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Fans take BYD to task as recall confusion clouds Chinese EV maker's image

Stock Markets Jun 30, 2022 01:15AM ET
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© Reuters. FILE PHOTO: People visit the BYD booth during a media day for the Auto Shanghai show in Shanghai, China, April 19, 2021. REUTERS/Aly Song

SHANGHAI (Reuters) - Customers of China's BYD Co (OTC:BYDDF) Ltd, the world's biggest electric vehicle (EVs) maker by sales, have taken the unusual step of urging regulators to expand a battery replacement recall to safeguard the reputation of a national champion.

Two BYD customers told Reuters they and others questioned why BYD had instructed dealers to replace batteries in their cars which were not subject to the recall. Though compensated, the customers said they wanted BYD to be more transparent.

The Shenzhen-based automaker did not respond to Reuters' requests for comment.

BYD has been a major beneficiary in the auto industry's rapid shift toward electrification, propelled by the backing of U.S. billionaire investor Warren Buffet. The three-decade-old firm has seen sales more than quadruple so far in 2022, largely shrugging off a slump brought by COVID-19 containment measures.

A maker of both electric cars and buses, BYD also builds batteries which it has portrayed as the industry's safest and which it is close to supplying U.S. EV peer Tesla (NASDAQ:TSLA) Inc, BYD's executive vice president has said.

It is this success that supporters fear could be undermined by public relations missteps. BYD's image has already taken a hit this year when its factory emissions were blamed for causing nosebleeds among local children. BYD said it complied with emissions rules and called the nosebleed allegations malicious.

"As an icon of the Chinese EV sector, BYD is failing us," said one of the complainants surnamed Wu. "It should be more transparent and honest facing such problems."

The complaints centre on the Tang DM-i plug-in hybrid sport utility vehicle (SUV) launched in April 2021 and priced around 200,000 yuan ($29,839.61). Tang DM is BYD's best-selling premium series with September-May sales exceeding 60,000 vehicles.

In April 2022, the State Administration of Market Regulation (SAMR) announced a recall of 9,663 Tang DM-i cars saying a defect in the battery pack could cause fires.

Three Tang DM-i owners told Reuters their cars were not on the recall list but that dealers in June had called them in to replace their batteries. Two said they were told the swap was due to quality issues and that the dealers would not elaborate.

The third said the dealer, when pressed, revealed the swap was on BYD's instruction and was due to the April recall. A bill seen by Reuters showed all charges covered by the manufacturer.

Two said they and others had submitted letters of complaint at SAMR's Defective Product Administrative Center after contact with BYD proved fruitless. They want an investigation into what they called a "secret recall" for fear of any damage to one of China's best-known international brands.

"BYD is growing too fast while its management is not able to keep up with its growth," said a complainant, who declined to be identified due to privacy concerns. "We hope this giant can make breakthroughs from this lesson and create real achievements."

It was unclear what criteria was necessary for SAMR to act. The regulator did not respond to Reuters' requests for comment.

A dealer in Sichuan said the Tang DM-i was being "widely recalled" but was unsure whether the scope was beyond the public recall. A Shanghai dealer owned by BYD declined to comment. A Shenzhen dealer did not respond to requests for comment.

FIRES

Plug-in hybrids - which draw power from batteries and combustion engines - make up half of BYD's passenger vehicle sales, with sales increasing nearly six times in January-May versus the same period a year earlier.

For all new-energy vehicle makers, however, fires constitute a persistent problem. In the past six months alone, over a dozen videos have been posted on social media showing BYD EVs on fire.

Several reviewed by Reuters showed large amounts of smoke rising from Tang-series SUVs, followed by blasts from the bottom of the vehicles where the battery packs sit. Reuters was unable to verify the authenticity of the videos.

Two years ago, Chairman Wang Chuanfu touted BYD's Blade battery, saying it would "guide the global battery industry back on track" and "put an end to spontaneous combustion" in EVs.

The Tang DM-i Blade battery pack differs in structure to the Blade for battery-only EVs - such as might be supplied to Tesla - but uses the same lithium-iron phosphate chemistry.

In the recall, SAMR said some Tang DM-i battery packs risk malfunction because a defective component could expose the system to water and cause "thermal runaway", or a sudden increase in temperature that could cause an explosive fire.

Recalls not involving casualties usually have little sales impact, said auto analyst Shi Ji at China Merchants Bank International. That said, of increasing importance is the manner in which an automaker handles the recall, Shi added.

"The e-mobility trend has pushed automakers to be much more customer-oriented than before," Shi said. "Battery safety is one of the key factors to convince buyers, especially for the mass-market segment that BYD is after."

($1 = 6.7025 Chinese yuan renminbi)

Fans take BYD to task as recall confusion clouds Chinese EV maker's image
 

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