Author 丨 Song Doudou
Editor 丨 Zhang Mingyan
A stone stirred up thousands of waves, and a paper announcement made BYD the first car company in the world to officially announce the suspension of fuel vehicles.
On April 3, BYD (002594. SZ) officially announced that it will stop production of complete fuel vehicles from March 2022 in accordance with the company's strategic development needs. In the future, in the automotive segment, the company will focus on pure electric and plug-in hybrid vehicles.
BYD said that it will continue to produce and supply fuel vehicle parts, continue to provide perfect service and after-sales protection for existing fuel vehicle customers, as well as the supply of spare parts throughout the life cycle.
Although electrification is the trend of the times, many car companies, including BBA, have planned a timetable for stopping production of fuel vehicles and completely transforming new energy, but most of the deadlines are between 2025 and 2030. In contrast, BYD's "farewell" fuel vehicles, although they have long been traced, are indeed unexpected in time and speed.
On the one hand, the accelerated development of the new energy automobile industry and BYD's optimistic expectations have accelerated the process of BYD abandoning fuel vehicles. On the other hand, in 2022, the problems of raw material price increases, chip shortages, tight production capacity, and long delivery cycles are testing many players. Stopping the sale of fuel vehicles and investing more technology, research and development, funds, personnel, production capacity, etc. into new energy vehicles is an important part of BYD's victory in this increasingly urgent large-scale battle.
From the establishment of BYD in 1994 to enter the battery field, to the cross-border automobile manufacturing in 2003, to the comprehensive transformation of BYD to new energy vehicles in 2014, and then to the promotion of BYD's internal "reform" and external "opening up" in 2017. Over the past 28 years, BYD Chairman Wang Chuanfu has led BYD to complete one gorgeous turn after another.
As the world's first car company to officially announce the suspension of production of fuel vehicles, can the myth of Wang Chuanfu's wealth be continued? BYD, which has a huge sales volume of new energy vehicles, still faces many challenges. It is difficult to hide the worries of increasing revenue without increasing profits, the exploration and layout of intelligence and high-end are slightly lagging behind, and how to find incremental space is the key for BYD to break through the trillion market value.
The suspension of production and suspension of sales has long been traced
BYD's suspension of production and sale of fuel vehicles is not out of thin air.
In June 2021, a bydie internal communication meeting minutes circulated online, after being asked "In the future, will all the company's fuel vehicles be completely replaced by DMI and DMP, and discontinued?" At that time, BYD replied that "the internal sales of fuel vehicles this year are expected to be about 150,000 units, and the planning of future fuel vehicles has also stopped, and it will be fully replaced as soon as next year (as long as the monthly production capacity of DMI reaches 80,000 units and the monthly shipment is 40,000 units)." However, in response to the above-mentioned meeting minutes, BYD responded at that time, "There is no such plan at present, and there is a demand in the market and consumers, and there is a demand for partner dealers." ”
In November 2021, BYD, as the only Chinese car company, signed a pledge with Five car companies, Named Volvo, Ford, GM, Mercedes-Benz and Jaguar Land Rover, to stop the production of fossil fuel vehicles worldwide by 2040.
The industry generally believes that BYD's accelerated withdrawal from the fuel vehicle market is not unrelated to THE continuous increase in sales of BYD's new energy vehicles since 2021. The increase in sales is inseparable from its strategy of adhering to the parallel two routes of DM hybrid and EV pure electricity.
Wang Chuanfu said publicly a few days ago, "If pure electric vehicles focus on solving the need for additional purchases, then plug-in hybrid effectively solves the demand for first purchase and exchange of more families, and forms a significant substitution effect on the huge stock fuel vehicle market." ”
ACCORDING TOD's latest March production and sales report shows that its new energy vehicle production in March was 106,700 units, with sales of 104,900 units, and the first monthly sales exceeded 100,000 units, while the production and sales of fuel vehicles were 0. Among them, BYD's DM plug-in and hybrid models sold 50,600 units, an increase of 615.2% year-on-year; EV pure electric models sold 53,600 units in March, an increase of 229.2% year-on-year.
From January to March this year, BYD's cumulative sales of fuel vehicles were only 5,049 units, down 89.78% year-on-year, and accounted for only 1.7% of total sales.
In fact, as early as a year ago, BYD's fuel vehicle business gradually contracted. In March 2021, BYD's sales of new energy vehicles exceeded the traditional fuel vehicles for the first time, reaching 59.33%. Since then, new energy vehicles have been soaring, and the presence of fuel vehicles has been greatly reduced, in 2021, BYD's annual sales of 730,000 vehicles, of which new energy vehicles exceeded 604,000 units, accounting for 81.58%; while the sales of fuel vehicles were 136,300 units, accounting for 18.4%.
Zhu Yulong, an expert in the automotive industry, believes that "at present, this decision (bydir) is not harmful, and it has benefited a lot, which is a good way to play." ”
In his view, there are three reasons: First, BYD's fuel vehicles in recent years have maintained low prices, especially the models have become old (the special F3 and speed of fuel vehicles have entered the end of their life, and several other Song series have DM-i and pure electric models), the scale is around 200,000, with the demand for pure electric and plug-in rising, there is no economic impact on stopping.
Second, from the perspective of overall brand sales, BYD broke through the shock of sales in the range of 400,000-500,000 vehicles in 2021 and began to enter the range of 750,000 vehicles, the main driving force is that the penetration rate of new energy vehicles has begun to rise in a straight line, and BYD has also exchanged relatively low gross profit for market share.
Third, at present, in the global world, it is the transition from traditional fuel vehicles to all new energy brands; from the perspective of government and consumer recognition, pure electric vehicle companies are a plus.
Sell the most cars and make the least money?
However, ASD, as the top annual sales of new energy passenger cars in China, makes the least amount of money despite selling the most new energy vehicles. On March 30, BYD released its fiscal 2021 annual report. Operating income for the current period increased by 38% year-on-year to 216.14 billion yuan, but net profit attributable to shareholders of listed companies fell by 28% year-on-year to 3.045 billion yuan, and non-net profit fell 57.53% year-on-year to 1.25 billion yuan.
Among the top three independent brands, in 2021, Great Wall Motor's revenue was 136.405 billion yuan and net profit was 6.726 billion yuan; Geely Automobile's revenue was 101.6 billion yuan and net profit was 4.847 billion yuan; BYD's revenue was the largest, but the net profit was the lowest.
For the double-digit growth of revenue in 2021 while the net profit fell by nearly 30%, BYD insiders told the 21st Century Business Herald reporter: "In 2021, due to the impact of the global epidemic, the electronics business is under short-term pressure; affected by factors such as rising raw material and commodity prices, the company's overall costs have risen." During the period, the sales volume of the automobile business increased significantly, and the profitability of the automobile segment increased. ”
According to BYD's official data, in the whole year of 2021, BYD's new car sales reached 730,000 units, an increase of 75.4% year-on-year. Among them, the sales volume of new energy vehicles was 593,700 units, an increase of 231.6% year-on-year, accounting for more than 80% of sales, and the cumulative sales of pure electric vehicle models and DM hybrid models were 320,000 units and 270,000 units, respectively, an increase of 44.9% and 467.6% year-on-year.
While sales have been rushing all the way, the gross profit margin of BYD's auto-related business has fallen by 7.81% to 17.39% year-on-year. In the first and second half of 2021, the gross profit margin of the automotive business in the first half of 2021 was 19.5%, and continued to decline to 16.2% in the second half of 2020, down nearly 10% compared with the second half of 2020.
In contrast, the gross profit margin of Tesla's automobile business with huge sales in 2021 is about 30%, and the gross profit margin of Weilai and Ideal Automobile, whose annual sales have not yet exceeded 100,000 vehicles, has also exceeded 20%.
Dolphin Investment Research pointed out in the analysis that the main reason for the decline in the company's gross profit margin comes from the change in the model structure of the revenue side and the aggressive pricing strategy on the one hand, and the price increase of upstream raw materials on the cost side on the other hand.
In 2022, problems such as raw material price increases, chip shortages, tight production capacity, and long delivery cycles are testing many players, and the competition on the new energy vehicle track is becoming more and more fierce. Stopping the sale of fuel vehicles and investing more technology, research and development, funds, personnel, production capacity, etc. into new energy vehicles is an important part of BYD's victory in this increasingly urgent large-scale war.
At present, BYD's production capacity is close to the ceiling, according to BYD's data in the first quarter of this year, its production and sales are close, basically in a state of full production and full sales. BYD revealed in the minutes of the investor meeting after the release of the 2021 financial report that BYD's cumulative undelivered orders have reached 400,000 units and are still increasing month by month.
The accelerated development of the new energy automobile industry and BYD's optimistic expectations have accelerated the process of BYD abandoning fuel vehicles. Wang Chuanfu recently predicted at the China Electric Vehicle 100 Forum that according to the speed of industry change in 2021, the penetration rate of new energy vehicles in mainland China is expected to reach 35% at the end of this year.
In addition, it is understood that BYD's sales target for 2022 is conservatively expected to be 1.5 million vehicles, and if the supply chain is good, it will hit 2 million vehicles. At present, BYD is actively expanding production, and public information shows that by the end of 2022, BYD's actual usable capacity will reach 1.9 million vehicles.
It is worth noting that BYD's all-out sprint will launch a more intense "fight" with Tesla. In the first quarter of this year, Tesla delivered more than 310,000 vehicles worldwide, and BYD's new energy vehicle sales reached 286,300 units, an increase of 422.97% year-on-year, and the gap between the two was less than 30,000 vehicles.
In addition, BYD's annual sales target of 1.5 million in 2022 has surpassed Tesla.5 million. Tesla CEO Musk previously said on the earnings call that Tesla sales will increase by 50% in 2022, and Tesla will target 1.4 million vehicles in 2022 based on last year's sales of 936,000 vehicles.
The dilemma of high-end and intelligence needs to be solved
"With the introduction of new models and the expansion of production capacity, sales will be further expanded in the future. In the context of rising volume and price, profits are expected to improve. BYD insiders told the 21st Century Business Herald reporter.
The "price" of "volume and price rise" refers to the high-end brand that BYD is preparing, and BYD once entered the automotive market as a low-end model.
It is understood that BYD will rely on two brands to enter the high-end market, one is the Denza brand, positioned in the range of 300,000-500,000 yuan, and in 2022 to 2023, it will successively launch 3 new models of pure electric multi-purpose vehicles, including MPV and SUVs; the other is a new high-end brand of new energy, positioned in the price range of 50-1 million yuan, which is expected to be launched in October.
On February 14 this year, BYD's 100% shareholding, Denza Automobile Sales Service Co., Ltd. obtained a business license, and Zhao Changjiang, director of bydir's high-end brand preparation office of BYD Automobile, tweeted that BYD will soon launch high-end products and open high-end services.
Another high-end brand of BYD is also in preparation. Li Yunfei, general manager of BYD's brand and public relations business department, previously said in an interview with the 21st Century Business Herald reporter that in the second half of 2022, BYD will launch a high-end brand, the price range is expected to be more than 500,000-1 million yuan, and its brand, products, sales and service networks, and operation teams are new and independent, and the first model is a hardcore off-road vehicle.
In the future, BYD's automotive business will be composed of four sections: Dynasty.com, Ocean.com, Denza and high-end brands. Among them, the main sales models of the Dynasty series include Qin, Han, Tang, Song, Yuan and derivative models, which basically cover the price range of 100,000-300,000 yuan; the main sales models of the Ocean series include Dolphin, Seal, etc. and the upcoming warship series.
It is worth mentioning that BYD revealed in the financial report that this year's Song MAX DM-i, destroyer 05 and other models equipped with DM-i super hybrid technology have been listed; pure electric models, following the Dolphin, the yuan plus model equipped with e platform 3.0 has been listed in February 2022, and more models equipped with e platform 3.0 will be launched in Dynasty Network and Ocean Network.
It is worth mentioning that in addition to selling cars, BYD is also cultivating new growth points.
Wang Chuanfu said in an interview with the 21st Century Business Herald reporter, "Subsidiaries only earn BYD's money is not called skill, and it is called skill when it is dismantled to earn money in the market, which means that the product is competitive." So we have a market-oriented 1.0 strategy, that is, the separation of the parts business. Motors, batteries, powertrains and other businesses are killed in the form of business units to compete with their peers. ”
BYD's decision to open up its first business to the outside world is its highest quality asset - power batteries. At present, BYD power batteries are mainly installed in its products, but it intends to play the role of suppliers.
In April last year, Wang Chuanfu said that he had begun to supply blade batteries to the whole industry, and among the partners on display, in addition to the "red flag" clearly marked, the others were replaced by "secret". Following the news that BYD may supply Tesla last year, this year's "gossip object" has become Weilai and Xiaomi Motors.
In addition to batteries, it is understood that BYD e platform 3.0 has cooperated with Mercedes-Benz, Toyota, Didi and so on.
Electrification is the first half, intelligence is the second half. Compared with Tesla and Wei Xiaoli, the new force of China's head car manufacturing, which is currently booming, BYD, which has transformed into a traditional car company, does not have an advantage in the field of intelligence and automatic driving. BYD has The DiLink Intelligent Connected Vehicle System in the field of intelligent cockpit and DiPilot in the field of intelligent driving.
Among them, DiLink has evolved to version 4.0, mainly relying on the Android ecosystem to download the car application, but the experience is not fully connected with the vehicle, and complaints such as "car machine caton" are common on social platforms; DiPilot is relatively conservative and difficult to compete with Tesla and Wei Xiaoli.
BYD has taken action to make up for shortcomings. At the end of 2021, BYD and Momenta established Shenzhen Dipai Zhixing Technology Co., Ltd. to create a high-level intelligent driving solution for the future; in February this year, BYD chose Baidu as its intelligent driving technology supplier, and Baidu will provide BYD with an ANP intelligent driving product and human-machine co-driving map; in the same month, BYD also invested in the lidar company Sagitar Juchuang; at the end of March, BYD announced that it had reached a cooperation with Nvidia in intelligent driving technology, starting from the first half of 2023. BYD will be equipped with NVIDIA's DRIVE Hyperion platform on some new energy vehicles. In addition, BYD is also cooperating with Huawei MDC, and it is reported that BYD's upcoming seal will carry Huawei MDC.
It is not difficult to see that BYD's intelligent driving path is becoming clearer, and in the short term, it quickly makes up for the shortcomings through the procurement of supplier solutions, and at the same time recruits a large number of talents in the field of intelligent driving, and may also embark on the road of self-development in the future, after all, the "soul" is handed over to the supplier, after all, it is not a long-term solution.
In the first half of the electrification competition, with the advantages of DM-i super hybrid, blade battery and other fields, BYD has gained a certain advantage. In the more intense intelligent competition in the second half, can BYD write a legend?
This issue is edited by Liu Xiang Intern Zhan Huinan