BYD: From Battery-Powered Dreams to Evergrande on Wheels – A Comedy of Errors in Four Acts
Ah, the age-old question: can the shiny electric car king of China pull a classic Evergrande and turn from national hero to national headache? Let’s write this as a humorous essay, because nothing says “funny” like comparing a company that makes affordable EVs to the poster child of Chinese property implosion. Even Berkshire Hathaway wanted a piece of the action until …
Act I: The Setup – Rise of the EV Emperor
Now picture this: Evergrande was the company that built half of China’s skyline by borrowing like tomorrow’s hangover didn’t exist. They pre-sold apartments, used the cash to buy more land, pre-sold more apartments and repeated until the music stopped in 2021. Debt piled up like towers of raw concrete, presales turned into ghost towers and suppliers waited forever for payment while the company partied on. Just check out the video below. Like many Sinophiles, Singapore’s former presidential candidate Mr Tan Kin Lian didn’t believe that Evergrande’s downfall represents a systemic problem and confidently invested in Country Gardens. Something tells me that he won’t have much to shout about this investment.
Enter BYD, the electric vehicle juggernaut. They don’t build ghost cities; they build ghost inventories of cars. To the cheers from the Sinophiles and BCA, BYD zoomed past Tesla in sales, flooded China with cheap EVs, and became the darling of “Made in China 2025.”
But like Evergrande, success was built on a “house” (or in this case, a battery pack) of very “clever” financial tricks. Official reports show modest debt – sometimes net debt looking almost cute, like a few tens of billions yuan. But analysts like GMT Research (the same folks who called Evergrande’s bluff early) peeled back the layers and screamed: “Hidden debt iceberg ahead!” The Sinophiles and BACs of course, dismiss it as Westerners jealous of China’s success spreading rumours. Tan Kin Lian calls it “smearing China”.
They estimated that the real net debt for BYD to be closer to 323 billion yuan (~$44 billion) a couple years back, thanks to “supply chain financing” – basically IOUs to suppliers stretched longer than a Shanghai traffic jam. This brings us to:
Act II: The Warning Signs – Red Flags Waving Like They’re at a Military Parade
Evergrande’s collapse had classic symptoms: – Sky-high leverage hidden in creative accounting – Endless delay of payments to suppliers and contractors – Inventory (unfinished buildings) piling up – Desperate price cuts to move product and generate cash – Profit warnings and cash flow turning from Niagara to trickle – Quality complaints and unfinished projects everywhere
Swap “unfinished apartments” 烂尾楼 for “unsold cars rotting in lots,” and BYD’s 2025 plot twist starts looking eerily familiar.
1. Inventory buildup? Check. Dealers are drowning in stock, many reportedly closing shop.
2. Surging “other liabilities” and long-term borrowings exploding (up hundreds of percent in spots)? Check.
3. Cash flow from operations dropping faster than profits? Double check.
4. Aggressive price wars – slashing prices on dozens of models to clear lots? Mega check.
5. Quality gripes flooding the internet, from corrosion to mystery defects? Yup, social media is having a field day.
6. Accounts payable stretching out (suppliers waiting 200+ days in some reports), turning suppliers into unwilling bankers? Classic move. The symptoms are very similar to Evergrande’s, but instead of ghost towers, we have ghost parking lots full of shiny EVs nobody wants at full price. The price cuts aren’t confidence boosters; they’re fire sales to keep the cash flowing before the suppliers revolt or banks get twitchy.
Act III: The Punchline – “But Wait, We’re Different!”
BYD’s PR team would like a word: “Our debt-to-asset ratio is lower than Ford’s! No Evergrande here!” “Western media is smearing us!”
And sure, official numbers look healthier than the property wreck called Evergrande, with some debt reductions reported into 2026 and probability of bankruptcy models putting distress under 10-30%. BYD makes real products people (sort of) buy, has massive vertical integration (batteries, chips, the works), and enjoys Beijing’s industrial-policy love. Evergrande was pure speculation; BYD is “strategic national champion.”
But here’s the best part: Evergrande also screamed “We’re fine!” right until they weren’t. Hidden leverage via supply-chain tricks is the same smoke-and-mirrors. If domestic demand keeps softening, exports face tariffs and the credit window slams shut, those “quasi-debts” could turn real very fast. Suppliers stop shipping batteries, production halts, dealers bail and suddenly the EV miracle is just like a virtual image in a mirror conjured by the likes of Tan Kin Lian, Kishore Mahbubani and George Yeo.
Act IV: The Moral – Don’t Count Your EVs Before They Hatch
Will BYD actually go full Evergrande? Probably not tomorrow – it’s too strategically important for leaders not to hold on still the last straw falls. China doesn’t let flagships sink without a fight. But the signs are there: overcapacity masked by creative financing, price wars eating margins, inventory gluts, slowing sales, and sharp profit drops. The market knows it and it’s not just “evil Westerners” and their dirty tricks.
Evergrande taught China that endless borrowing and preselling the future works… until it doesn’t. BYD might just be proving the sequel is always worse – especially when the presold item is a car that depreciates faster than a politician’s promises.
So buckle up, folks. The ride might get bumpy. If BYD starts preselling 2030 models to pay 2026 bills, you’ll know what the ending is going to look like. Until then, enjoy the cheap EVs – while they last.