Last year, Hefei made a bold 7 billion yuan investment in NIO, and this year it has placed its bets on Leapmotor. Along the way, the city has also attracted several new energy vehicle-related industrial projects, including the Jianghuai-Volkswagen joint venture and the second phase of Changan Automobile’s facility, demonstrating the continuous expansion of its new energy vehicle landscape. Now, Hefei’s aggressive move to secure a partnership with BYD has sent shockwaves through both the automotive and battery industries.

According to news reports, on July 9, Anhui provincial leaders held talks with Wang Chuanfu, Chairman and President of BYD, regarding the promotion of comprehensive strategic cooperation. The relevant projects between BYD and Hefei are scheduled to break ground by the end of August. This marks yet another win-win scenario for the “Blade Battery” and the “Gambling City.”

I. The Appeal of BYD

Globally , BYD is the only high-tech company that masters core technologies in batteries, electric motors, electronic control systems, and IGBTs, as well as core technologies in vehicle manufacturing. It is a leading enterprise in China’s new energy vehicle manufacturing, lithium batteries, consumer electronics contract manufacturing, power semiconductors, new energy, and new rail transit sectors, boasting a world-class international team.

To date, BYD has established seven major power battery production bases across the country. Aside from Hefei, the others are located in Shenzhen, Huizhou, Changsha, Chongqing, Xining, and Xi’an. According to plans, BYD’s total production capacity—including that of the “Blade Battery”—is expected to reach 75 GWh in 2021 and 100 GWh in 2022.

II. Hefei’s Appeal

In fact, Hefei was one of the earliest cities in China to explore the new energy vehicle sector. More than a decade ago, Hefei joined the “Ten Cities, Thousand Vehicles” initiative for new energy vehicles. By optimizing the layout of three major forces in the new energy vehicle sector, the city has established a tripartite structure comprising traditional new energy vehicle manufacturers, joint ventures and cooperative enterprises, and new entrants in the automotive industry.

However, one should not put all their eggs in one basket. In the industry’s view, this saying aptly summarizes Hefei’s strategic approach to layout and investment in the new energy vehicle sector, as the city has consistently pursued a diversified strategy in this field.

Currently, the city has attracted over 120 new energy vehicle enterprises, including NIO, JAC, Volkswagen (Anhui), Ankai, Changan, and Chery (Chaohu), forming a complete industrial chain that covers vehicle manufacturing, key components, applications, and supporting services. It is precisely because of these accumulated strengths that Hefei has taken its “bet” on the new energy vehicle sector to the next level.

III. Why a Partnership of Titans?

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A Natural Ace Up Its Sleeve First, BYD is a leading enterprise in the new energy vehicle sector with distinct advantages in technological innovation. Particularly in the field of power batteries, the Blade Battery is BYD’s well-known “ace up its sleeve.” At present, it has already become a battery or platform supplier for renowned foreign enterprises such as the Volkswagen Group, Daimler Mercedes-Benz, Ford Motor Company, and Toyota Motor Corporation.

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Aligning with Industry Trends Furthermore, following the “chip shortage,” the new energy vehicle sector is now facing a “battery shortage.” Reports indicate that in the face of this shortage, automakers are taking no chances and are rushing to secure partnerships with power battery manufacturers. In early June of this year, Great Wall Motor signed a ten-year strategic cooperation framework agreement for power batteries with CATL.

This clearly demonstrates automakers’ desperate need for power batteries. Will automakers in Hefei—such as JAC, NIO, Ankai, Changan, and Chery—also approach BYD to discuss the supply of Blade Batteries? It appears that BYD’s arrival may resolve the critical bottleneck of battery supply, which aligns with Hefei’s own industrial development strategy.

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A Long-Term Strategy Furthermore, construction of BYD’s Anhui Bengbu Fudi production base is proceeding at full speed. It is reported that the Bengbu Fudi project has a total investment of 6 billion yuan and is planned to have an annual production capacity of 20 GWh of power batteries. Considering this collaboration between BYD and Hefei, it is clear that BYD’s expansion in Anhui has been carefully planned for some time.

Conclusion

Hefei’s “grand strategy” for promoting the development of the new energy vehicle industry has been set, but to truly execute this plan successfully, it requires comprehensive planning, strategic positioning of key players, and a commitment to making each move carefully and steadily. In the future, as the collaboration between BYD and Hefei deepens, we will continue to monitor the resulting synergy.