Automotive revolution: BYD leads the way in electric power, First Hydrogen focuses on hydrogen, and Porsche loses market share

BYD significantly increases sales and challenges Tesla

Last December, the Chinese automaker BYD set a new sales record. With around half a million vehicles with electric or hybrid drives sold, the Company achieved a whopping 50.95% increase in its home market compared to the previous year.

Sales of hybrid drives developed better than sales of pure electric vehicles. These accounted for 207,734 units, while hybrid drives accounted for 301,706 units sold. BYD is also further expanding its lead internationally. 57,154 models made the leap abroad despite possible punitive tariffs. If its main competitor, Tesla, does not deliver at least 467,000 vehicles in the last quarter, BYD will move to the top of the best-selling cars with alternative drive systems to the combustion engine - in terms of annual volume.**

In its marketing, BYD is relying on an aggressive price war through discounts and the increasing popularity of hybrid drives, particularly in the small car segment. The weakness of brands such as Volkswagen and Stellantis is also helping the Chinese to gain greater market power.

Sales in Norway are particularly positive. With a population of around 5.7 million, the country benefits from low electricity prices and, at an average of 19.9 cents per kilowatt hour, is in the low-cost segment by European standards. Hydropower is the main source of electricity generation in the land of fjords, accounting for 90% of the total. On average, the Norwegian drives around 40 km per day. The country has no domestic automotive industry to protect, which works in BYD's favor. In the last five years, BYD has increased its market share of new vehicles in Norway to around 10%.

First Hydrogen relies on mini nuclear reactors for hydrogen production

Energy production and supply is also the topic of the new year for the company First Hydrogen. The Company has two business areas. One is the construction of hydrogen-powered commercial vehicles. In the past few months, First Hydrogen has successfully completed pilot phases. The vans, which are designed for delivery traffic in and around cities, have so far been able to cover a distance of 630 km with a single hydrogen refuelling. An impressive range compared to electrically powered vehicles of the same design.

The second business area is the production of hydrogen. First Hydrogen is currently planning to use small modular reactors (SMR) to produce green hydrogen in Canada and the European Union. These compact reactors are designed to ensure a stable and cost-effective energy supply for hydrogen production. A reactor generates 300 MW, which is ⅕ of a conventional nuclear power plant. The electricity costs from an SMR are around 3.6 cents per kilowatt hour.

Compared to conventional nuclear power plants, SMRs offer decisive advantages: they require less space, can be built more quickly, and their electricity supply is not dependent on the weather. In order to offer hydrogen as an energy source on a large scale, First Hydrogen plans to build its reactors specifically in regions with limited grid power supply. The goal is to supply hydrogen filling stations. Depending on demand, the modular design of the SMR can also be adapted to the regions.

The US, Russia and China are already planning to use them for energy supply. In particular, IT giant Google has a vested interest in the SMR. In Europe, Poland, France, and the Czech Republic are leading the list of SMR pioneers. France is at the forefront, with plans to build the mini-NPPs as an export hit.

The EU is also planning an SMR push because they fit with the climate goals: more energy independence, lower CO₂ emissions and new jobs. The first of these mini power plants is expected to go into operation as early as 2030. The reactors can be prefabricated in factories, which should reduce construction costs.

Balraj Mann, CEO of First Hydrogen, explains the strategy: "Nuclear energy, unlike solar or wind energy, offers a constant source of energy for hydrogen production." The cost of electricity from an SMR would be around USD 36/MWh (3.6 cents per kWh). Large technology companies have recognised the need to secure low-cost energy for the foreseeable future and have recently made significant investments in nuclear energy. Those who, like First Hydrogen, occupy a strategically valuable field early enough can build a leading position from a niche position.

Porsche is fighting on all fronts – Shares on a downward slide

The luxury sports vehicle brand Porsche is in the throes of a deep crisis. The shares of the long-established company are currently around 39% below their annual high of EUR 93.60 at EUR 57.34. The problems lie, on the one hand, in the parent company Volkswagen's missed electrification strategy. The EVs to date are too expensive for consumers. On the other hand, the sports vehicle buyer wants the loud sound of the combustion engine instead of the quiet hum of the electric battery. Porsche AG's losses in its most important sales market, China, are particularly significant. There, sales in the first nine months of last year plummeted by 27%. CFO Lutz Meschke sees the cause in the rapid electrification of the Chinese market, in which European manufacturers have fallen behind. BYD, on the other hand, is pleased to have won the favour of domestic buyers as a local automaker.

Now the Stuttgart-based company has to make significant adjustments to its strategy. The goal of selling predominantly electric vehicles by 2030 is no longer the Company's primary objective. Customers want the best of both worlds, which is why Porsche is focusing on hybrid drives. At BYD, too, the mixed drive is the leader in sales. A slight glimmer of hope is emerging for the Stuttgart-based company with the electric Macan, for which numerous advance orders have already been received from the US and Europe. As the Chinese market increasingly stagnates, Porsche AG is turning its focus to India. The rising economic power is expected to fall under the spell of the German sports car in the future.

The Chinese carmaker BYD is slowly but surely becoming a global market leader in alternative automotive powertrains. With a strategic mix of aggressive pricing, a strong focus on hybrid drives and low-priced models in the small vehicle segment, BYD is moving inexorably to the forefront of electric mobility. The Company is particularly successful in Norway. The country has cheap electricity and Norwegians only drive an average of 40 km a day. BYD has what it takes to knock Tesla off its throne. First Hydrogen plans to build mini-nuclear power plants to generate hydrogen. The combination of its own hydrogen-powered vehicle fleet and energy production could prove to be a strategically valuable competitive advantage. The early positioning in the niche of SMR technology offers the opportunity to establish itself as a pioneer in this growth market. Particularly in the US, tech giants such as Google are relying on this form of energy supply. Porsche AG, on the other hand, is struggling with sales difficulties. Customers in the target market of China prefer other brands to the German sports car manufacturer. In other markets, demand for EVs remains subdued. Only the EV Macan seems to be catching on in the luxury segment. As a result, Porsche's management has decided to change its strategy. The focus is on hybrid drives to avoid completely scaring customers away. The 39% decline in the share price underscores the challenges that the Company – also in relation to its big brother Volkswagen – has to overcome.