The progress of the strong alliance between two behemoths, Toyota and BYD

By Jeff Lee 2022-08-23

The partnership between Toyota and BYD that kicked off two years ago is a perfect match between two behemoths built on BYD's three E technologies – electric cell (battery), electric motor and electric control – and Toyota's brand image and distribution channels. Although the sales of BYD's own brand vehicles are burgeoning in the Mainland China market, there is still a long way to go before BYD can challenge Toyota as the global sales leader. So currently, the two of them adopt a cooperation model where they benefit each other while each takes what it needs. In my opinion, both companies will continue to work closely together to enter the BEV market for at least the next five years. Major car manufacturers really need to tread lightly in dealing with the new force.

BTET (BYD Toyota EV Technology), a BEV research and development company headquartered in Shenzhen that has been operating since the year before last, is a 50/50 joint venture between Toyota and BYD. Since its establishment, the company has been delivering concrete R&D results and mass production plans. It is understood that the first model from the cooperation will be a sedan slightly larger than the Corolla, and the point is to keep the price at about US$30,000. This BEV, which will bear Toyota's logo, will be the second new-generation BEV after the bZ4X. It will be equipped with the three E technologies, including BYD's well-known blade LFP battery, and is expected to be launched in the Mainland China market first by the end of this year. Toyota was planning to unveil the new car at the Beijing Motor Show this April, but the show was cancelled due to the pandemic, so the actual appearance and the specifications of this model, probably called BZ SDN, have not yet been officially revealed.

Maybe you want to ask, "The two companies are only working together on one BEV. Anything of particular interest?" Let me start with BYD's Denza, a joint venture with another major international manufacturer – Mercedes-Benz – established in 2010. The company's products to date have not been well received by the market. There are two main reasons for that. BYD's EV technology was still nascent, and the vehicles were priced much higher than comparable BYD models. By 2020, BYD's three E technologies had matured. The sales of its own-branded models started to soar. The company has been faring really well this year, even beating FAW-Volkswagen and SAIC Volkswagen in July to become the monthly sales champion in China for the first time. Exerting such a force completely different from back then, BYD is helping Toyota to build a new pure electric car that is similar to the Corolla, the world's No. 1 single-vehicle sales model in history. How can this strong alliance, already going viral in the market before the launch of a car, not have the attention of other players in the auto industry?!

The top three auto companies in the world in terms of market capitalization are Tesla, Toyota, and BYD. Based on estimates, BYD is almost certain to overtake Tesla be the world's No. 1 in the annual sales volume of new energy vehicles (BEVs + PHEVs) this year for the first time. Meanwhile, the outcome of the sales battle between Toyota and the Volkswagen Group will depend on the supply of non-fuel vehicles in the end. If BYD and Toyota use the BZ SDN as a touchstone for long-term concrete cooperation, the two auto giants may become the trailblazers of affordable BEVs in the EV era, creating a win-win situation and reshuffling the global car market ahead of schedule.