Insight Conversation: Tyler Li, BYD Brazil

Chinese electric vehicle producer BYD is positioning itself to rank among the top three automakers in Brazil by leveraging its ethanol-electric hybrid technology. Tyler Li, CEO of BYD Brazil, told S&P Global Commodity Insights in an interview that production at the company's largest facility outside China, located in Camaçari, Bahia, will no longer be launched in March due to the shutdown of construction activities in December, when authorities found workers in "slavery-like" conditions. The new forecast is that the launch will take place in 2025.

With a 327% surge in sales in 2024, the company announced it has cut ties with the firm involved in the employee issues and remains committed to "full compliance with Brazilian legislation," while exploring other necessary measures.

Li said combining ethanol and electricity will be crucial to accelerating the transition to greener mobility, combining technological innovation with local market needs.

Li recently spoke with Commodity Insights Associate Price Reporter Anne Barbosa to discuss key challenges facing the sector and trends in the region, including his perspective on current price volatility of raw materials like lithium.

Following the shutdown of the BYD factory's construction at the end of 2024, when does the company plan to commence production, and what are the key expectations?

Our forecast is to begin in 2025 the production of vehicles using SKD (semi knock-down) system, where the vehicles are shipped in kits for assembly, and after we will begin the full production at Camaçari factory, in Bahia. We will invest Real 5.5 billion ($900 million) and produce up to 150,000 cars per year in the first phase and 300,000 in a second one.

In addition, the plant will create approximately 20,000 direct and indirect work positions in the region, positively impacting the local economy and strengthening the production chain. We know that, for Brazil, this complex represents an opportunity to enhance the transition to a more sustainable mobility. We want to transform the region into the Brazilian Silicon Valley by investing in research. BYD currently has more than 110,000 employees working in research and development. We are an innovation company that files an average of 45 patents per day and we want to bring this culture to Brazil.

Brazil is not expected to become a large consumer of purely electric cars, with an EV penetration rate projected at below 30% by 2050, according to Commodity Insights forecasts. Is BYD considering an adaptation with ethanol-electric hybrid models?

Quite often, anything that’s new fosters concern: it is natural and part of the process. Ethanol itself, for example, had a very similar reception to electric vehicles in Brazil. Both emerged in a context of searching for more sustainable solutions for mobility and, in their own way, faced fears and resistance from society.

We have just announced the development of our hybrid-flex engine that, in addition to gasoline, will be able to use ethanol, a renewable fuel produced on a large scale in our country. We believe that the combination of ethanol and electricity will be essential to accelerate the transition to a greener mobility in Brazil, combining technological innovation with the needs of the local market.

We believe in the potential of the Brazilian market. We have just broken the record of 76,716 vehicles sold this year, a growth of 327% when compared to 2023. In November alone, BYD sold 12,308 units. Currently, seven out of every 10 100% electric cars and one in every four hybrids sold in Brazil are from BYD, a testament to the trust and quality of our products that are winning over Brazilians.

How does the current price volatility of raw materials such as lithium impact the production of EVs?

Volatility in primary material prices can, indeed, impact the production of electric vehicles, making cost management more complex. However, BYD stands out for its verticalization in its industrial chains, which gives us greater control over the production and supply of essential components.

A good example that illustrates this point is BYD Seal, with almost 70% of its components produced in-house. This production model ensures greater stability in the supply of raw materials and optimization of production, in addition to strengthening our competitiveness.

The Lithium Triangle region of South America is home to more than half of the world's lithium reserves, and BYD has already expressed interest in building a new plant in Peru. What are the plans for the region?

BYD is studying several possibilities to strengthen the supply chain. Any new developments will be announced in due course.

Electric charging infrastructure is still one of the main bottlenecks for the growth of electric car sales in Brazil. How has BYD invested and monitored developments in this sector?

Brazil, with its vast proportions, presents a major challenge for the implementation of charging stations. However, we are firmly committed to helping expand this infrastructure. As part of this commitment, we offer a free home charger to every consumer who purchases one of our vehicles, encouraging the culture of home charging.

In addition, in partnership with Raízen Power, we are investing in 600 charging points throughout the country. We also recently donated 100 chargers to Goias, which will be installed in the main cities of the state. This initiative was the largest investment in electric and hybrid car chargers in the state.

How do you plan to remain competitive in the region amid high local costs?

BYD is committed to improving its competitiveness in Brazil. To this end, our strategy involves a series of investments in local production, which will allow us to reduce importation taxes and logistics costs, in addition to optimizing our operations with more efficient technologies.

We believe that local production, combined with innovation and the development of sustainable solutions, will be essential to ensure that we remain competitive in the market.

What are BYD's growth forecast and market expansion plan in Brazil over the next few years?

We reached the incredible milestone of 10 million new energy vehicles produced in 2024. To give you an idea of the progress of this market, it took us 15 years to reach the first 5 million and only 15 months to jump from 5 million to 10 million.

In Brazil, we broke our record with more than 70,000 units sold. We are already among the 10 largest automakers in the overall sales ranking and we want to be among the top 3 in the coming years.

This interview has been edited for clarity and length.