Author | Xu Yun
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Produced by | Bullet money view
On the evening of April 3, an announcement by BYD caused people to discuss hotly, and quickly appeared on the hot search list of social platforms - BYD officially announced the suspension of fuel vehicle production.
According to the above announcement, BYD will focus on EV pure electric and DM plug-in hybrid vehicle business in the future, and the phrase "new energy vehicle leader" after its brand logo is proved by practice - at the very least, BYD has now become the first car company in the world to officially announce the suspension of fuel vehicles.
If you carefully observe BYD's business development and financial performance, its comprehensive move to new energy vehicles is not a whim, but has long been traced.
According to BYD's financial report, it sold a total of 554,980 new energy passenger cars in 2021. Riding on the east wind of the new energy concept, BYD flourished in the capital market in 2021, with its stock price once exceeding 333 yuan, and the total market value exceeded the high point of 900 billion yuan.
With the hot sales of the "Dynasty" series of new energy vehicles, BYD has also become the annual sales champion of China's new energy passenger cars. However, BYD, which is selling new energy vehicles in full swing, has ushered in an embarrassing moment.
In 2021, BYD achieved revenue of 216.142 billion yuan, an increase of 38.02% year-on-year; but its net profit attributable to shareholders of listed companies fell by 28.08% year-on-year to 3.045 billion yuan, falling into the dilemma of increasing revenue but not increasing profits.
Photo / BYD earnings report
In 2021, how will BYD develop? After the suspension of fuel vehicles, BYD, is its new energy future worth looking forward to?
1. Eventually become a new energy vehicle enterprise
There is no doubt that BYD is currently the most expensive new energy vehicle company in China.
As of the close of trading on April 1, BYD's stock price closed at 235.96 yuan per share, with a total market value of 686.9 billion yuan, while in the same period, SAIC's market value was only 199.2 billion yuan, less than one-third of BYD's. The market capitalizations of the "top three independents" Geely Automobile, Changan Automobile and Great Wall Motors are HK$124.1 billion (about 100.7 billion yuan), 86.9 billion yuan and 256.4 billion yuan respectively, and the sum of the market capitalizations of the three companies is 242.9 billion yuan less than THATD.
However, it is such a highly sought after company by capital that has handed over a 2021 semi-annual report that has surprised the market, and the identity of "car company" was once caught in a dispute that did not deserve the name.
ACCORDING TOD's financial report, its revenue is classified by product by four major segments: "secondary rechargeable batteries and photovoltaics", "mobile phone parts, assembly and other products (hereinafter referred to as: mobile phone business)", "automobiles, automobile related products and other products (hereinafter referred to as: automobile business)" and "other".
The mobile phone business and the automotive business have historically been the bulk of BYD's revenue streams. According to the data, in the first half of 2021, the mobile phone business contributed the most revenue to BYD, reaching 43.132 billion yuan, accounting for 47.46% of the total revenue; while the automobile business that contributed the most revenue in previous years contributed 39.157 billion yuan to its revenue, accounting for 43.08% of the total revenue, taking a back seat.
However, after the development of the second half of 2021, BYD's "car company" identity has finally been confirmed again.
In 2021, the revenue of BYD's auto business segment was 112.489 billion yuan, ranking first among the four major segments, accounting for 52.04% of the total revenue; the revenue from the mobile phone business was 86.454 billion yuan, accounting for 40% of the total revenue, ranking second.
However, comparing the relevant revenue data in 2020, it can be seen that the growth rate of BYD's auto business revenue in 2021 was 33.93%, which failed to outperform the growth rate of 43.99% of mobile phone business revenue.
In addition, the proportion of BYD's auto business in total revenue is declining, from 53.64% in 2020 to 52.04% in 2021; while the proportion of revenue in mobile phone business is increasing, from 38.34% in 2020 to 40% in 2021.
This is clearly not a good development trend. It should be known that the automobile-related business can be said to be bydio's most well-known and most recognized business sector at present, and it is also an important criterion for Volkswagen to measure the value of BYD.
In particular, BYD has just officially announced that it will fully transform into a new energy vehicle company, and such performance seems to make it unable to play the role of "new energy vehicle leader" at present.
However, from the perspective of new energy vehicle sales, with the hot sales of the "Dynasty" series of new energy vehicles, BYD is still a "brother of independent brands" in the domestic new energy field, and other domestic car companies are still difficult to compete with it in this field.
According to data from the China Association of Automobile Manufacturers, BYD's new energy vehicle market share reached 17.1% in 2021, an increase of nearly 8% during the year.
"The electric vehicles of the 'Dynasty' series are selling very well, especially the attention of 'Han' is very high, and many customers are coming to this car." In addition, the high safety of the blade batteries we carry also adds a strong selling point to electric vehicles. A BYD car salesman told "Bullet Financial Outlook".
In 2021, BYD sold 721328 cars (including commercial vehicles, the same below), an increase of 82.8% year-on-year, of which the sales of new energy vehicles rose even more rapidly, up 245.55% year-on-year, reaching 562871, accounting for 78.03% of the total sales of the current period.
"Bullet Finance Outlook" flipped through BYD's past financial reports and sales express reports and found that this is also the first time that its annual sales of new energy vehicles have surpassed fuel vehicles in terms of total sales.
You know, although BYD has laid out new energy vehicles a long time ago, and won the global new energy vehicle sales champion in 2015-2018. However, for a long time, BYD's car sales force is still fuel vehicles, and from 2018 to 2020, BYD's new energy vehicles account for about 41%-49% of total sales.
In 2022, BYD's new energy vehicle sales as a proportion of total sales are still increasing. From January to February, BYD sold 181451 new energy vehicles, accounting for 97.29% of total sales.
Therefore, from the perspective of automobile sales composition, BYD is increasingly inclined to be a new energy vehicle company, rather than a traditional car company that relies more on fuel vehicles.
2, the cost of high sales
At a time when BYD is rushing towards new energy vehicle companies, its performance is also increasingly inclined to the new forces of "not making money".
In 2021, BYD achieved revenue of 216.142 billion yuan, an increase of 38.02% year-on-year, but its profit failed to achieve simultaneous improvement, but declined.
In 2021, BYD's net profit attributable to shareholders of listed companies was 3.045 billion yuan, down 28.08% year-on-year; its net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses fell sharply by 57.53%, to only 1.255 billion yuan.
Regarding the decline in net profit, Zhang Min, an independent director of BYD, said at the online briefing of BYD's 2021 annual report held on April 1 that the decline in net profit was mainly due to the decline in gross profit margin due to changes in product structure.
In addition, Wu Yue, representative of BYD Securities, said that the company's profits are affected by changes in product structure and rising commodity prices, and with the launch of new models and the expansion of production capacity, future sales will be further expanded. In the context of rising volume and price, profits are expected to improve.
With the soaring sales of BYD's new energy vehicles, the government subsidies it received have also risen. In 2021, BYD's new energy subsidy income reached 5.867 billion yuan, compared with 2.302 billion yuan in 2020.
But this also can't help but cause people to worry: when the government's subsidies for new energy vehicles decline, how will BYD's performance continue?
Although at present, BYD is still quite favored by capital, and in the nearly one month as of March 31, BYD has received 13 brokerage research reports, buying 8 and increasing its holdings, with an average target price of 360 yuan, far exceeding its current stock price and also higher than its all-time high price of 333.33 yuan.
However, BOC Securities also pointed out in the research report that BYD's short-term performance is under pressure, and it faces risks such as lower than expected sales, declining gross profit margins such as new energy, and shortages of raw materials or price increases.
According to the data of Oriental Wealth Network, in 2021, BYD's gross profit margin was 13.02%, a new low since 2013.
Photo / Oriental Fortune Network
According to BYD's financial report, the gross profit margin of its automotive business in 2021 was 17.39%, down 7.81% year-on-year, and the gross profit margin of its mobile phone business was 7.57%, down 3.62% year-on-year.
"The decline in the gross profit margin of the company's automotive business was mainly caused by the impact of rising commodity prices and other aspects." Wu Yue said.
It can be seen that in 2021, BYD's total operating cost was 212.602 billion yuan, an increase of 63.592 billion yuan over the same period of the previous year, an increase of 42.68%, higher than its revenue increase. Among them, the operating cost of the automobile business increased by 47.9% year-on-year, and the cost of the mobile phone business increased by 49.86% year-on-year.
Zhou Yalin, vice president and financial director of BYD, pointed out that the increase in operating costs during the period was mainly affected by factors such as rising raw materials and commodity prices.
It is reported that the main raw materials required for BYD's production include steel, plastics and other metal raw materials, such as lithium, cobalt and so on.
According to the report of the Lithium Battery Research Institute (GGII) of the High Industry and Industry Research Institute, the average price of lithium iron phosphate cathode material will rise by more than 100% in 2021. By the end of 2021, the price of lithium iron phosphate cathode materials has risen to 82,000 yuan / ton.
Photo / Lithium Battery Research Institute (GGII)
Upstream raw materials are in short supply, and prices are rising, boosting the cost of lithium iron phosphate. The main raw material for the production of lithium iron phosphate is lithium carbonate, and the price of battery-grade lithium carbonate has risen from 53,000 yuan per ton at the beginning of 2021 to 270,000 yuan per ton at the end of the year, and has recently soared to about 500,000 yuan / ton.
"At present, the soaring price of raw materials is a challenge that the industry needs to overcome, and it is recommended to comprehensively sort out the layout and production capacity of lithium carbonate resources, increase domestic mining and foreign imports, maintain market supply and demand, stabilize price expectations, and promote the healthy and safe development of the industry." BYD Chairman Wang Chuanfu pointed out.
According to BYD's financial report, in April 2021, its new energy pure electric passenger cars have been fully equipped with lithium iron phosphate batteries "blade batteries". This also means that with the spread of the global "lack of core tide", the increase in the price of raw materials for new energy vehicles, and the increase in BYD's new energy vehicle and battery shipments, the increase in BYD's costs may continue.
Nowadays, car companies have begun to shift the cost pressure to the sales terminal, and a number of car companies, including BYD, have announced an increase in the price of new energy vehicles.
Since 2022, BYD has raised prices twice. On January 21, BYD announced that due to factors such as the sharp rise in raw material prices and the decline in subsidies for new energy vehicles, it will raise the official guidance prices of its "Dynasty Network" and "Ocean Network" related new energy models by 1,000-7,000 yuan.
On March 15, BYD once again announced that due to the continuous sharp rise in raw material prices, the official guidance price of new energy models related to "Dynasty Network" and "Ocean Network" will be raised by 3,000-6,000 yuan, which will take effect from 00:00 on March 16.
According to media reports, the specific price increase range is: Tang DMi, Song Pro, Plus DMi, Qin Plus DMi and other hybrid models increased by 3,000 yuan, and Song Plus EV, Qin Plus EV, Yuan Plus, Yuan Plus, Dolphin, e2 and other pure electric models increased by 6,000 yuan.
This can't help but worry, the original more inclined to consumers "use car B" electric vehicles, sales will be adversely affected by the price increase wave?
Under the Weibo of BYD's sudden announcement of price increases, there are also many netizens who vent their dissatisfaction, believing that BYD's notice of price increases is too sudden and saying that they will give up buying BYD.
Photo / BYD Auto Official Micro
"After the price increase, customers will definitely complain, but this is also a helpless move, after all, car companies must protect profits." However, after the news of the price increase came out, some interested customers were worried that the price increase would speed up the decision-making time. In the long run, this may accelerate the reshuffle of the industry, everyone may be more inclined to buy more secure big brands, and some new energy brands with slightly less competitiveness may not be able to stick to it. The BYD sales staff said.
As for whether the price increase will affect BYD's subsequent sales, he said that it is not easy to make a conclusion at present, "because the oil price of fuel vehicles is also rising, but the electricity consumption of electric vehicles is definitely cheaper than that of fuel vehicles." And the price increase of electric vehicles is almost industry-wide, and other new energy brands are also raising prices, some even larger than BYD's price increases. Coupled with the lack of cores affecting the delivery of electric vehicles, in fact, some electric vehicles are not immediately available if they want to buy them. ”
3. Overseas business has just started
BYD's new energy vehicles are selling in full swing in China, but its competitiveness in the international market is far less than that of its biggest competitor Tesla.
Looking back at the early stage of the development of new energy vehicles, BYD won the global new energy vehicle sales champion for four consecutive years from 2015 to 2018. However, after Tesla came out, the pattern was rewritten, the global new energy vehicle sales champion changed hands, and Tesla's sales volume has ranked first in the world for 3 consecutive years since 2019.
For the whole of 2021, Tesla delivered 936,200 units, an increase of 87.4% year-on-year; WHILE BYD's new energy vehicle sales were 721,300 units, an increase of 82.8% year-on-year, slightly inferior to Tesla.
Although with many traditional car companies to promote electrification transformation, and new car-making forces are also dividing up the new energy vehicle market, Tesla's global market share in recent years is in a state of decline, in 2019, 2020, its global market share of 17%, 16%, respectively.
In 2021, Tesla's global market share of electric vehicles has dropped to 14.4%, but it still ranks first, and BYD, with a market share of 9.1%, ranks second.
Judging from the latest data, the two companies still maintained a considerable growth rate in 2022.
In the first quarter of 2022, Tesla deliveries reached 310048 vehicles, up 68% year-on-year.
From January to February 2022, BYD's sales of new energy vehicles reached 181451 units, with a year-on-year growth rate of 494.28%. According to BYD, its cumulative undelivered orders have reached 400,000 units, and it is still increasing month by month.
For the development of 2022, BYD is ambitious. Wang Chuanfu said that BYD's sales target for new energy vehicles in 2022 is about 1.1 million to 1.2 million, of which 600,000 are pure electric models and 500,000-600,000 plug-in hybrid models are expected.
Tesla CEO Elon Musk predicts that Tesla's car deliveries will easily grow by more than 50% in 2022 than last year. Based on this calculation, Tesla will deliver more than 1.4 million vehicles in 2022.
Although today, whether it is International car companies such as Volkswagen, BMW, Mercedes-Benz or Chinese car companies such as SAIC, Geely, and Great Wall, they have all entered the new energy vehicle market to fight, but looking around the development of domestic and foreign car companies today, the most promising person in the field of new energy vehicles to "break the wrist" with Tesla is still BYD.
However, whether it was before or now, BYD's high sales are supported by the domestic market. But Tesla not only has the U.S. base camp, but also the development of the two major car markets in China and Europe is also remarkable, and Tesla will sell about 168,000 vehicles in Europe in 2021.
In the European car market, Tesla's competitiveness is still improving. On March 22, Tesla's Berlin Gigafactory held a groundbreaking ceremony, Tesla's fourth gigafactory in the world after Nevada, New York and Shanghai. It is reported that the annual output of Tesla's Berlin Gigafactory will reach 500,000 vehicles, and the main production models will be Model 3 and Model Y.
So far, Tesla has established its own production bases in the three major global car markets of North America, China and Europe. This is obvious for Tesla's global expansion.
As the birthplace of the automobile industry, the importance of the European market for car companies needless to say, today, the tide of new energy vehicles has also swept the European car market. According to EV Sales Blog data, in 2020, the sales of new energy passenger cars in Europe soared to 1.367 million units, an increase of 142% year-on-year, surpassing China for the first time and becoming the world's largest new energy vehicle market.
In 2021, the annual sales of new energy vehicles worldwide will be 6.75 million units. Among them, Sales in Europe reached 2.338 million units, second only to China's 352.1 units.
Although China has demographic dividends and policy dividends, it is obviously not too realistic to rely on China alone to compete with an international brand for the global new energy vehicle sales championship. For BYD, in order to compete with Tesla, in addition to stabilizing the development of the domestic market, it is also necessary to bet on overseas markets.
However, objectively speaking, BYD's current overseas development may be difficult to say successful. BYD's financial report shows that in 2021, its overseas sales volume was 15,363 vehicles, an increase of 107.75% year-on-year. However, from the perspective of model composition, among them, more likely to be the export of commercial vehicles such as pure electric buses and pure electric taxis.
In terms of new energy passenger cars going to sea, in 2021, BYD officially entered the European market, transporting 1,500 "Tang EVs" to Norway, the first stop in Europe, and completing the delivery of 1,000 vehicles.
In addition, while BYD's "Yuan PLUS" model was officially listed in China, it was also listed in Australia and opened pre-sale, named "ATTO3", continuing to increase the global layout of new energy passenger cars. It is reported that the car has received more than 15,000 intention orders in Australia.
From this point of view, the progress of BYD's new energy passenger cars going to sea is still in its infancy.
4. Conclusion
In 2021, UNDER THE INFLUENCE OF THE EPIDEMIC AND MANY UNDESIRABLE FACTORS SUCH AS THE PRICE INCREASE OF RAW MATERIALS AND THE LACK OF CORES, STILL HANDED OVER A REPORT CARD OF HIGH GROWTH IN NEW ENERGY VEHICLE SALES, WHICH IS ALSO ITS OFFICIAL ANNOUNCEMENT TO STOP PRODUCTION OF FUEL VEHICLES AND FULLY TURN TO NEW ENERGY VEHICLES.
But at the same time, BYD has also encountered the embarrassing situation of increasing revenue without increasing profits, and the dependence of new energy vehicles on government subsidies has added some uncertainty to its future performance growth.
The development of the mainland automobile industry naturally lags behind foreign countries, and at the critical moment when the automobile industry is moving towards the new energy era, it has won a rare opportunity to overtake in the corner. In the era of new energy vehicles, if domestic car companies still stick to the local area and cannot go out to compete with global car companies in the international market, there will be no difference with the era of fuel vehicles.
Bydir, which ranks high in the domestic new energy vehicle sales crown, can it assume the heavy responsibility of competing with overseas car companies such as Tesla after transforming into a new energy vehicle company?
*The title picture in the text comes from: Photo Network, based on VRF protocol.