The timing and consideration of BYD's suspension of fuel vehicles | President Zhu's column

In recent days, BYD has aroused heated discussions, and it issued an announcement on April 3 that according to the needs of strategic development, it plans to stop the production of its fuel vehicles from March 2022. IN THE AUTOMOTIVE SEGMENT WILL FOCUS ON PURE ELECTRIC AND PLUG-IN HYBRID MODELS. Today we can discuss this matter together, from the overall point of view -

1. BYD's fuel vehicles in recent years have maintained low prices, not to mention, the sales of fuel models have also stagnated (in the past three years or so, the more special F3 and Speed Sharp in fuel vehicles have entered the end of their life, while several other Song series have DM-i and pure electric models), with the demand for pure electric and plug-in models rising, the economic impact of stopping fuel vehicles is controllable.

2. From the overall sales point of view, BYD in 2021 broke through the shock of the sales range of 400,000-500,000 units, into the order of 750,000 units, the main driving force is the penetration rate of new energy vehicles began to rise sharply, BYD also used a relatively low gross profit in exchange for market share (DM-i models are cost-effective and green card play).

3. From the perspective of the brand, in the global world, the complete transformation from traditional fuel vehicles to new energy (BYD has become a pioneer), which is a plus point, from the perspective of the government, consumer recognition, etc., there are many benefits and little harm, which is a good way to play.

Figure 1 Historical data of bydir by-one vehicles delivered

Part 1: BYD's sales volume is reviewed

Taking the insurance data of the past three years for reference, the insurance data of BYD fuel vehicle terminals from 2019 to 2021 are 217617 units, 214518 units and 193998 units, which are about 200,000 units for a long time, and the insurance data in the first two months of 2022 are 8813 units and 3464 units, respectively. Looking at the new energy side, the plug-in hybrid model in 2021 soared from 50,000 units to 229,000 units due to the rollout of DM-i, while the sales volume in the first quarter of 2022 reached 141,000 units; pure electric vehicles rose from 100,000 to 130,000 units to 296,600 units in 2021, and 143,000 units in the first quarter of 2022. So on the whole, fuel vehicles are not so important to BYD.

Figure 2 Bydir's sales of different power types in 2019-2021

From the perspective of BYD fuel models, the main force is F3, Song and Song Pro, and the next two cars are actually on the same platform as DM-i and pure electric. In 2021, the best-selling BYD fuel car Song Pro sold 63,600 units, F3 39,700 units, Song PLUS 39,200 units, and Song 21,400 units. Since October 2021, BYD has discontinued its F3 model. At present, the main demand is still the Song family, and with the gradual rise in orders for DM-i models, the fuel vehicles are stopped, so that consumers can all turn to DM-i plug-in hybrid models.

Therefore, this time node in March is basically fixed, that is to say, this part of the simple fuel vehicle is stopped, and the symbolic significance is greater than the actual significance.

Figure 3 BYD fuel vehicle sales in 2019-2021

In the investor exchange, there is an introduction that BYD currently has accumulated 400,000 units in hand (2022 target 1.5 million units, according to Q1 to continue to pull volume), here a large part of the orders are DM-i models, due to the basic PRODUCTION OF PHEV models and fuel models mixed line production, from the order accumulation and follow-up development point of view, now the fuel vehicles are stopped, commercial interests are not lost, of course, the biggest benefit is still at the brand level - From a brand of the fuel vehicle era to enter the brand of all new energy vehicles, from the image point of view, it is quite Cool. Combined with the previous Time Magazine's selection of BYD as the "Global TOP 100 Company", this time there is a certain active public relations component.

Figure 4 TIMES selected top 100 companies in 2022

Part 2: BYD's considerations

To add, from the investor minutes, we can see some of BYD's decision-making factors. At present, there are still 60% of car-free households in China, and if all of them are pure electric vehicles, the pressure is relatively large from the consumer level. If the first car is plug-in hybrid, the differentiated advantages of BYD DM-i models are mainly to solve consumers' concerns about mileage or charging facilities by solving consumers' concerns about mileage or charging facilities at a price close to that of joint venture fuel vehicles, which can impress consumers with fuel saving and strong power.

Then promote pure electric vehicles - consider that the second car in the family is suitable for pure electricity, the first PHEV is suitable, the proportion is 40% PHEV, 60% pure electricity, to the European market reference (45% PHEV, 55% pure electricity), so in the long run, China is also this trend. Therefore, for BYD, the original low-end fuel vehicles have obviously reduced the price and brand image, and now to grab customers from the joint venture fuel vehicles, they must sacrifice their weaknesses (traditional fuel vehicles).

Figure 5 BYD is currently a great threat to joint venture fuel

Since 2017, China has entered the era of stock competition, so BYD's sales target of 1.5 million units in 2022 is to grab the joint venture car customers, this attack is still very aggressive, reluctant to children can not set the wolf.

Figure 6 Sales volume of passenger cars in China

From the overall point of view, after the suspension of the sale of fuel vehicles and pure tram models, BYD's models have fully entered the range of more than 100,000 yuan, and the main DM-i entry model covers 100,000-150,000 yuan and improves the model 150,000-200,000 yuan; from the perspective of pure electric models, that is, with the same lithium iron phosphate battery, with 100,000-200,000 yuan models to expand the sales base, with more than 200,000 yuan of models to make money, and then rely on DM-i to achieve the upward breakthrough of the brand. With the current data, BYD no longer needs to keep fuel vehicles to drag its hind legs.

Figure 7 Price bands of BYD models (January 2022)

In fact, from the perspective of production capacity, as the DM-i model removes the previous dual-clutch transmission and develops a dedicated engine, the components shared by the DM-i model and the fuel vehicle will be gradually eliminated, which will also make room for PHEV and BEV.

From the perspective of sales network and region, plug-in hybrid has indeed inherited all the 4S shop network of the original fuel vehicle, and from the perspective of sales amplification, it has achieved an upgrade in the geographical dimension and entered the original place that was not hit.

Figure 8 BYD's sales area (fuel vehicles, plug-in hybrids and pure electric)

Of course, I think the problem that BYD needs to worry about is that with the suspension of fuel vehicles and further adjustments to existing products, what will the previous fuel vehicle users do next? My understanding is that before the large-scale volume of F3 and other fuel vehicles, the supply of small accessories should be no problem, but the value of used cars will directly dive. Of course, the users who bought BYD fuel vehicles before would have been quite niche (although there are 200,000 terminal sales every year from 2019 to 2021), and this part of the consumer may have to bear the devaluation of second-hand cars after the transformation of a brand to new energy.

brief summary:

I think BYD's playing style in the past two years is still very interesting - first do the scale, and then make money. In the stock market, BYD (DM-i products) has a very, very large impact on joint venture brands, and for new energy vehicles affected by cost factors, it is a bit of a mainstay. Of course, this model can also be deduced, if the new energy vehicles (car companies) do not do the vertical integration of the three electricity field, it seems that there is no way out (the cost can not be spelled, and the technical iteration is not OK).

Figure | network and related screenshots

About author:Zhu Yulong, senior electric vehicle three-electric system and automotive electronics engineer, author of "Automotive Electronics Hardware Design".

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