Wang Chuanfu cut off the fuel car, and BYD "bit" Tesla

Wang Chuanfu really came this time.

On April 6, BYD Automobile announced that it would stop the production of fuel vehicles starting in March this year, and said that it would focus on pure electric and plug-in hybrid vehicles in the future.

This also means that BYD has become the world's first traditional car company to completely stop production of fuel vehicles. I have to say that in terms of the boldness and determination of reform, Lao Wang is really one of the best in the big guy circle.

Why does BYD have such courage? Can the growth trend of BYD's new energy vehicles continue to be maintained?

Not long ago, Wang Chuanfu said in a speech at the China Electric Vehicle 100 Forum: "The replacement of fuel vehicles by new energy vehicles will only be fast, not slow. We have all gone through the process of electrification of public transport, and the more we end up, the faster the speed of change is beyond imagination, and the same is true for private cars. ”

It seems that Wang Chuanfu wants to seize this wave of change. However, although BYD currently has the momentum of catching up with Tesla in terms of sales, there is still a big gap between intelligence and high-end.

01

Fully electrified

BYD's announcement of the suspension of fuel vehicles is actually not surprising. Lao Wang has repeatedly called on the state to ban fuel vehicles in public in the past two years.

And in June last year, there was also news that BYD was going to stop selling fuel vehicles, but perhaps the time was not ripe. BYD responded at the time, "There is no such plan at present, the market and consumers have demand, partners and distributors have demand." ”

In the case that the new energy vehicle technology has not yet been fully developed and the fuel vehicle still occupies the mainstream of the automobile market, so decisively stopping the production of fuel vehicles, BYD's behavior seems to reveal a tragic tragedy of a hero's broken wrist.

But looking back at BYD's sales in the past few years, we will find that BYD's wave of operations is actually a story of a person who did not succeed in fishing and turned to be the first person to eat crabs.

Nowadays, many people's impression of BYD is a big user and a sales champion of new energy vehicles, but in fact, in 2017, BYD's new energy vehicle sales accounted for only about 16%.

BYD's best-selling model that year also had nothing to do with new energy, and the best-selling model at that time was the original fuel car F3, which sold 111,000 units that year.

Although the bicycle data is not bad, BYD's total sales in that year were about 340,000 vehicles. Compared with More than 1.2 million vehicles in Geely and more than 1 million vehicles in Chang'an, this figure is not at all in the same order of magnitude. Even if it is compared with SAIC and GAC in that year, there is a gap of more than 100,000 vehicles.

BYD's sales in 2017 are ordinary, far from the scenery of the current sales champion, and it is mainly fuel vehicles.

In the following 3 years, BYD continued to advance in the fuel circuit, and successively released a number of fuel vehicles. In 2018, BYD even launched two new cars, the Tang second-generation fuel version and the Qin fuel version, but the sales were dismal.

In July 2019, BYD launched the fuel car Song Pro. After the launch of this car, the monthly sales once exceeded 10,000, and the sales volume exceeded 100,000 in 2020, which is regarded as a representative of the rise of BYD's fuel vehicles.

Due to the excellent performance of Songpro's sales, in this year, the proportion of BYD's new energy vehicle sales has regressed from 44% in 2019 to 39%.

Sell well, of course, to take advantage of the chase. In June 2020, BYD released the Song Plus fuel version, but this time the market response was flat and sales were flat. And this is also the last fuel car launched by BYD.

Obviously, BYD, which is about to completely stop production of fuel vehicles, was still using fuel vehicles as the main force only two years ago, and even did not hesitate to reduce the sales space of new energy vehicles.

In 2021, the inflection point suddenly arrived.

In January of that year, BYD launched the creative DM-i super hybrid platform, using a high-power and high-efficiency motor as the main driving force. This means that when the power is sufficient, the DM-i hybrid is a pure electric vehicle; when the power is insufficient, the DM-i super hybrid is a hybrid with low fuel consumption.

It is this new series that has pushed by-one's annual sales of BYD automobiles to 730,000 units, while directly pulling the sales volume of new energy vehicles to more than 80%. The trend of new energy vehicles within BYD has completely exploded.

In 2021, BYD's sales of fuel vehicles will only be 136,000 units. In January and February this year, car sales totaled 185,600 units, including 5,049 fuel vehicles, which is a complete decline.

In this development situation, BYD chose to abandon the production of fuel vehicles, which seems to be a wise move. After all, if you want to stand out among traditional car companies and surpass traditional car companies such as the Great Wall and Geely, ALL IN new energy vehicles are the best opportunity to overtake in curves.

02

Comparable to Tesla?

ACCORDING TOD's March production and sales report showed that the company's total automobile production in March was 106,700 units, an increase of 170.06% year-on-year; sales were 104,900 units, an increase of 179.78% year-on-year, of which new energy vehicle sales were 104,900 units.

In the first quarter of 2022, BYD's cumulative sales of new energy vehicles were 286,300 units, an increase of 422.97% year-on-year. BYD's production and sales of fuel vehicles in March were zero, which means that in the first quarter of public data, the cumulative sales of fuel vehicles were still 5,049.

In terms of bicycle sales, in the first quarter of this year, Tesla delivered more than 310,000 vehicles worldwide, and BYD was less than 30,000 vehicles.

Musk previously said on the earnings call that Tesla sales will increase by 50% in 2022. Based on last year's sales of 936,000 units, Tesla's sales target for 2022 is 1.4 million units.

BYD's sales target of 1.5 million vehicles in 2022 is set higher than Tesla's, but with BYD's new energy vehicle sales growth rate of nearly 4 times year-on-year, BYD's sales scale is also relatively large.

However, this does not mean that BYD can catch up with Tesla. Although BYD's car sales and revenue are growing rapidly, the gross profit margin is still at a low level. At the same time, BYD has not yet been able to achieve the high-end of the brand, although the electrification technology is strong, but there is still a certain gap with Tesla in the fields of intelligence and automatic driving.

In 2020, the average bicycle price of BYD Automobile is only about 135,200 yuan, and it will only reach about 151,700 yuan in 2021. Low prices correspond to low gross margins.

In 2021, the gross profit margin of BYD automobiles, automobile-related products and other products was only 17.39%, down 7.81% year-on-year. The gross profit margin of Tesla's auto business in 2021 reached 29.3%, an increase of 3.7 percentage points year-on-year.

A big reason for the decline in BYD's gross profit margin is the sharp increase in raw material and commodity prices. This is a common problem facing the automotive industry at present.

Rising costs and declining gross profit margins have also allowed BYD to increase revenue without increasing profits. In the whole year of 2021, BYD achieved revenue of 216.142 billion yuan, an increase of 38.02% year-on-year; but the net profit was only 3.045 billion yuan, down 28.08% year-on-year.

On the other hand, low gross margin is also BYD's own choice. BYD has been pursuing the strategic idea of "scale first, profit later" and quickly seized the market size through low prices.

As BYD's sales volume has occupied a certain market scale, BYD has also begun to seek a high-end layout.

On January 21, 2022, BYD officially released the news that "due to the sharp rise in raw material prices and the decline of new energy car purchase subsidies", the price of BYD Dynasty Network and Ocean Network related models will be raised by 1,000 yuan to 7,000 yuan on February 1.

BYD also revealed this year that it will launch high-end products priced at about 500,000-1 million yuan in the first half of 2022.

However, whether it can successfully achieve high-end and increase gross profit margin like Tesla has yet to be tested.

In terms of intelligence, BYD, like most traditional car companies, is relatively backward in development. At the online briefing of BYD's 2021 annual report, investors asked Wang Chuanfu, "When will BYD's autopilot catch up with or surpass Tesla?" ”

Wang Chuanfu responded, "The company will continue to increase the development of automotive intelligence, from the three aspects of perception, decision-making, and execution, and actively explore cooperation with international partners in different professional fields."

Not long ago, BYD chose Baidu as its intelligent driving supplier, and the two sides cooperated in intelligent driving and other fields.

With various measures, we can see Wang Chuanfu's determination to comprehensively enter new energy. However, in the future, the road is long and obstructed.

Author | Liao Hongyang

Edit | Kerr

Source | CarVisibility

EDN