BYD's SkyRail struggles as stations rust, a rare setback for EV giant

By Linda Lew

 

Wang Chuanfu, the founder of BYD Co., has tried his hand at many things: producing batteries, making electronics and most recently, what BYD is famous for, electric vehicles. But for more than a decade, he’s also been attempting to build out another enterprise — a monorail network to solve the problems of congestion and carbon emissions at the same time.  

Launched in 2016, BYD’s SkyRail system was billed as green transportation for the future. The Shenzhen-based company has spent nearly $1 billion and assigned more than 1,000 engineers to develop it. Wang, in an interview in 2017, said SkyRail could be deployed to more than 200 cities across China, with a market worth trillions of yuan.

 

 

However, just a few years later, the rollout in around a dozen cities ran up against a squeeze on local government budgets. Now, half-dismantled stations and trains are collecting dust and rusting away in places such as Anyang city in Henan province and the tourist hotspot of Guilin, images and videos from Douyin, the Chinese version of TikTok, show.

 

Even though SkyRail appears to be a rare misstep for BYD, which vies with Tesla Inc. as the world’s biggest seller of EVs, the company has said it’s continuing to innovate the technology, according to its latest annual report released in March. Such commitment raises questions at a time when the cash flow of automakers is under strain from an extended price war and BYD’s core electric car division is showing signs of softness. 

 

“We have sufficient data to prove that we’re right,” Wang said in an interview in 2021, when authorities were beginning to pause projects like SkyRail. Despite the challenges, he said he believed that one day the public will overcome their doubts and see the transit system as a workable solution.

 

BYD was in talks about seven years ago to introduce SkyRail and later, the smaller SkyShuttle, in about 20 Chinese cities, which were attracted by the cheaper construction costs relative to subway lines. Wang said the cost per kilometer to build a SkyRail was 20% of a subway line and would take only a third of the time. Construction had begun in places like Shenzhen, Shantou and Xi’an.

 

Major hurdles came in 2021, when Beijing suspended approvals for new urban rail infrastructure projects to rein in ballooning local government debt and set minimum thresholds on local government revenue, economic output and population size. Bengbu city in Anhui province said it had completed most of the construction for a 5.7-kilometer (3.5 mile) long SkyRail test line, but due to the city failing to meet the population criteria set out in the adjusted national policy, it wasn’t permitted to start operation, Chinese media reports from 2021 show. 

China has resumed approvals for a select few new urban subway and rail infrastructure projects in recent years, but most SkyRail or SkyShuttle ventures have ended up abandoned, including the one in Bengbu. Some, such as the one at BYD’s headquarters in Shenzhen, and those in the cities of Xi’an and Yinchuan, continue to operate.

 

BYD has also run into troubles in advancing SkyRail overseas. It’s making the most progress in Brazil, where it’s also constructed an EV plant in Bahia state. It had a monorail deal with Salvador, but that was canceled in 2023 due to escalating costs. A contract for developing line 17 of the network in Brazil’s most populated city of Sao Paulo is still going ahead, and is scheduled to start operation in 2026, Brazilian media reported.

 

Although a decade in, SkyRail hasn’t made a huge deal of progress, history shows Wang is persistent with solutions he believes in and has found ways of eventually making them work.

 

Charlie Munger, the late business partner of Warren Buffett and an early BYD backer, said at an annual investor meeting in 2009 that after working a couple of miracles in businesses such as batteries and cellphone components, BYD proceeded to sail into cars with zero experience and mass produce a popular model.

 

“What it is, is a damn miracle,” Munger said.