BYD is crazy! With more than 400,000 orders in hand, "build Tesla in minutes"?

Author 丨Pan Lei

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The most shocking remark of BYD President Wang Chuanfu is "building Tesla in minutes.".

This sentence was said in 2013. At that time, at BYD's headquarters in Pingshan, Shenzhen, "HexagonAl Building", Wang Chuanfu told shareholders who came to the shareholders' meeting that once the (electric vehicle) household consumption started, BYD could "build Tesla in minutes".

For a long time, this sentence has become a stem - Tesla in 2013, although the sales volume is only more than 20,000 units, but it is already the traffic burden of the global automobile market.

Nine years later, BYD looks closer and closer to turning that meme into reality.

In 2021, BYD sold nearly 600,000 new energy vehicles, and Tesla sold about 320,000 vehicles in China in the same period (according to the Association of Automobile Associations), which has surpassed the latter in number.

At the beginning of April this year, BYD released another blockbuster news - officially stopped selling fuel vehicles from March 2022.

Unlike other car companies that often leave a "buffer period" of years or even decades when announcing similar plans, BYD directly announced the fact that it began to stop production of fuel vehicles last month.

This is the first in the world, but it is in line with BYD's original intention of building a car - entering the automotive industry is to build electric vehicles.

When you enter the game to build a car, you want to build an electric car

At the beginning of 2003, no one would have thought that the "battery king" BYD would run to build a car.

So when BYD released the announcement of the acquisition of 77% of Xi'an Qinchuan Automobile, hong Kong fund managers said that they could not understand it - the high-quality "battery stocks" in their hands (mainly mobile phone batteries) will soon become uncertain auto stocks, so they chose to smash the market.

AT ONE's market capitalization once evaporated nearly HK$2.7 billion in two days.

The view of these fund managers is that the target of the acquisition is not in line with the company's overall strategic development, and it is clear that BYD has continued this mistake.

BYD believes that the acquisition of Qinchuan Automobile can form a "synergy effect" in the field of batteries, accelerate the development and production of power batteries, and take into account the huge potential of the automobile market.

However, investment institutions represented by JPMorgan Chase do not recognize the so-called "synergy", saying that BYD can promote the power battery business by investing in battery technology companies or cooperating with car companies, rather than buying an oem at a high price.

WANG Chuanfu, president of BYD, refuted this view.

He believes that the core of electric vehicles is the battery, and this is BYD's advantage. The acquisition of Qinchuan Automobile is to prepare for profitability in 5-10 years, so hong Kong fund managers are too short-sighted and can only see two or three years.

At the 2004 Beijing Auto Show, BYD exhibited as many as seven new models, including the world's first lithium-ion hybrid-driven sedan, the Hybrid-S, and the electric concept CAR ET.

Wang Chuanfu said that building electric vehicles is BYD's ultimate goal to enter the automotive industry.

However, at that time, when fuel vehicles occupied an absolutely dominant position and the development trend of electric vehicles was still unclear, BYD actually took the technical route of fuel vehicles and electric vehicles in parallel.

In the era when fuel vehicles played an absolute main force, BYD has not given up chasing electric vehicles, and in 2008 launched the two-mode model F3DM, which was named "DM", which is actually an electric, oilable and electric plug-in hybrid model, which is also the world's first plug-in hybrid model that has achieved mass production.

After many iterations, this "DM" technology has become the CURRENT FIRE DM-i (economy market) and DM-P (high-end market), and completely replaced the role of fuel vehicles within BYD.

BYD no longer needs fuel vehicles

BYD's desire to withdraw from the fuel vehicle market has long been foreshadowed.

At the end of 2018, Wang Chuanfu proposed to clarify the timetable for banning the sale of fuel vehicles at the bi-weekly consultation forum of the National Committee of the Chinese People's Political Consultative Conference, and Zeng Yuqun, chairman of NINGDE Times, also held a similar view.

In 2019, in some public places such as the World New Energy Vehicle Conference, Wang Chuanfu continued to call for a ban on the sale of fuel vehicles.

In terms of sales composition, BYD is now almost completely rid of fuel vehicles.

In February, BYD's full range of models sold 90,268 units, of which 87,473 were new energy, accounting for nearly 97%.

By March, BYD released more than 100,000 units of sales data, only DM (dual-mode models, oilable and electric) and pure electric two forms, fuel vehicles have disappeared.

Another notable detail is that BYD's last fuel model, the Song PLUS fuel version, was released in August 2020, and BYD has not updated its fuel vehicle products since then.

And BYD also has a large number of undelivered orders in its hands.

According to the information disclosed in the minutes of BYD's investor meeting that came out at the end of March this year, its orders in hand are as high as 400,000, and it is still increasing.

Based on this, BYD said that its sales target for this year is 1.5 million units, and even expected to hit 2 million units - 730,000 units (including fuel vehicles) last year.

In response to the spike in delivery, BYD has fallen into a "capacity hell" similar to Tesla's and is currently expanding its production capacity across the country.

According to public information, in 2021, BYD will add vehicle project production bases and power battery production bases in many cities, including Hefei, Yancheng, Jinan and so on.

Correspondingly, BYD began to expand its personnel.

According to data released by BYD, the total number of employees in 2021 was 288,200, an increase of 63,900 over 2020.

On the short video platform, BYD even opened the national recruitment model through live broadcasting, and factories in Shenzhen Pingshan Headquarters, Xi'an, Changsha, Shaoxing and other cities are recruiting people, and some factories also provide entry rewards of up to 6,000 yuan.

Oilable and electric, but also at the lowest price

For more than a decade before 2021, BYD's sales were "stable" at around 400,000 to 500,000 units – 448,000 units in 2009 and 416,000 units in 2020.

In 2021, BYD's sales exceeded 730,000 units, of which new energy vehicles contributed nearly 600,000 units.

Cui Dongshu, secretary general of the National Passenger Car Market Information Joint Association, believes that BYD's independent innovation technology breakthrough has led to a breakthrough in sales, including a "blade battery" that integrates energy and structure, and plug-in hybrid technology represented by DM-i. "The integrated range of the plug-in hybrid model exceeds 1,000 kilometers and achieves a good (market) effect."

In early April 2021, BYD verified the safety performance of the blade battery through the "needle prick" test - using a steel needle to puncture the blade battery, the ternary lithium battery, etc., and the result was that the ternary lithium battery quickly deflated, and the blade battery carried this extreme puncture test.

This testing method, which is not widely promoted, has triggered a quarrel between Li Yunfei, general manager of BYD's brand and public relations business unit, and Zeng Yuqun, chairman of CATL, and Zeng Yuqun, chairman of CATL.

In addition to blade batteries, oilable and electrical DM-i technology has been recognized by users, and orders have soared.

In September 2021, Wang Chuanfu even apologized to users for the long delivery cycle, saying that the problem would be solved by expanding production capacity.

One of the owners of the Song PLUS DM-i said that the car was booked in October last year and there is no mention of the car at present.

A technical expert working on a head of "new car-making forces" also believes that BYD's sales explosion is due to the market demand for plug-in hybrid models began to be released, and DM-i has no battery life anxiety, while it can also take into account most urban travel scenarios with pure electric mode.

He also stressed that there is no opponent in the field of plug-in hybrid is also one of the reasons for the rise of BYD's sales, "Great Wall, Chery and Geely also have similar hybrid models, but because they have added transmissions, the cost is not dominant, and the price is more than THATD."

Great Wall Motor's DHT hybrid is currently mainly installed in WEY brand models, as well as Haval Red Rabbit, etc., with a minimum starting price of 138,800.

Chery Kunpeng DHT now only carries the Tiggo 8PLUS Kunpeng e+ car, starting at 155,800.

Geely Star Yue L Thor Hi · The X Hybrid edition starts at 171,700.

Compared with these opponents who want to expand the plug-and-mix market, the starting price of BYD Qin PLUS DM-i is only 111,800. "BYD DM-i happens to be the lowest price, and the blade battery is also famous."

In Cui Dongshu's view, BYD's industrial chain advantages can also achieve cost effects. "What BYD is doing is vertical integration and strong system capability. Batteries, battery management systems, vehicle wiring harnesses, brakes, sunroof assemblies, etc., are all produced by ourselves."

It is worth mentioning that BYD also seems to benefit from the stability and control of the supply chain.

According to the news released by Great Wall Motors, the reason for the decline in sales in the first two months of this year is that it is plagued by the shortage of Bosch ESP.

A widely circulated theory is that BYD is listed as a priority supply target by Bosch, on the grounds that the former's strong horizontal component research and development capabilities can develop alternatives, while Bosch has to reduce its posture and cooperate with BYD in order to gain market share.

Wang Hui, an industry insider who knows BYD's situation, said that the above rumors are a very old story, but Bosch does have a relatively deep cooperative relationship with BYD, such as the vehicle control logic (dTCS, similar to ESP and other body stability systems) developed for new energy vehicles, "In this case, ESP gives priority to protect BYD."

He believes that Bosch is "jealous" of BYD, "Bosch can do, BYD can do; and BYD does a lot of things, Bosch can't do."

For the DM-i model is popular, he said that DM-i and e platform 3.0 (BYD's pure electric platform) belong to the king explosion level of technological innovation that can produce industry standards, the former directly revolutionizes the life of fuel vehicles, defines the market and products, the opponent will be very uncomfortable, and even "all non-luxury brand fuel vehicles will be killed."

"The product is on the right road, and at the same time, the oil price is soaring, coupled with the economic downturn, it is inevitable that the fuel-saving and money-saving car will sell well." He explained the reasons for BYD's soaring sales.

Can tesla be built in minutes?

Zhang Yan, who has been engaged in research and development in a number of electric vehicle companies, believes that BYD's technology belongs to No. 1 in the industry, "the three electrics are their own, they can also make car chips, the shape is getting better and better, and now the overseas reputation has also been established."

But he also pointed out that BYD's shortcoming is intelligence. "However, BYD has invested in unicorns in the autonomous driving industry chain."

Ruibea's analysis shows that BYD has invested in Horizon, a developer of autonomous driving chip technology, and Sagitar Juchuang, a lidar manufacturer, and cooperated with autonomous driving technology company Momenta.

At the end of March, BYD and NVIDIA cooperated on an intelligent driving platform.

Xu Lide, former assistant to the president of Bo County Automobile, said that intelligence is not too much of a problem for BYD, so now sales have not been affected, but on the other hand, sales take-off is also related to eating the dividends of the transition era between oil and electricity.

But he also pointed out that BYD's car is OK, but compared with first-line car companies, such as Buick, Toyota, Honda and other international brands, the gap is still very large, "the service level of 4S stores is very low."

"BYD is not so good", he believes, now the owner of the BYD (lack of service level) is still based on understanding, "but with the expansion of the group of car owners, the service level still needs to be improved."

A BYD car owner also mentioned that the BYD 4S store service is indeed not very good, love to answer.

However, he believes that the car is not bad than any service, "and the management is quite strict, and if you are not satisfied, you can complain."

The aforementioned technical experts who work for a new force of car manufacturing also said that BYD's service is indeed a short board, such as changing the after-sales warranty period, etc. "If it is BYD + Weilai's service, it is invincible."

As for whether BYD can "build Tesla in minutes", he believes that the customer groups of the two are not a bunch of people at all. "Most of the users of pure electric vehicles (like Tesla) are two cars and have stronger spending power. Many of the people who buy the plug-in hybrid model are a car, and they want to save more money, especially at the current high oil prices. In addition, in limited-license cities, such as Shanghai, you can also get free Shanghai licenses when you buy a mixed model."

Cui Dongshu said that the unique advantages of BYD's plug-in and hybrid models have constituted a competitive substitution relationship for joint venture brand fuel vehicles, "BYD's product grade has been greatly improved, and the average sales price has exceeded the level of 150,000 yuan."

At the end of May 2021, Li Yunfei, general manager of BYD's passenger car brand and public relations business department, released a wind, and in the fourth quarter of 2021, a high-end model priced at 500,000-800,000 yuan will be released, and a new brand LOGO will be hung.

According to Li Yunfei, this is a model that does not need to be advertised, "enough to make people see it for the first time, and their eyes don't want to leave."

But during the Guangzhou Auto Show at the end of the year, another BYD executive said that the high-end model will be released in the first half of 2022, which is a hardcore off-road vehicle priced at 500,000-900,000.

As for the competition between BYD and Tesla, Xu Lide believes that at least in terms of domestic sales, BYD has almost doubled Tesla's, and there is also a backlog of orders similar to Tesla, "(which shows) that while Tesla is developing, BYD has also achieved brand value accumulation."

In his view, this wave of mixed dividends has promoted the rise of BYD, a former third-rate car company, but the longer-term future competition depends on what the next generation of fuel the market chooses.

Note: Wang Hui and Zhang Yan are pseudonyms in the text.