheeling-and-dealing he is naturally good at. Then again, for a peasant kid orphaned as a teenager, he is not supposed to be naturally good at anything.
Whether he succeeds or not, Wang Chuanfu, is a name that everyone in the west should know. It’s long overdue.