No. of Recommendations: 1
Rhodium’s Sebastian said vertical integration – owning the supply chain rather than buying parts from elsewhere – had given it “a lot of control over costs”.
I don't see how owning the parts makers gives you any control over the costs. Certainly it gives you some advantages: control of supply, quality, integration with your product, etc. But control over costs?v if you are a carmaker like Ford that is buying its batteries, you pay market price for batteries. If you are BYD, you have to make them yourself, and you will still end up paying roughly their market price. The market price for a commodity like batteries is, very roughly, the same thing as their cost of production. If BYD could make batteries any more cheaply than its competitors, it would be taking over the market for batteries, but it can't and it isn't.
dtb
