Introduction: This article summarizes 40 business considerations of BYD founder Wang Chuanfu, which explains why he is recognized as the first person in China's auto industry today.
Tian Shanshan | wen
Wang Chuanfu finally realized his wish when he built a car 20 years ago.
On April 3, BYD Automobile officially announced that it will stop the production of fuel vehicles from March 2022, becoming the first traditional car company in the world to officially announce the suspension of fuel vehicles. This not only shows BYD's determination to break his wrist, but also reflects its mission of focusing on new energy vehicles such as pure electric and plug-in hybrids, and constantly exploring for the sustainable development of mankind.
"Only producing new energy vehicles" was Wang Chuanfu's wish and original intention when he cross-border car manufacturing in 2003. However, at that time, the new energy vehicle market had not yet developed, and BYD, which made cars with "zero foundation", could only choose to produce fuel vehicles, plug-in hybrid vehicles and pure electric vehicles at the same time in order to survive.
A start-up car company, not a single fuel vehicle has been produced, at the beginning of the car to challenge the technical difficulty of electric vehicles, at that time the outside world and investors are generally not optimistic, think that Wang Chuanfu is not able to measure up, too arrogant.
But Wang Chuanfu did not think so, he constantly released "big words" in the process of enterprise development, "a million cars, in my opinion, is actually a pile of steel", "2025 plans to sell more than 10 million vehicles, surpassing Toyota to become the world's first", "once the family consumption starts, BYD can build Tesla in 'minutes'"... He also earned the title of "Car Maniac".
But time is the best litmus test. Many of the "big words" that Wang Chuanfu has said are becoming reality. Today, BYD is already the world's leading new energy vehicle company, not only selected as "2022 Most Influential 100 Companies" (the only Chinese car company on the list) by Time Magazine, but also regarded as the only new energy vehicle company in China that can compete with Tesla.
BYD and Tesla are the two strongest companies in the global new energy automobile industry, but the market positioning routes of the two are different, Tesla is aiming at the high-priced, luxurious intelligent electric vehicle market, BYD is a two-legged walk, the main plug-in new energy and pure electric parity market. At present, the cumulative sales of new energy vehicles in both have exceeded one million, and they are still growing at a very fast acceleration. In 2021, Tesla ranks first in the world with sales of more than 930,000 yuan, and BYD ranks second in the world with sales of nearly 600,000.
Although Tesla's sales are higher than BYD's, in the Chinese market, BYD ranks first in new energy vehicle sales for 9 consecutive years. According to the statistics of the Association, from January to February 2022, BYD sold about 180,000 vehicles in China, far exceeding Tesla's sales in China (about 43,000 vehicles) in the same period. According to the latest March data, BYD's sales of new energy vehicles exceeded 100,000.
From the perspective of the capital market, Tesla's market value has risen very rapidly, from tens of billions of dollars in the past two years to nearly a trillion dollars in market value, riding the dust, far more than all car brands. BYD is the first car company in China with the largest market value, with a market value of more than 900 billion yuan at its highest. Although the stock price has declined since the end of last year, the market value is still more than 700 billion yuan, which is more than twice that of Great Wall Motors, the second largest car company in market value.
BYD also has a competitive advantage, it has established a complete industrial chain in the field of electric vehicles: not only to create new energy vehicles, but also to create power batteries, motors, electronic controls and on-board chips and other core components of new energy vehicles. In 2021, with BYD's DM-i super hybrid, e-platform 3.0, blade battery and other core technologies began to enter the market, BYD upgraded from a new energy vehicle manufacturer to a new energy vehicle technology platform, which can also link more upstream and downstream enterprises in the new energy industry and build a huge new energy vehicle ecology. Some people believe that this means that BYD's sustained profitability will continue to increase, and it may only be a matter of time before the market value exceeds one trillion yuan or even higher.
BYD's success is inseparable from the "madman" Wang Chuanfu. He founded BYD in 1995 and has gone through three transformations, each time boldly:
In 1995, Wang Chuanfu resigned as the director of the Beijing Nonferrous Metals Research Institute and founded BYD in Shenzhen to enter the field of mobile phone batteries. Just eight years later, in 2003, in all three areas of rechargeable battery technology (lithium-ion batteries, nickel-cadmium and nickel-metal hydride batteries), BYD has become one of the largest and second largest battery manufacturers in the world, and its mobile phone foundry business has also been very successful, including Nokia, Motorola, Samsung, Sony and Ericsson brands.
In 2003, BYD crossed into the automotive industry and began to develop and produce electric vehicles and fuel vehicles from scratch; in 2008, BYD launched the world's first mass-produced plug-in hybrid model, and began to lay out the new energy field, develop solar energy, energy storage and other products; after 2008, BYD has successively launched pure electric buses, pure electric taxis, pure electric forklifts and other new energy commercial vehicle products, and entered overseas markets such as Europe and the United States.
In 2014, BYD comprehensively transformed into new energy vehicles and set foot in the field of new energy rails; in 2016, BYD launched the new energy urban rail transit solutions "Cloud Rail" and "Yunba" with completely independent intellectual property rights, and then landed in Yinchuan, Chongqing, São Paulo, El Salvador and other cities at home and abroad; in 2021, BYD became one of the two strongest new energy vehicle companies in the world, and established a complete industrial chain advantage in the field of electric vehicles, from castings, molds, power systems, The independent supply of automotive electronics, power batteries, on-board chips and other parts, in addition to the direction of electrified rail transit, BYD is also the industry leader.
3 successful transformations have put Wang Chuanfu on 3 distinct labels: technology idiot, subversive, and car maniac. Investor Charlie Munger praised him as "a hybrid of Edison and Welch", who could solve both technical problems like Edison and corporate management problems like Welch.
In terms of business strategy, Wang Chuanfu also has the ability to accurately control. For example, he judged that the electrification of the car first began in the field of public transportation, then advanced to the field of commercial vehicles such as taxis and logistics vehicles, and finally reached the climax of electric vehicles in the field of private cars. That's how BYD developed its electric vehicle business. In 2011, BYD launched an electric bus in Shenzhen, achieving win-win results in environmental protection, employment and improving people's livelihood. After that, BYD's electric buses began to go all over the country, and later successfully entered developed countries such as britain, the United States and Japan. This also explains why BYD can establish a complete industrial chain in the field of electric vehicles, a realistic reason is that its new energy business scope is the widest, and there are many technical application scenarios that need to be developed.
All of the above actually point to a core trait of Wang Chuanfu: true entrepreneurship.
Specific to the direction and strategy of entrepreneurship, Wang Chuanfu's choice is: not to consider the direction of the highest profit and the highest rate of return, but to first enter a large market to solve social problems, and then use the advantages of technology and cost to become a participant, leader and innovator of the new industry. He said, "Entrepreneurs should be good at developing themselves in solving social problems, making themselves and society a win-win situation." ”
Unfortunately, initial investors and peers did not understand this trait of Wang Chuanfu, especially his entrepreneurial direction and strategy. During the critical period of BYD's development, his decision was met with huge opposition from investors. In 2003, when he crossed the border to build a car, the outside world was generally not optimistic, the stock price fell by 40%, and even Some Hong Kong investors threatened to "sell BYD stock until they died" on the call. But he vigorously defied the public opinion, made decisions with an "iron fist", and resolutely implemented them.
Under Wang Chuanfu's leadership, BYD has established its own style: advocating technology, problem-oriented, solving problems through innovation, and persistence.
Today, after 28 years of entrepreneurship and nearly 20 years of car manufacturing, Wang Chuanfu has finally ushered in his own era and become the leader of new energy vehicles.
This article sorts out some of Wang Chuanfu's thoughts on technology research and development, independent innovation, business strategy, corporate management, and social responsibility in the process of leading BYD's development.
One
Technical barriers are "paper tigers"
1. Technical barriers are a kind of fear created for latecomers, and they are "paper tigers" that force you to give up. I have 200% confidence in electric vehicles, and BYD wants to become the largest electric vehicle company in China.
2. Only by mastering the core technology can enterprises stand out in the fierce market competition; only by taking the strategy one step ahead and stepping into the high-threshold industry can they win the development advantage.
3. Others do diversification, 90% end in failure, why does BYD do one into one? Because we attach great importance to technology, we feel that technology is very easy.
4. BYD has a technical "fish pond", which has a variety of technologies, chips, electric vehicles, rail transit, etc. are the "big fish" in the "fish pond". When the market needs it, we fish one out.
5. The automobile industry is a traditional industry that has been done for more than 100 years. The traditional industry is a low-tech industry, the parts in the mobile phone are high-tech, LPC, camera, LCD, precision plastics, which is not more difficult than the manufacture of cars? In this difficult industry, we can all compete, not to mention the automotive industry?
6. It is necessary to have strong technology in order to see far and deeply. We have 15,000 engineers working day and night to study the technologies needed by China or the world, and to study various technical directions, such as new energy technology and solar technology
7. Some entrepreneurs who do not understand technology think that we are gambling heavily, and some investors who do not understand the market and do not understand technology also think that we are gambling heavily, in fact, I am very timid, and I will not gamble at all.
8. Technology determines strategy. In a highly competitive environment, it is crucial for entrepreneurs to grasp the direction. As a technology-based company, BYD prefers to do some very complex industries that are not simple to judge the direction.
Two
On why we insisted on building electric vehicles 20 years ago
9. China relies on imports for 72% of its oil, and 70% of its imported oil is transported through the South China Sea. In PetroChina, 70% of it is used for transportation a year, and cars consume 70% of PetroChina. From these three 70% we can see that China's development of electric vehicles is more urgent than any other country, and we have a responsibility to solve this problem through technology.
10. Entrepreneurs should be good at developing themselves in solving social problems, so that they can win both society and society.
11. New energy vehicles are a "big fish". 10 years ago, when no one believed in electric vehicles, we began to "raise" and encountered many difficulties, such as shareholders saying that you "burned" so much money, less dividends, and controversial. This is the difficulty, but we insist and do not give up, because we believe that China has three major problems of oil security, clean air, and warming that must be faced.
12. We know that one day the state will propose carbon neutrality goals, because human beings must be sustainable and cannot use up fossil energy for future generations, bring about climate change, bring about rising temperatures. This persistence has allowed BYD to overcome many difficulties.
13. Nature did not give us oil, but gave us the desert, and the sunshine time in the desert can reach three or four thousand hours a year. In the future, if 1% of the area of China's desert is paved with solar panels, China's electricity is enough, and all thermal power can be turned off.
14. When capital, technology and the market come together, anything can happen. Technically, BYD has 15,000 engineers; financially, BYD's market capitalization is now (2016) 150 billion yuan; coupled with the Chinese market and even the global market, when these three work together, anything can happen
Three
About independent innovation
15. As long as it is man-made and not made by God, others can make it, and so can we.
16. If you want to compete with others, you have to take the road that others have walked, that is, to seek your own death, you and others are exactly the same way of playing, why do you win? So, it must be "you hit yours, I hit mine".
17. The driving force of innovation is not to innovate for the sake of innovation, but to innovate for the sake of survival, because of competition and excess, I must innovate. Competitive pressure is what drives innovation.
18. I originally worked in a research institute, left Beijing in 1995, and went to the sea to create BYD in Shenzhen. Why is there innovation in Shenzhen? Because there is a lasting market pressure to promote enterprise innovation. Shenzhen has so many original things, innovative enterprises, and a relatively good innovation soil and environment, the fundamental reason is reform and opening up and marketization.
19. Countries with a high degree of marketization tend to give birth to many big innovations. For example, the United States has given birth to many innovative enterprises, from Intel to Microsoft, to Google, Apple, who is next does not know. Every entrepreneur is walking on thin ice and must constantly introduce new things. In the 90s of last century, a "big brother" product may sell for 3 years Today, a mobile phone product may sell for 6 months. Without new products, you lose your competitiveness
20. As the main body of independent innovation, to achieve independent innovation in the true sense, it should go through a process, first of all, it must have the ability of independent research and development and production, and then the ability of independent certification, the goal is to cultivate independent innovation brand, only after going through this series of processes can it be regarded as the completion of independent innovation.
21. It is not impossible to take [technology], but it must not be subject to people.
22. The main body of innovation is people, but the bigger factor is the market environment, and the most fundamental thing is the market economy. Many companies are dumped in the market every day, and this motivation will force companies to innovate. If there is a low degree of marketization in a place, the motivation for innovation may not be so sufficient. Therefore, there must be a certain environment in order to form an innovative driving force
23. Learn to stand on the shoulders of giants. We do refer to the excellent brands of some foreign companies, and we use its non-patented technology to eliminate the patented technology. We make extensive use of generic technologies, and the combination of generic technologies is our innovation.
Four
Strategies for new energy vehicles
24. Two-thirds of households in China do not have a car, making it difficult for these car-free families to buy a pure electric vehicle for the first time. Therefore, BYD's strategy is pure electric to go, plug-in hybrid to go.
25. Travel is electrified in the first half and intelligent in the second half. The first half is underway, around the industrial chain in the first half, BYD power semiconductors and battery materials are also laid out very deeply, and it is believed that they can survive the battle in three to five years. In the second half, chip + 5G, BYD's core technology can not be less.
26. Bus electrification was proposed by BYD first, relying on product strategy, coupled with the repeated integration of technology, it has slowly formed the current market. In Japan, BYD's pure electric bus has achieved a breakthrough of zero; it is difficult for traditional Chinese cars to enter the United States, but BYD electric buses have driven straight in and even built production plants.
27. BYD's red electric double-decker bus enters the UK. Because the UK doesn't have this electric car, we have, and we fill the gap. We are not robbing people of jobs and markets, but there are no competitors, and there are none today.
28. We need them (new car-making enterprises) to come in, use the traffic of mobile phones, do mobile phone fans, and some platform providers use its traffic and ecology to come in and persuade everyone not to buy fuel vehicles, but to buy electric vehicles. Doesn't this cake get bigger? After getting older, how much you should cut depends on whose technology (good).
29. Many Internet giants have entered the automotive field, Internet technology can improve efficiency, which requires traditional auto companies to learn, but auto manufacturing has its complexity, more complex than mobile phones, traditional car companies and Internet companies will have a gradual integration process.
30. The speed of development of new things has never been equal, and the adjustment speed of the industry pattern is faster than imagined. It is estimated that by 2030, the proportion of new energy vehicles in the Chinese market is expected to reach 70%.
Five
About business management
(In 2017, Wang Chuanfu launched BYD's internal "reform" and external "opening up.") Externally, BYD opens up the intelligent vehicle technology platform and opens core components such as power batteries and motors to enter the supply chain of new energy vehicles; internally, BYD has built an organizational structure of "business group + business unit", allowing each team to play the advantages of collaborative development and professional expertise, and improve BYD's organizational operation efficiency and market response speed. ）
31. These subsidiaries (parts companies) only make BYD's money, that is not called the skill, dismantled to make the market money that is called the skill, which means that the product is competitive. We have a market-oriented 1.0 strategy, that is, a split of the parts business. Motors, batteries, powertrains and other businesses are killed in the form of business units to compete with peers and sell products.
32. The strategy of subsidiary marketization 2.0 is to go public and let the capital market recognize the valuation. BYD Semiconductor is already on the way to the market, and more business units will be listed in the future, and batteries and motor drives are possible. BYD will distribute 10% of the subsidiary's equity to the management team, and the higher the market value after the listing, the greater the income. This can further mobilize the enthusiasm of each business unit.
33. If I myself have achieved a little, our aim is to make every subsidiary a "little king". Of course, this is not easy, and it requires parts companies to continuously improve their competitiveness and plan to lose three layers of skin.
34. Talent assets are the most important. If I were to invest in a company where fixed assets like houses, machines, etc. were not the most important, I would pay more attention to how many engineers it had. As long as these engineers are still there, even if all the property, including land, plant, patents, and stocks, disappears, it can make a comeback at any time.
35. The market is like a battlefield, competition is like a war, and the general is very important, which requires entrepreneurs to play a leading role, to bury their heads in hard work, to do more and say less; there is a sense of innovation that dares to be the first, perseverance, perseverance, persistence, not giving up.
Six
The industry serves the country and solves social problems
36. We are a Chinese company, so we want to name these cars after the Chinese dynasty. There is also a detail that all the keys on BYD's car are in Chinese characters. Chinese must have backbone and confidence: a prominent feature of the Chinese nation is Chinese characters, why can't they be used? Cars are sold abroad, and some people may feel that Chinese buttons are not foreign, which may affect sales. It's okay, I take it wrong, I'm willing to sell this bit.
37. As an entrepreneur, money is no longer a big problem, and more people think about serving the country through industry. China is facing the two urgent issues of oil safety and air quality improvement, how do we change? Therefore, our goal is to develop zero-emission electric vehicles, promote the advancement of electric vehicles, and then replace fuel vehicles, improve the quality of our air, and reduce our dependence on oil.
38. Another insistence of BYD is to insist on manufacturing and industry, and has never been tempted by anything. In addition to automobiles and rail transit, BYD also has electronics and OEM, and we have always adhered to it. Strong manufacturing is the foundation of the country's industry, although the gross profit is not high, but it can bring a lot of employment, so that China's industrial system becomes more dense and more complete.
39. Persistence is important, and for more than a decade, we have persevered all the way. BECAUSE BYD built electric vehicles, the stock price fell by 40% that year, but we did not give up. A lot of money has been invested in doing solar energy, and the market environment is not good, but we are still insisting. Entrepreneurs should be socially responsible.
40. Everything we do is for the green dream, saying that the big is for the earth, saying that the small is for the environment of the country, for the sake of our next generation, for the health of our children.
Resources:
[1] After 20 years of car building, BYD Wang Chuanfu finally ushered in his own era, Elephant Vision Automobile
[2] Wang Chuanfu: Decisive Battle Intelligence Second Half, China Entrepreneur Magazine
[3] Forbes China Interview with BYD Wang Chuanfu: "The market is like a battlefield, competition is like a war", Forbes official WeChat account
[4] Wang Chuanfu: I am very timid, and I will not gamble at all, Xinhua Viewpoint
[5] No Hero! BYD Wang Chuanfu was named on the annual cover of Fortune, Bus Information Network
[6] Wang Chuanfu and BYD 'Myth of Making Wealth', China Auto 30 Think Tank
[7] Wang Chuanfu and the five unicorns in BYD's cage | Fortune about you, Prism
![Bring your own "charging treasure"? Reverse discharge encountered the epidemic May Day[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)