BYD added two more parts subsidiaries to create a closed loop of the industrial chain

Reporter Of this newspaper, Jiao Yue, trainee reporter Li Yucheng

On March 2, there was market news that BYD had established two new companies in Changsha, both of which included auto parts research and development, with a registered capital of 50 million yuan. BYD confirmed the news to the Securities Daily reporter.

In addition to Changsha, BYD has recently established auto parts companies in major production bases such as Xi'an and Changzhou. Behind this, BYD is stepping up the layout of the middle reaches of the new energy industry chain and accelerating the formation of an industrial chain closed loop from raw materials to parts to vehicle design and manufacturing.

Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, told reporters that new energy vehicles drive the development of the parts industry. For BYD Auto Parts, on the basis of the business guarantee provided by the parent company, it can develop new customers for the market and thus further develop and grow.

A number of new automotive parts subsidiaries were established

All are located at the site of the production base

According to the data of Tianyancha, on March 1, Changsha Xingchao Automobile Co., Ltd. and Changsha BYD Auto Parts Co., Ltd. were established with a registered capital of 50 million yuan, and the legal representatives were He Zhiqi and Luo Zhongliang, and the business scope included: auto parts research and development, manufacturing; new energy vehicle sales; electric vehicle charging infrastructure operations. In terms of equity, the two newly established companies are wholly owned by BYD Automotive Industry Co., Ltd.

It is worth mentioning that He Zhiqi is the president of BYD Automobile Division and is currently the legal representative of BYD Automobile Co., Ltd. Luo Zhongliang is the chairman and general manager of BYD's Fudi Technology Co., Ltd., which specializes in automotive electronics and automotive chassis.

In fact, BYD has recently made frequent moves in the field of auto parts, and has successively established corresponding companies in Xi'an and Changzhou. On January 27, Xi'an BYD Auto Parts Co., Ltd. was established, the legal representative is Luo Zhongliang, and the registered capital is 1 billion. On February 16, Changzhou Faurecia Auto Parts Co., Ltd. was established with a registered capital of 10 million yuan, which is wholly owned by Shenzhen Faurecia Auto Parts Co., Ltd., which is jointly held by Faurecia (China) Investment Co., Ltd. and BYD Automotive Industry Co., Ltd.

Judging from the geographical distribution of these auto parts companies, it just fits several major production bases of BYD. It is understood that as of January 2022, BYD has put into operation a total of 4 production bases, namely Shenzhen factory, Xi'an Phase I and PHASE II factory, Changsha plant and Changzhou plant.

Taking Xi'an as an example, the Xi'an production base is one of BYD's most important production bases, shouldering the production of popular models such as Qin PLUSDM-i hybrid and Song PLUSDM-i hybrid, and the planned annual production capacity of the xi'an phase I and II factories is 300,000 vehicles, totaling about 600,000 vehicles.

At this scale, it is particularly necessary to form a supporting auto parts production capacity. On December 5, 2021, the BYD New Energy Auto Parts Industrial Park project with a total investment of 15 billion yuan was signed and landed in Xi'an High-tech Zone. According to public reports, the project plans a total investment of 15 billion yuan, mainly to build electric assembly factories, motor factories, electronic control factories and other core components. After the completion of the project, it is expected to achieve an annual output value of about 70 billion yuan.

Guaranteed production capacity

Vertically build a closed loop of the industrial chain

The reason for the establishment of two new auto parts subsidiaries in Changsha may be related to the supply and marketing situation faced by BYD, and strengthening the supply of parts is conducive to smoothly ensuring the production capacity of the whole vehicle.

At the Changsha plant, BYD mainly produces Yuan Pro, E2 and Dolphin models, and its production capacity remains between 20,000 and 30,000 vehicles. Since its launch, BYD Dolphin models have been in rapid volume, with sales reaching 10,016 units in December last year, successfully breaking 10,000 units; sales reaching 10,602 units in January this year.

Overall, BYD is currently facing a state of supply and demand, and its production capacity is tight. According to the company's announcement, in January, BYD sold 93,168 new energy vehicles, an increase of 361.73% year-on-year, basically flat month-on-month; of which 92,926 new energy passenger cars, an increase of 367.65% year-on-year, a slight increase of 0.11% month-on-month. In the same month, the company produced 91,736 new energy vehicles, an increase of 309.66% year-on-year. On the investor Q&A platform, there is no shortage of investors urging delivery, saying that it takes 4-5 months to mention the hybrid model, and it is recommended that BYD increase its overall production capacity.

From the perspective of industrial layout, increasing the layout of auto parts in the midstream is conducive to BYD's vertical integration of the industrial chain and increasing synergy effects to create a closed loop. At present, BYD has a relatively comprehensive industrial chain layout in the new energy automobile industry, running through the upstream, middle and downstream and aftermarkets of the industry.

"While expanding its production capacity horizontally, BYD is also extending its vertical strategy, laying out high-end chips and lithium ore resources, and the car-making industry chain is also developing to the application scenarios of motors and accessories and terminals." Qi Haiyan, president of Beijing Teyi Sunshine New Energy Technology Co., Ltd., pointed out in an interview with the Securities Daily reporter.

It is understood that as early as 2016, BYD Chairman Wang Chuanfu began to think about market-oriented reforms, introducing external suppliers while letting the internal parts department go out.

Since March 2020, BYD has split off five subsidiaries, including Fordy Battery and Fordy Power, corresponding to batteries, engines and other businesses. While relying on BYD, these subsidiaries are gradually becoming independent and broadening their growth space. Taking Fudi Battery as an example, its monthly installed capacity in China ranks second, second only to the leading enterprise Ningde Era. BYD Semiconductor, which specializes in semiconductor business, has also passed the meeting at the end of January, and the spin-off and listing is imminent.

"Like batteries, motors, chips and other core businesses, BYD has the conditions to set up subsidiaries for independent development." Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, told the Securities Daily reporter that unlike many auto parts companies that are difficult to obtain customers after their establishment, bydir's auto parts companies have their first customer is themselves, BYD sold more than 600,000 new energy vehicles last year, which can provide full support for the business, and can expand new customers after that.

Qi Haiyan believes that BYD has not seen a major cross-border phenomenon, and most of them revolve around the huge track of new energy vehicles, indicating that it is fully optimistic about the future prospects of the global new energy track.

(Edited by Qiao Chuanchuan)