Between insufficient automobile production capacity and overcapacity, how to find a balance point is always a difficult "magic spell". Cracking this "curse" requires macro-control, and it is even more necessary for enterprises to make a difference and be brave to be "crab eaters".
"It is necessary to rely on existing production capacity to develop new energy vehicles and ensure that the project construction is standardized and orderly." Vehicle enterprises should highlight the key layout, rely on the existing production base to gather and develop, and no new production capacity distribution points will be added before the existing base reaches a reasonable scale. On March 26, at the 2022 China Electric Vehicle 100 Forum, Lin Nianxiu, deputy director of the National Development and Reform Commission, sent a strong signal of automobile production capacity regulation. Xin Guobin, vice minister of the Ministry of Industry and Information Technology, pointed out more seriously at the forum: "It is necessary to further strengthen the overall layout in view of the current industrial development situation, and resolutely curb blind investment and duplicate construction." "It can be seen that the regulation of automobile production capacity is already on the string." Discontinuation of fuel vehicles from March! On April 3, a week later, BYD announced the decision, which appears to be a positive response to the national development and reform commission and the Ministry of Industry and Information Technology's emphasis on capacity regulation.
With the rapid development of new energy vehicles, the transformation of existing fuel vehicle production capacity into new energy vehicle production capacity, rather than separate new production capacity, has become an important issue for industry enterprises at present and in the future. Around this topic, the reporter of China Automobile News exclusively interviewed Du Guozhong, deputy general manager of BYD's automobile brand and public relations business department, and listened to his experience in bydirecting BYD's production capacity optimization. "BYD is the first car company in the world to officially announce the suspension of production of fuel vehicles, which is a measure to actively respond to the national requirements for the adjustment of production capacity in the automobile industry, and it is also the need of BYD's own development strategy." Du Guozhong said that the optimization and adjustment of production capacity on the basis of adhering to the development concept of "innovation" and "green and low carbon" is of strategic significance to BYD's long-term development.
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What is the purpose of capacity optimization?
The survey shows that as far as the domestic new energy vehicle production capacity is concerned, the insufficient capacity of the head enterprise and the overcapacity of the tail enterprise are the indisputable reality. In 2021, BYD DM-i models have been delayed due to production capacity constraints, and although BYD has made a public statement, it has still aroused heated discussion among consumers. At the same time, the production and sales of fuel vehicles are gradually declining, especially in 2021, BYD has significantly reduced the proportion of fuel vehicles.
"After stopping production of fuel vehicles and optimizing production capacity, BYD can not only release more new energy vehicle production capacity, make up for the lack of pure electric and hybrid vehicle production capacity, alleviate the pressure of undelivered orders, but also get rid of the lower input-output efficiency of fuel vehicles, realize the strategic concept in the field of new energy vehicles, and provide strong support for future market competition." Du Guozhong said that optimizing production capacity also means optimizing resource allocation and forming more advantages.
In fact, in recent years, with the continuous and substantial growth of new energy vehicle sales, the contradiction of BYD's insufficient production capacity of new energy vehicles has become increasingly prominent. Even if the method of co-production of plug-in hybrid vehicles and fuel vehicles is adopted, it is still difficult to meet the growing demand for new energy vehicle orders.
In this regard, BYD has been looking for ways to solve the production capacity problem. According to public reports, ATD has built nine vehicle production bases, including the Shenzhen plant, the Changsha plant, and the Xi'an plant. Even so, the contradiction between the order of new energy vehicles and the production capacity is still prominent. If we continue to produce fuel vehicles, it will to a large extent restrict the production capacity of new energy vehicles with good market benefits and in line with the development trend.
"Traditional fuel vehicles have completed their historical mission in BYD and can 'retire from success'." Du Guozhong was quite emotional about this. He told reporters that BYD was established in 1995 and officially entered the automotive industry in 2003 to vigorously lay out new energy vehicles. In 2008, the world's first two-mode electric vehicle BYD F3DM was launched. Over the years, BYD has been focusing on new energy models, optimizing product structure and achieving better scale effects. In particular, the breakthrough of super hybrid DM-i in products has further transformed BYD's product structure into new energy vehicles.
Whether from the perspective of the market and users, or from the perspective of global development trends, BYD's production capacity optimization measures for discontinued fuel vehicles have become a timely move. In Du Guozhong's view, in the past few years, the Netherlands, France, the United Kingdom, Switzerland, Japan and other countries have successively announced the suspension of fuel vehicles in their own countries from 2025 to 2040; Volvo, Ford, Volkswagen, Nissan, Audi, General Motors, Honda, Toyota and other multinational automobile companies have also proposed a timetable for stopping the sale of fuel vehicles. But the reality is that in the transformation to new energy vehicles, BYD is one step ahead of the suspension of fuel vehicles.
In fact, the demand from consumers and the potential market for family car purchases make it imperative to adjust production capacity. Du Guozhong said that it is a global consensus to cope with climate change and achieve carbon peaking and carbon neutrality. In the current international environment, oil prices have risen sharply, and the reform of new energy vehicles will accelerate. The mainland is more urgent than any other country to reduce its dependence on oil, and the replacement of fuel vehicles by new energy vehicles will only be faster. If pure electric vehicles focus on solving the need for additional purchases, then plug-in hybrid models effectively solve the first purchase and replacement needs of more families, and form a significant substitution effect on today's huge fuel vehicle market.
For example, Du Guozhong said that from the data point of view, in 2021, plug-in hybrid models will have a market share of up to 50% in Europe, but only 18% in China. More than 60% of households in China still have no cars, and plug-in hybrid models have the advantages of short-distance electricity consumption and long-distance oil, which extends the driving range and facilitates family travel. At present, there are more and more plug-in hybrid models on the market. From the perspective of mainland new energy automobile industry planning, plug-in hybrid models will remain the focus of new energy vehicle layout in the future period of time, and it is also one of the important ways to achieve the goal of "double carbon". Capacity optimization contributes to the stability of the industrial chain, supply chain, and smooth transition of the market from fuel vehicles to new energy vehicles.
"Any decision is a long-planned practice, and stopping production of fuel vehicles and focusing on new energy vehicles is BYD's original intention." Du Guozhong said frankly.
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Resource allocation improves performance
Then the suspension of fuel vehicles will inevitably carry out the conversion of production capacity. The conversion of production capacity will inevitably involve the reallocation of production factors and resources such as technology, research and development, capital, and personnel, how does BYD deploy it? In fact, BYD has long carried out a series of changes, whether it is technology, research and development or personnel allocation, are gradually tilting towards new energy vehicles. For example, BYD has long launched the co-production of plug-in hybrid vehicles and fuel vehicles. The suspension of traditional fuel vehicles this time, the relevant production capacity and core technology can still be applied to plug-in hybrid models.
Du Guozhong told reporters that in the allocation of technology and research and development resources, BYD has always adhered to the strategy of "walking on two legs" of pure electric + plug-in hybrid, accelerating the replacement of new energy vehicles with traditional fuel vehicles. In terms of independent research and development, BYD adheres to technological innovation and fully grasps the core technologies of new energy vehicles such as batteries, motors, and electronic controls. At the same time, a series of core technologies of new energy vehicles independently developed by BYD have strongly empowered products and formed a strong product matrix. In particular, the "DM-i super hybrid" product, the price refers to the same level of fuel vehicles.
ACCORDING TOD's recent 2021 financial report shows that in 2021, BYD's new car sales will reach 730,000, of which the annual sales of new energy vehicles will exceed 600,000.
In terms of the allocation of R&D personnel, in 2021, BYD's R&D focus layout will be greatly inclined to the field of new energy vehicles. According to reports, in 2021, the number of BYD R & D personnel increased to about 40,400, an increase of 31.52% year-on-year. At the same time, BYD's R&D investment reached 10.627 billion yuan, an increase of 24.20% year-on-year. The continuous increase in R&D personnel and funds has made BYD have super security blade batteries, DM-i super hybrid, DM-p technology, DiLink4.0, e-platform 3.0, IGBT4.0 and other core technologies.
In terms of capital allocation, Du Guozhong said that after the optimization of the production capacity of discontinued fuel vehicles, the sales expenses, research and development expenses and management expenses can be focused on the new energy vehicle business with higher input-output efficiency, so as to realize the strategic concept in the field of new energy vehicles, and at the same time lead the "green revolution" of global car companies with practical actions to optimize production capacity, and benefit the world with "China Creation", "Chinese Wisdom" and "Chinese Solution".
While optimizing production capacity, BYD has not snubbed existing fuel vehicle users. In a public statement, BYD promised to continue to provide comprehensive service and after-sales protection for existing fuel vehicle customers, as well as the supply of parts and components throughout the life cycle, to ensure worry-free travel.
"The accelerated development of the new energy automobile industry is itself the result of the 'policy + market' two-wheel drive." In Du Guozhong's view, in 2021, China's automotive industry struggled hard, withstood the pressure, firmly embraced the electrification reform, ended the three consecutive years of decline, and achieved a good start in the "14th Five-Year Plan". The "Carbon Peak Action Plan for 2030" issued by the State Council in October 2021 also said that by 2030, the proportion of new energy and clean energy-powered transportation vehicles will reach about 40%. Under the two-wheel drive, new energy vehicles are releasing huge energy and becoming the "top pillar" for the transformation of new and old kinetic energy in the automobile industry and the promotion of consumption. In recent years, the new energy automobile industry has entered a new stage of market-oriented development and achieved a milestone leap. These are the internal logic of BYD's production capacity optimization.
Du Guozhong pointed out that the current automotive industry is facing severe challenges such as the ups and downs of the epidemic, the soaring price of raw materials, the instability of the supply chain, as well as the shortage of fossil fuels and the instability of oil prices. "This has undoubtedly sounded the alarm for the new energy automobile industry." Du Guozhong said that optimizing production capacity also means that BYD will focus its limited resources on pure electric and plug-in hybrid models, solve the above unfavorable factors and "card neck" problems, and fundamentally promote the development of new energy vehicles.
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Kinetic energy conversion is gradually becoming a trend
"Standardize the merger and reorganization of vehicle enterprises, vigorously promote the withdrawal of backward enterprises and ineffective production capacity, and build an industrial pattern with reasonable layout, orderly development and efficient operation." In Lin Nianxiu's view, to promote the high-quality development of the automobile industry, production capacity adjustment and optimization is a top priority.
Indeed, reasonable capacity utilization rate is an important indicator of the high-quality development of the automobile industry. Surveys show that the utilization rate of domestic automobile capacity has now fallen below the "safety line". By the end of 2021, the national passenger car capacity utilization rate is 52.47%. In the same period, there were 86 enterprises with sales, and the corresponding overall capacity utilization rate was 57.93%. All are below the normal value of 79% of the international mainstream standard, that is, there is overcapacity. Data previously released by the International Association of Automobile Manufacturers (OICA) also shows that in 2020, China's light vehicle capacity utilization rate was 52%, lower than the capacity utilization rate of 75% in South Korea, 68% in Japan and 62% in Europe.
"The problem of overcapacity in automobiles has been delayed for a long time, which not only affects the economic benefits of car companies themselves, but also leads to a series of problems such as vicious competition in the market." LU Haibo, an analyst at CITIC Securities, told the "China Automotive News" reporter that the contradiction of overcapacity is highlighted at the level of car companies, usually the contradiction between fuel vehicles and new energy vehicles, such as the gradual decline in the production and sales of fuel vehicles, and the supply of new energy vehicles is in short supply, which must obviously be optimized and adjusted, ANDD is a typical example in this regard. Through internal optimization of production capacity, it can not only meet the growing demand for new energy vehicle orders in the market, improve the production efficiency and economic benefits of car companies, but also have a good effect on the company's technology research and development, capital use, resource allocation, etc., shorten the delivery cycle, accelerate the development of new models, and can have a positive impact on the market.
In addition to the capacity optimization of the entire automotive industry, in the field of new energy vehicles, overcapacity has also attracted attention. "New energy vehicles, especially passenger cars, will have a catastrophic overcapacity!" On April 1, what Tan Xuguang, chairman of Weichai Group, said caused a heated discussion.
"The issue of new energy vehicle capacity needs to be viewed objectively." Qin Xiaopeng, an analyst at Orient Securities, believes that among new energy vehicle companies, the head companies such as BYD not only do not have overcapacity, but even if they stop production of fuel vehicles, their new energy vehicle production capacity is still insufficient. New energy vehicle tail enterprises are facing the embarrassing situation of only production capacity and no output, such as Byton, Sailin, Bo County and other enterprises that have disappeared in the market, and their existing production capacity is also counted in the data. At present, how to use this spare capacity is an urgent problem to be solved. In addition, in order to provide various subsidies that still exist in the local area, new energy vehicles in some places are still producing new energy vehicles with low grade, poor quality and almost no sales, which should be the focus of capacity elimination.
"On the new track of electrification, intelligence and networking, the domestic automobile industry has entered a new stage of survival of the fittest and stock competition." Lu Haibo believes that behind the optimization of production capacity, it reflects the connotation of enterprise transformation and industrial upgrading, or more and more car companies will optimize and adjust production capacity like BYD, keeping up with the rapid development of the "new four modernizations" of automobiles and the rhythm of continuous growth of market demand.
Indeed, with the continuous expansion of the new energy vehicle market, more and more car companies around the world have issued a timetable for discontinuing fuel vehicles. Among them, most of the time points for domestic car companies to stop selling fuel vehicles are set in 2025, and most of foreign car companies are after 2030. For example, Changan Automobile plans to completely stop selling traditional fuel vehicles in 2025; BAIC Group will stop the production and sales of its own brand traditional fuel passenger cars in China by 2025. Ford announced that all passenger car series in Europe will achieve zero emissions by mid-2026 and fully electrify by 2030. Toyota plans to achieve 100% pure electrification in China, Europe, and North America by 2030...
BYD, which is one step ahead, has already benefited from capacity optimization. Production and sales data show that in March when BYD stopped production of fuel vehicles, BYD's new energy passenger car sales exceeded 100,000 units, which is also the first time that BYD's monthly sales of passenger cars exceeded 100,000 units. Among them, the sales volume of Biya pure electric EV models was 53664 units, and the sales volume of DM hybrid models was 50674 units. It can be seen that the results of capacity conversion have begun to appear.
"The automobile industry is the pillar industry of the national economy, from the perspective of the entire economic development, combined with the actual production capacity adjustment and optimization has become an organic part of the transformation of economic development momentum and macro-control, but also the only way for the high-quality development of the automobile industry, which is not only conducive to the automobile enterprises to adapt to market demand and innovative development, but also will play an important role in the implementation of the 'six stability' and 'six guarantees' to promote the overall stable growth of the economy." Liu Rui, a professor at the School of Applied Economics of Chinese Min University, believes that under the severe test of various unfavorable factors such as the epidemic and supply chain problems, whether it is BYD or other car companies, starting from reality and seeking practical results is the key to capacity adjustment and optimization, industrial transformation and upgrading.
Text: Zhao Jianguo Editor: Sun Huanyu Layout: Zhao Fangting Image source: the company's official website