The black technology on electrification gradually breaks the circle, and the closed industrial chain is moving towards opening up, which are the places where capital is optimistic; the high-end brand is not smooth, and the grass-roots talents cannot be retained, which are hidden dangers in the future
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Text | Caijing reporter Li Yang, Li Haoyin, Huang Huiling
Edit | Shi Zhiliang Lu Ling
"Shenzhen? Oh, I know BYD. On the streets of Germany, when the taxi driver spat out these words, Yao Zhipeng, director of growth style investment at Harvest Fund, was a little surprised. As an institutional investor, he did not expect that a company that mainly focuses on corporate clients would be so global.
A few years ago, by mentioning BYD (002594. SZ), ordinary people in China think of electric buses and affordable Volkswagen, but as BYD has stepped on the wind outlet of the development of the new energy automobile industry, it has now become more and more out of the circle.
In April 2021, TIME magazine (TIME) selected the "100 most influential companies", as the only new energy overall solution provider from China, BYD was selected. Time magazine recognized BYD's electric bus business around the world and also introduced passenger cars, including the sedan "Han" that is in short supply in the market.
These reputations are fed back into the capital markets. SAIC Motor (600104.SH), GAC Motor Group (601238. SH), General Motors (GM.NYSE), BMW (BMW.DE), Daimler (DAI.DE), this string of names are byBYD's opponents in the past two years in terms of market capitalization.
In August 2021, when BYD exceeded 300 yuan per share, it was only one foot away from the first trillion-dollar market value car company in China. Some brokers shouted out the target price of 1.5 trillion yuan for BYD, and the market sentiment heated up. Compared with two years ago, when the market was around 50 yuan / share, why did BYD change its appearance in the capital market now?
BYD is regarded as one of the representative enterprises of China's new energy industry. In the view of Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, BYD is a traditional car company that attaches importance to technology, and it is also the most promising car company. Engineers have a strong corporate culture, less to say and more to do, and the outside world does not know much about it.
Xu Zhongchao, managing director of CICC Capital, told Caijing that BYD, which continues to polish its core technology, can be called a technology company in the automotive industry.
Figure/IC
BYD spans many trillion-level markets such as energy storage, batteries, electric vehicles, chips, etc., and has good competitiveness in various fields and advantages in some segments. But there is still too much uncertainty about whether BYD can cash in on the valuation and take the above sectors further.
After the National Day, the automobile sector (Shenwan level) led the market, and the automobile sector rose the most, but BYD, which was climbing steadily, never crossed the milestone of trillions of market value. With the resurgence of the wave of valuation declines in the new energy sector at the end of the year, BYD's hope of breaking through the trillion market value in the short term is becoming more and more dim.
As of the close of trading on December 28, BYD's stock price has fallen back to 270.85 yuan / share, with a market value of 788.483 billion yuan, when to break through the trillion market value threshold, is a big suspense left by BYD to the industry.
Returning to the global electric vehicle sales championship
Wang Chuanfu, who stepped onto the stage, bowed to the audience. This scene appeared in September 2021, at a press conference in Shenzhen, Wang Chuanfu, chairman and president of BYD Group, apologized to consumers due to the slow delivery of DM-i hybrid models.
Behind the slow delivery, the hot sale of the product made BYD unexpected. Li Yunfei, general manager of BYD's brand and public relations, revealed to Caijing that BYD has accumulated more than 100,000 orders.
Market share is the market share of China's new energy vehicle market
Watchmaking: Li Yang
Judging from the amount of insurance from January to November 2021, BYD's sales have fully exceeded the sales volume of the whole year of 2020. Tang Jihui, research director of Wilson Intelligent Technology Company, explained to the "Finance" reporter that thanks to the results of technology research and development, DM-i technology and blade battery have enhanced BYD's core competitiveness. In an interview, industry experts without exception took the initiative to talk about DM-i technology, saying that this is a benchmark product for BYD's self-developed technology.
Unlike the plug-in hybrids that used to be mainly internal combustion engines in the past, BYD's DM-i super hybrid system is mainly driven by pure electric power. Gasoline engines generate electricity, and motors power cars. If necessary, the engine can also directly output the power of the car. The comprehensive energy consumption of the whole vehicle is not only much lower than that of fuel vehicles, but also lower than that of traditional gasoline-electric hybrid energy-saving vehicles.
"Order now? We won't be able to pick up the car until next year at the earliest. In the BYD Dynasty series 4S store in Guangzhou, the reporter of Caijing saw that there were many people who came to the store to see the car, most of them were running DM-i. Unlike the widespread lack of chips in the industry, BYD is because blade battery capacity cannot keep up with demand.
Batteries are one of BYD's core competitiveness in electric vehicles. Wang Chuanfu has high hopes for blade batteries, saying that it will promote the technical route of power batteries back to the right path and redefine the safety standards of new energy vehicles. Blade batteries are shaped like blades, through structural innovation, more batteries are installed in the limited car space, and the mileage is improved, compared with the current ternary lithium batteries of passenger car owners, the life is longer and the cost is lower.
Insufficient capacity is a "happy annoyance". From a macro point of view, with the rapid growth of global new energy vehicle consumption, BYD has hitched a ride. In July 2021, BYD regained the global electric vehicle sales crown from Tesla, and the sales of new energy passenger cars exceeded 50,000; in August and September, BYD's new energy passenger car sales went all the way up, exceeding 60,000, 70,000, and 70,000 units, respectively, surpassing Tesla for three consecutive months and reaching the top of the global electric vehicle sales championship.
Source: Clean Technica
In the August new energy sales ranking, BYD became the most popular new energy vehicle company in the Chinese market with sales of 90,142 vehicles, twice that of the second place SAIC-GM-Wuling (44,157 units) and three times that of the third place Tesla China (31,732 units).
Taking 2019 as the demarcation point, BYD has steadily moved upwards, firmly grasping the share of 20%-30% of the domestic new energy market, and once declined with the general trend, with a market share of less than 20%. Until 2021, BYD stepped on the momentum of recovery, and the market share also recovered to about 25%.
It is not easy to survive to this day, ANDD has experienced the entire cycle of ups and downs of new energy vehicles. With the help of electric buses, BYD not only drank the head soup of electrification promotion, but also established a brand overseas.
Wang Chuanfu saw the market, and at the beginning BYD proposed that electrification should take the lead in public transportation and taxis to keep up, and promote urban charging facilities. In 2017, it successfully entered the bus and small electric vehicle tracks and excavated the first pot of gold in the electric vehicle market.
The next strategic adjustment is very flexible. Wang Chuanfu, chairman of BYD, told the "Finance" reporter bluntly that when friends want to understand and start to follow up, BYD, which is one step ahead of the strategy, must maintain the leading position in products or subtle strategies. BYD continues to bet, through lean production, so that electric private cars continue to reduce costs and improve efficiency, to create A0-class cars, to establish a market segment leading position.
At present, BYD electric vehicles have been sold to more than 300 cities in six continents and more than 50 countries and regions around the world, of which pure electric buses have sold more than 65,000 units. In May 2021, at the ceremony of BYD's first million new energy vehicles rolling off the production line, BYD officially launched the passenger car overseas plan, and the first batch of 100 new Tang EVs went to Norway to complete the transformation of "business transfer" in overseas markets.
New energy vehicles going to sea is a major trend, and only by paying enough tuition fees can they be targeted and truly accepted by the market. "Many Chinese new energy vehicles are particularly concerned about the Internet of Vehicles and the entertainment function of the car, but ignore the driving performance, in fact, European consumers are very concerned about the driving experience in different situations, Chinese car companies do not pay a lot of tuition to understand the local needs, it is difficult to enter the European market." He Yipeng, general manager of BYD Europe Co., Ltd., told Caijing reporters.
The imagination space for the separation of vehicle parts
In addition to the good sales of new energy vehicles, the spin-off and listing of parts is also very important. The industry generally believes that with the help of outsourcing and OEM, IT will open up BYD's profit and valuation space and release the market potential of subsidiaries.
BYD entered the new energy market very early. In 2003, it entered the vehicle market with this, and in 2008, it became famous because of Buffett's investment, and at that time, the domestic new energy industry chain was almost blank, and BYD was forced to build the whole industry chain to meet business development.
Since the domestic new energy vehicle market is still in the cultivation period, BYD's so-called "new energy independent technology" has always been shrouded in mystery. In 2018, BYD, which has been closed for a long time, began to open to the outside world: divesting the automotive electronics business and setting up a separate division; selling batteries to other car companies; and in 2018, all technologies of the electric vehicle e-platform were fully opened to the public.
In 2020, BYD is fully open: five companies were established: Fudi Battery, Fudi Vision, Fudi Technology, Fudi Power, and Fudi Mould, covering almost all the businesses of new energy vehicle manufacturing and research and development, and strive to accelerate the external sales process of core components of new energy.
After the split, the components subsidiaries began to wave in the market environment. In July 2021, the Shenzhen Stock Exchange accepted BYD Semiconductor's listing application on the Growth Enterprise Market (GEM), and was subsequently suspended by the Shenzhen Stock Exchange twice due to the issuer's lawyer being investigated and the shortage of raw materials. Fordy Battery is also actively seeking to go public, and in the medium and long term, each component subsidiary has a listing plan.
Wang Chuanfu told the "Caijing" reporter, "BYD's market-oriented 1.0 strategy is to split the parts business, so that the motor, battery, powertrain and other businesses in the form of business units to compete with peers." Marketization 2.0 is to sell the enterprise and let the capital market recognize it. ”
Today, BYD Semiconductor's business has covered the research and development, production and sales of power semiconductors, intelligent control ICs, intelligent sensors and optoelectronic semiconductors, and has an integrated operation of the whole industry chain including chip design, wafer manufacturing, packaging and testing, and downstream applications.
The supply of parts involves the core secrets of car companies, and there are views in the industry that other car manufacturers will be afraid to buy BYD parts. In this regard, Li Yunfei responded that as long as the financial and equity cuts are done, the market only looks at product strength.
In the field of technology, BYD has a certain family foundation. In terms of power batteries, since the release of BYD blade batteries, the lithium iron phosphate market has gradually warmed up, surpassing ternary lithium batteries. In the market, BYD's market share is second only to the Ningde era; in terms of energy storage, BYD has been promoted on a large scale in the world since 2013, with total global sales of more than 1.7GWh, and is the first Chinese energy storage provider in 2020 overseas electrochemical energy storage (excluding household energy storage) shipments, and its energy storage battery performance ranks second in China.
In addition to Mercedes-Benz, Toyota, Hino, there are more brands in cooperation negotiations: some buy individual technologies, some buy some parts, some buy the entire e-platform parts, and some direct vehicle contracting.
The closed-loop technology accumulation of the whole industry chain for up to 20 years is a huge advantage of BYD's market-oriented market and the basis for high valuation. But because it has never been directly involved in market competition, how to really get peer recognition still needs to be tested.
In the eyes of employees, Wang Chuanfu, who has carried BYD all the way through the thorns, has absolute authority. During the COVID-19 pandemic, the workshop was shut down. 3 days out of the drawings, 7 days to create a mask machine, 10 days out of the product, he "tough" to promote the technical transformation of R & D personnel, Shenzhen's mobile phone parts factory was transformed into a mask manufacturing plant, built a mask production line of 2,000, the maximum daily output of 100 million, becoming the world's largest mask manufacturer.
On the road to diversified operation, BYD has also encountered ups and downs. The cloud rail business, which was once called "rebuilding a BYD" by Wang Chuanfu, is quite embarrassing in the soaring market value of BYD.
Cloud Rail is a strategic product launched by BYD in 2016. Once released, it quickly obtained order intentions from many cities at home and abroad, and in September 2017, the first commercial operation cloud rail line was operated in Yinchuan, and the cloud rail once overshadowed the new energy vehicle business.
The following year, due to policy implications, a number of cloud rail projects were stopped by the government. Until April 2021, the first train for the trans-sea cloud rail in Bahia, Brazil, rolled off the line in Shenzhen, which was built by BYD. In October 2021, BYD unveiled the 2021 Beijing International Urban Rail Transit Exhibition, and BYD's cloud rail business, which has been silent for a long time, is ready to move again.
A number of fund managers told Caijing that in BYD's current value assessment, the cloud rail business is not considered. Similar evaluations are relatively obscure, but rail transit has never been a good investment target.
A number of people in the capital industry told the "Finance" reporter that rail transit such as cloud rail is generally regarded as infrastructure construction, with large investment and long return cycle, capital interest in it, the story is not sexy, and it is naturally difficult to have a good valuation.
From the perspective of investors, buying BYD stocks is more optimistic about BYD's new energy business. Compared with the cloud rail, BYD should give priority to solving the problem of vehicle sales and brand.
The price is high-end, but the brand is still not high-end
Car companies are pursuing to promote high-end brands, enhance competitiveness, and bring higher premiums. When new products sell well and bicycle prices gradually rise, how is BYD's brand high-end progressing?
BYD has not worked hard. The two major sales platforms of Dynasty and e-net are completely independent to isolate the brand influence of low-end models on high-end models; and constantly launch high-end products. At present, medium and large cars have accounted for more than 17% of BYD's sales share.
In the view of Wen Wen, research director of Bona Consulting, BYD's design elements are in line with the trend; the layout is in line with market demand; and it has got rid of the product route of large size and low price many years ago.
Li Yunfei believes that behind BYD's sales volume and stock price, it is already consumers' recognition of the brand, and the brand image is not what it used to be. According to Li Yunfei, "In the second half of 2022, BYD will also launch its own high-end brand, its first car is a hard-core off-road vehicle, and the price of high-end brands is more than 500,000 to 1 million." ”
Byd's average bicycle price continues to rise. Wilson's data shows that from January to July 2021, the average price of BYD's bicycles has reached 151,800 yuan. For comparison, Volkswagen, the best-selling joint venture brand in China, has an average bicycle price of about 160,000. In terms of product pricing, BYD has been on par with the joint venture car companies.
The price of 200,000 units is regarded as a watershed for domestic high-end models. According to the statistics of the "Finance" reporter, BYD has 6 models priced at more than 200,000, including 15 different configurations. The new energy version of BYD Tang has touched 340,000 yuan.
However, in the survey results shared by Wenwen to the "Caijing" reporter, it is shown that BYD's progress has not been fully conveyed to consumers. In the consumer impression, BYD is still low-end, cheap and imprecise workmanship. After all, the brand image has been fixed at the beginning of its establishment, and it is extremely difficult to evolve through product upgrades.
"Buying BYD is about the cost performance, and will not consider the first model." A Qin PLUS DM-i user told Caijing reporters. Some consumers include the BYD brand in the ranks of ordinary domestic cars, not low-end or high-end. BYD has created products that meet the needs of consumers, but still has not created a brand.
It should be pointed out that BYD's attraction to consumers depends on new energy technology, and automotive intelligence has not yet become BYD's product label.
"At present, BYD's experience in intelligence is inferior to that of Xiaopeng, Ideal, Weilai and other new car manufacturing strength, but BYD is also actively seeking cooperation and synchronous improvement, and the gap between intelligence in the future will not be large." A new energy fund researcher told the "Finance" reporter.
BYD is aware of its shortcomings. Liu Ke, vice president of BYD's Product Planning and Automotive New Technology Research Institute, said that whether the car machine can replace or even surpass the mobile phone 100% is the only standard for smart cars.
At present, BYD's DiLink intelligent network system has been iterated to 3.0, which can run all software based on the Android system, and to some extent can replace mobile phones. But this is far from enough, a young consumer in the 4S store after experiencing Han's car machine system, surprised by the speed of response, frankly the sense of fluency is better than Xiaopeng. Even so, he still chose Xiao Peng instead of Han. Because the Android system is compatible, but there is no feature, not tide enough, prefer Xiaopeng's car machine system. BYD needs to meet the needs of consumers to show their individuality.
The industry believes that only the high-end of the brand can increase the product premium. Only by strengthening the intelligent network function can we expand the profitability of the product, with the help of digitalization, software subscription, etc., so that the car transaction is no longer a hammer transaction, and this is where BYD's auto products need to be strengthened.
Basic talent is slipping through the cracks of his fingers
The competition of enterprises is, in the final analysis, the competition of talents. Management master Jim Collins put forward the management concept of "first people before things" in the book "From Excellent to Excellent", that is, enterprises must first recruit and retain the right candidates, and then determine the development direction and strategy of enterprises.
On the new track of smart electric vehicles, the competition for talents has never been as fierce as it is today.
On August 30, Geely Automobile (0175. HK) announced that it has granted 167 million shares to over 10,000 people, or about HK$4.49 billion in market capitalization. Coincidentally, another private auto giant, Great Wall Motors (02333.HK), announced that it granted a total of 32.6532 million restricted shares to 557 incentive recipients and granted a total of 300 million stock options to 8147 incentive recipients.
"Inclusiveness is the biggest feature of this share award program." Rui Meng, a professor of finance and accounting at China Europe International Business School, explained to Caijing that unlike the traditional equity incentive plan that only targets executives, the number of people covered this time is large, the amount is large, and there is a feeling of sunshine.
If traditional auto companies want to compete with the Internet and new car manufacturers, they need to make some changes in salary. Wang Huan, head of customer success at LinkedInChinese Solutions, told Caijing that this will force companies to change the salary structure of employees and change the incentive mechanism.
However, BYD has done very little in this regard. BYD's latest equity incentive was in June 2015, which issued no more than 32.66 million shares of the company's shares to 97 supervisors, senior executives, etc.
It attaches great importance to research and development, but it is very rough in the management of talents, which is a two-sided design of BYD.
Lian Yubo, senior vice president of BYD and president of the Engineering Research Institute, is proud of the culture of engineers, saying that among BYD, engineers have the highest status and the best treatment. As of the end of the reporting period in 2020, the number of BYD R&D personnel has increased to 35,776, accounting for 16% of the total number of people in the group.
However, the treatment of BYD's R&D engineers is severely polarized. Some cutting-edge engineers who master core technologies are well paid, and more R&D personnel feel confused and helpless.
According to the 2020 financial report, Lian Yubo's pre-tax annual salary was 6.829 million yuan, and Luo Hongbin, senior vice president and president of the Electric Power Research Institute, had an annual pre-tax salary of 7.378 million, both higher than Chairman Wang Chuanfu's 5.336 million. In BYD's executive salary structure, the salary of technical personnel accounts for a larger proportion.
Shu Youxing, then general manager of BYD Automobile Sales Company, once told Caijing that fresh graduates are the main force of BYD. At the same time, in order to improve the quality, BYD also introduces overseas experts in various fields to promote the coordinated development of fresh graduates.
A BYD engineer who has just left his job told Caijing reporter, "I have worked at BYD for 4 years, and my pre-tax salary has only risen from 7300 yuan to 9000 yuan." "In Shenzhen, where land is scarce, even in the relatively remote Pingshan, the pre-tax salary of 9,000 yuan is too cheap."
"Thanks to BYD's training, but forced by the pressure of life, I can only leave my job and change jobs." According to the engineer, similar situations abound at BYD, with a very high brain drain rate.
Another female engineer suffered from an underhumanizing situation at BYD. In an internal application for a job transfer, she successfully passed the technical interview, but the original department was unwilling to release people, and she was particularly uncomfortable in the game between the two departments, and she could only leave.
The intelligent electric vehicle track is in a stage of rapid development, even the shallow mature employees have been robbed by various forces, and the grass-roots engineers often double their value several times after leaving BYD.
On the one hand, the total salary of BYD's senior management has been ranked first among car companies for many years, recruiting excellent engineers with high salaries; on the other hand, there is a lack of concern for grass-roots R & D personnel, and the most extensive level of "soldiers" is lost to competitors.
A number of interviewed industry insiders said that there is an old saying in China, "the camp of iron, the soldier of flowing water", before the car companies believed that "a thousand troops are easy to get, one will be difficult to find", ordinary employees, and even middle-level managers, have not received due attention, car companies seek to "grasp the big and let go of the small". However, at present, when all kinds of car-making forces are moving at the same time, "soldiers" are also resources that must be competed for. In the era of talent in the automotive industry, BYD's management method is undoubtedly lagging behind.
Bringing people in is not the end, but the beginning of the new. Wang Huan suggested that in terms of corporate culture, many traditional car-making enterprises and auto parts companies should pay special attention to integrating young, innovative and other genes into corporate culture in the digital transformation, so as to stimulate the creativity of talents and achieve a better integration of talents and corporate culture.
BYD, which has both opportunities and hidden dangers, has attracted much attention from capital.
Wind statistics, as of the 2021 mid-year report, BYD (002594. SZ) holds 889 funds, accounting for 9.27% of YAD's outstanding shares, and the total market value of the shares held by the fund is 26.88 million yuan. There are 121 fund companies involved, which means that public funds in the whole market have more or less bought some BYD. Another 73 funds hold BYD Electronics (0285. HK), 57 funds hold SHARES IND (1211. HK）。
The market also has different voices. In June, Morgan Stanley said that BYD's current risk-reward ratio was low, so it downgraded the company's A-shares and H-shares to "low allocation". In August this year, CITIC Construction Investment gave a six-month target price of 540 yuan in a research report, corresponding to a market value of 1.5 trillion yuan, which surprised the market.
Some people believe that BYD has the potential to become an international giant, but it also has its own problems. Is such a large group resource investment sufficiently focused? When the auto industry suffers unprecedented changes in a century, can BYD maintain its lead? It still takes time to answer.
"The new energy industry has just started, the capital market is very concerned, and the current stock price contains optimistic expectations for next year, but the industrial cycle of this industry is relatively long and has not been completely overdrawn." Wang Guanqiao, a researcher at CITIC Prudential Fund, told Caijing reporters.
It is worth noting that at different stages of development of the industry, the research and investment focus of the capital market is different. In the long river of development of new energy vehicles such as battery, intelligence and networking, it is still in a relatively early stage.
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