Text\Blue Cham
With the rapid increase in the penetration rate of new energy vehicles, new energy vehicle companies have achieved a large increase in sales, especially new energy vehicle companies represented by BYD, which have achieved a qualitative leap in sales. Sales data show that in 2021, BYD's cumulative sales performance was 740,100 vehicles, an increase of 73.34% year-on-year, significantly outperforming the overall growth rate of the new energy vehicle market.
In terms of performance, BYD has shown a double day of ice and fire. According to the 2021 annual performance report from BYD, BYD achieved revenue of 216.142 billion yuan in 2021, an increase of 38.02% year-on-year, while its net profit attributable to listed companies was only 3.045 billion yuan, down 28.08% year-on-year.
Compared with Great Wall Motors, which is also the leader of its own brand, it is more able to find the problems that BYD is currently facing. According to the 2021 financial report from Great Wall Motor, in 2021, Great Wall Motor's revenue was 136.405 billion yuan, an increase of 32.04% year-on-year; the net profit attributable to shareholders of listed companies was 6.726 billion yuan, an increase of 25.43% year-on-year.
Obviously, in the case of revenue much higher than Great Wall Motors, BYD's profit is not as good as Great Wall. Therefore, whether it is a horizontal comparison or a vertical comparison, it shows that BYD does have a situation of increasing revenue and not increasing profits.
So why is this happening? We think it may be related to the following aspects.
First, the increase in production costs. Since the outbreak of the epidemic, the production cost of the automobile industry has risen significantly, including steel, plastics, lithium, cobalt, nickel and other bulk materials have risen significantly, which has led to the pressure of higher production costs for car companies from upstream. In particular, BYD's cars are mainly composed of new energy vehicles, and the increase in the cost of lithium batteries will have a greater impact on its costs.
Second, BYD's performance composition is more complicated. Familiar with BYD knows that BYD is not simply an automobile company, it also has electronics, semiconductors, solar energy, rail transit, lighting, energy storage and many other businesses, which together constitute BYD's revenue of more than 200 billion yuan, in this context, BYD's auto sector profits are likely to be divided equally by other sectors, so it also leads to low profit performance.
Third, BYD has invested more in research and development and has aggressive product pricing. From the financial report, BYD's R& D investment in 2021 is as high as more than 10 billion, an increase of 24.20% year-on-year, and high investment will not be converted into profits in the short term, but has become an expense, which will also reduce product profits to a certain extent, but in the long run, this is certainly worth affirming.
In addition, BYD's product pricing is more aggressive, in the era of fuel vehicles, BYD has the title of "price killer", and now when launching new energy vehicles, BYD still adopts the strategy of "price for volume", and its product pricing is more "conscience", the result is high sales, but the profit is not much.
It is worth noting that as a large user of new energy vehicles, BYD's enjoyment of the state's subsidy dividend is undoubtedly huge. According to the data, in 2021, BYD's subsidy income totaled 5.867 billion yuan, and the government subsidy included in the profit and loss of the current period was 2.263 billion yuan, which is also a major component of BYD's profits, but with the decline of new energy vehicle subsidies, it is difficult to say how BYD's profits will be in the future.
It is worth mentioning that in the face of cost pressure, BYD also announced price increases for its Dynasty Network and Ocean Network related models in January and March this year, thereby reducing cost pressure and improving profitability.
Write at the end:
From the current market performance, BYD's many models are in a hot selling state, including Qin PLUS DM-i, Song PLUS DM-i, Tang DM-i are quite hot, and even some models have been "complained" by consumers due to short supply, and there is also news that BYD has accumulated undelivered orders of 400,000 vehicles, and it is expected to hit the sales target of 2 million vehicles this year. Undoubtedly, higher sales will undoubtedly bring huge revenue increments to BYD, but at the same time, it should be pointed out that too low profitability is not a good thing for the long-term development of the company, and how to change this situation will test BYD's business wisdom.
(This article is originally produced by the editorial department of [Auto Industry] New Media, the author of this article is Lan Zhan, and the source should be indicated when reprinting)