Amazon’s Partnership with BYD Could Boost Growth, Despite Slowing EV Industry
In a recent announcement, Amazon revealed that BYD has chosen Amazon Web Services (AWS) as its preferred cloud provider for its connected vehicle platform. While this news may not have had a significant impact on Amazon’s stock, it raises questions about the potential value of this partnership and the implications for AWS’ growth.
The electric vehicle (EV) industry is currently facing challenges, with high inflation and interest rates making it difficult for everyday consumers to purchase vehicles. This has led to a slowdown in EV sales, even for popular models like the Ford F-150 Lightning. Until the industry rebounds, the future of EVs remains uncertain.
Considering the financial aspect of BYD’s decision to use AWS, it’s worth noting that BYD is Berkshire Hathaway’s only automotive investment. Despite selling off some shares recently, Berkshire Hathaway has held onto BYD for years, indicating the potential value of this partnership.
While the exact financial details of BYD’s AWS spending are unknown, it is interesting to compare it to Netflix’s spending on AWS. Netflix planned to spend $1 billion between 2019 and 2023 on AWS cloud services, which amounts to around $18 million annually. Assuming BYD’s requirements are not as high as Netflix’s, it can be estimated that BYD’s spending on AWS would be around $3.6 million annually.
In terms of dollars and sense, this partnership may not have a significant impact on Amazon’s revenue. However, it is important to consider the intangible value of such an association and the potential for future growth. As BYD expands into AI and enters North America, its business relationship with AWS could generate additional revenue for Amazon.
While AWS’ growth has been slowing down, partnerships like this one with BYD could help reignite its revenue growth. The more technologically advanced and innovative companies choose to work with AWS, the more other companies are likely to follow suit. This suggests that the current revenues from partnerships like this one may serve as a loss leader for AWS as it develops more significant revenue streams.
In conclusion, despite the challenges faced by the EV industry, Amazon’s partnership with BYD through AWS could fuel growth for both companies. While the financial impact may not be substantial, the association with a leading manufacturer of new energy vehicles and the potential for future revenue growth make this partnership promising for Amazon and AWS.
Disclaimer: The opinions expressed in this article are those of the writer and do not reflect the views of InvestorPlace.com. The writer does not have any positions in the securities mentioned.