BYD "Under the Crown": Dismantling the strength and fragility behind the sales of 3.02 million units
If you want to choose the 2023 car company of the year, BYD is an existence that cannot be ignored.
For the whole year of 2023, BYD sold a total of 3.024 million vehicles, a year-on-year increase of 61.8%. This figure not only makes BYD the world's new energy vehicle market sales champion, but also successfully squeezes into the ninth place in the top 10 list of global car sales, which can be called a historic moment in the development of China's automobile industry in the past 70 years.
If two or three years ago someone had claimed to you that their own brands could surpass the "North and South Volkswagen" to win the domestic sales championship and rank among the top 10 in the world, you might think that he was talking about an unrealistic dream. However, the rise of BYD has made all this a reality.
Looking back at 2021, BYD's annual sales were only 740,000 units, while in 2022, sales have soared to 1.86 million units. In 2023, BYD's sales will exceed 3 million units, constantly setting new sales records in the Chinese auto market.
BYD is considered to be the "next Volkswagen", what is its way to victory, and what kind of crises and challenges are hidden under BYD's "crown"?
"King" under 200,000
From the perspective of the annual sales structure, BYD's "Ocean" and "Dynasty" series almost monopolized the overall sales, reaching nearly 2.9 million units, which is undoubtedly the pillar of sales.
However, there is a clear difference between these two series: the Dynasty series has annual sales of more than 1.49 million units, a year-on-year increase of 31.8%, although the growth rate is considerable, it is significantly lower than the growth rate of BYD's overall sales, while the Ocean series has also made a comeback with good product power, with sales of 1.3829 million units in 2023, a year-on-year increase of 96.54%.
From the perspective of single car prices, BYD is currently focusing on the model market below 200,000 yuan. According to the research report of SDIC Securities, as of January to November 2023, BYD ranked first in sales in the two price ranges of 10 to 150,000 yuan and 15 to 200,000 yuan, with a market share of 11.6% and 20.2% respectively, with obvious advantages.
BYD Qin PLUS DM-i Champion Edition is a real sales "champion"| BYD
In the market below 200,000 yuan, BYD continues to use low prices and price reduction strategies to squeeze the market that was originally a joint venture fuel vehicle.
At the beginning of 2023, BYD adopted the strategy of "gasoline and electricity at the same price" and launched the Qin PLUS DM-i Champion Edition with a starting price of only 99,800 yuan, bringing plug-in hybrid sedans into the market of less than 100,000 yuan, attracting many consumers who originally targeted fuel vehicles. Judging from the sales figures, the effect can be described as amazing - the BYD Qin series will sell more than 480,000 units in 2023, accounting for nearly 1/3 of the market share of BYD Dynasty.
Although the proportion of sales above 200,000 in BYD is not high, judging from the current situation, it has gained a firm foothold. As BYD's first model to reverse its brand image, Han currently sells nearly 20,000 vehicles per month, while Tang's average monthly sales exceed 10,000 units, which has brought great competitive pressure to the joint venture fuel vehicles.
In addition, the Denza D9, with an average price of more than 410,000 yuan, sold a total of 119,000 units last year, winning the 2023 MPV sales championship in the Chinese market in all categories, breaking the monopoly of the joint venture brand for more than 20 years.
Look up at the U8 event | look up
The most notable is the Yangwang U8, which costs a whopping 1.1 million yuan, and sold 1,593 units in December. Although the follow-up trend still needs to be further observed, this achievement means that BYD's layout in the ultra-luxury market has achieved certain results.
In terms of product structure, BYD's plug-in hybrid products and pure electric products are "five or five points". BYD will sell 1,574,800 pure electric and plug-in hybrid new energy vehicles in 2023, with a year-on-year growth rate of 72.84% and 51.98%, respectively.
It is worth noting that this situation is different from the overall trend of the domestic new energy industry. According to the China Association of Automobile Manufacturers, from January to November 2023, the sales of hybrid models reached 2.439 million units, a year-on-year increase of 83.5%, while the sales of pure electric models reached 5.86 million units, a year-on-year increase of 23.6%. To put it simply, the sales volume of pure electric models is greater than that of hybrid vehicles, with a ratio of about 2:1, but the sales growth rate of hybrid products is faster than that of pure electric products.
The road to kinghood
The development of a company is a "pas de deux" with the times in which it lives.
China's new energy vehicle industry started in 2009 and has gradually increased its penetration rate from zero to 5.8% in 2021 over the past 12 years.
But no one expected that the new energy market sentiment would be ignited at once: in 2021 and 2022, the penetration rate of new energy passenger vehicles surged to 14.8% and 27.6%, and in 2023 it will reach 35%. The speed of the explosion like a tide exceeded many people's expectations, and even Li Bin, the founder of NIO, who is firmly optimistic about new energy, once bluntly said that "it will come sooner than I thought".
In the face of this big change, in a sense, BYD was the only car company that was ready at that time. It is fully prepared in terms of products, channels, and supply chains, while keeping the core of technology and cost. As a result, BYD has managed to capture the largest share of the market, far ahead of its past competitors.
比亚迪汉 DM-i 冠军版 | 比亚迪
Technological advantages
Wang Chuanfu, chairman and president of BYD, once said, "I am an engineer first, and an entrepreneur second." He is committed to building BYD's unique engineer culture, emphasizing technology first and innovation-oriented, which has earned him a reputation as a "tech maniac". This has also become BYD's background color.
The key to BYD's counteroffensive in 2021 lies in its explosion in the hybrid market. In particular, the new "DM-i" series launched in the second half of 2021 has successfully surpassed traditional fuel vehicles in terms of driving performance, fuel consumption and cruising range with strong product capabilities such as a range of more than 1,000 kilometers and a 4L power loss fuel consumption of 100 kilometers.
In the field of pure electric vehicles, the e3.0 platform adopts cutting-edge technologies such as 8-in-1 powertrain, CTB technology, and 800V high-voltage platform to realize the platformization of vehicle architecture and the integration of core modules, further reducing costs and improving product strength.
Cost advantage
Unlike other Chinese and foreign automakers with a high proportion of purchased parts, BYD has gone the opposite way and produced at least 70% of its parts independently, forming a unique vertical supply chain system. At present, BYD still controls the manufacture of high-cost parts such as batteries, motors, automotive electronics, molds, power semiconductors, and interior and exterior decorations.
BYD adopted a vertically integrated model, similar to Ford's early practice, and successfully seized control of key components. Especially in the face of challenges such as chip shortages in 2021 and battery cell price increases in 2022, many competitors have been affected, such as the Li L9 factory supply delay due to Sichuan power rationing, and the delivery schedule of NIO ET7 affected by the lack of supply of die castings, but BYD has greatly grabbed market share with its vertical integration capabilities.
At the same time, BYD also achieves cost reduction and efficiency improvement through the combination of semi-automated equipment and labor. As of 2021, BYD had only 288,200 employees, and by November 2023, the total number of employees has increased to 600,000, which has not only nearly doubled, but is even nearly 200,000 more than Toyota, which sells 10.65 million vehicles a year.
Relying on a lower-cost supply chain and manufacturing methods, BYD has created cars with a very competitive price.
Full coverage of the product matrix
At the same time, BYD has achieved full coverage through a huge product matrix in terms of product strategy. Compared with competitors such as Tesla and Wei Xiaoli, its product cluster is larger, including BYD (Dynasty, Ocean), Denza, Formula Leopard, Yangwang brand, etc., covering the price range of low, mid, high-end and luxury cars, forming an all-round competitive situation.
DENZA D9 focuses on the MPV market | Denza
In the field of plug-in hybrid vehicles, BYD has launched a number of hot-selling models such as Dynasty and Ocean Warship, equipped with the fourth-generation hybrid technology DM-i/DM-p, with prices ranging from 100,000 to 300,000 yuan. By realizing the advantages of full life cycle cost, it provides consumers with a powerful alternative to fuel vehicles.
In the field of pure electric vehicles, BYD has launched hot-selling models such as the Yuan, Han, and Dolphin, and accurately grasped the market demand in the segment through clear model positioning. The DENZA series is positioned in the mid-to-high-end price range of 30-500,000 yuan, the Yangwang series focuses on luxury models of 80-1.5 million yuan, and the Formula Leopard focuses on the personalized market.
In this era of "fast fish eating slow fish", BYD cleverly seized the opportunity. With its 20 years of accumulation in the new energy vehicle industry, it has successfully "eaten" the most lucrative dividends in the era of electrification and has become the world's largest new energy vehicle company.
A challenging future
In the past two years, BYD has achieved a sharp increase in sales, mainly by seizing the share of traditional car companies such as Volkswagen, Toyota, Honda, and Hyundai, because these traditional car companies are lagging behind in the new energy transformation.
Next, whether BYD's rapid growth momentum can continue, or whether it can continue to maintain its leading position in technology and products in the new energy revolution? This depends not only on the competitive landscape, but also on BYD's own ability to improve.
Strong players enter the game
At present, the most popular force in the automotive industry is Huawei, which does not directly manufacture cars, but has built its own "car manufacturing alliance". The alliance aims to expand the supply of systems and components for autonomous driving and other systems by assisting automakers in brand development and sales. At present, this alliance already has Chang'an, Cialis, Jianghuai and so on.
According to a report by Ping An Securities, in the short term, "annual sales of Huawei-related vehicles are likely to reach about 1 million units". Although this is less than BYD's 3 million units, it is expected to surpass Tesla's annual sales of 600,000 units in the mainland.
On the other hand, as traditional car companies such as Changan, Geely, Great Wall, and Chery have invested resources in the field of new energy. This also means that BYD will face more and more competition in the future. Taking the BYD Song as an example, the model once sold 478,800 units in 2022, and maintained a year-on-year growth of more than 200% at the end of the year. However, after entering 2023, the sales of the Song series have declined rapidly, and there has been a significant year-on-year decline since May.
This is not due to quality issues, but rather to the fierce competition from other independent automakers for its product positioning. From the Haval Thunder series, to the Geely Galaxy L7, to the Changan Deep Blue S7, all of them have been optimized in terms of configuration, interior and design on the basis of the "Song" series. The most important thing is that their prices are more competitive than the "Song" series.
Make up for the shortcomings of intelligence
Although BYD was the big winner in the first half of the competition in the field of electrification, BYD still lagged behind its competitors in the second half of the intelligent layout.
The successful launch of the new M7 has improved the public's awareness and acceptance of intelligent driving, and at the same time made consumers pay more attention to the position of intelligent factors in car purchase decisions. At the same time, Xpeng Motors is about to launch a number of models that support high-level autonomous driving in the mainstream 150,000 yuan market, which may bring competitive pressure to BYD's main products.
The Denza N7 is the first model in BYD's series to try to incorporate advanced intelligent driving Denza
In July 2023, the DENZA N7 was launched, along with BYD's high-end intelligent driving assistance system "Eye of the Gods". Based on the "Eye of the Gods", DENZA Pilot provides three intelligent driving assistance platform solutions:
The standard version is equipped with the Horizon Journey 3 chip, which meets the basic L2 requirements;
The high-speed version is equipped with NVIDIA's Orin-N chip, which provides high-speed and high-speed driving assistance;
The high-end version is equipped with the Orin-X chip and lidar to achieve city-level autonomous driving assistance capabilities.
In the test drive experience, the Denza N7 performed well in large curvature corners and emergency obstacle avoidance scenarios, but compared to competitors such as Xpeng and Huawei, its intelligent driving is still in the role of a catch-up.
Organizational issues
BYD's traditional advantages are reflected in technology research and development on the one hand, and on the other hand, it is precisely controlled in project development and processes, as well as in the comprehensive control of the supply chain, showing the characteristics of typical industrial manufacturing enterprises.
However, with the transition from electrification to intelligence in the new energy competition, BYD needs to realize the transformation into a technology company. Compared with traditional cars, smart cars can provide owners with rich and perceptible value, as well as a new driving experience. This also means that software and algorithms have gradually become the core elements of competition for car companies, and the barriers to automobile manufacturing have evolved from the ability to assemble tens of thousands of parts to the ability to combine and run hundreds of millions of lines of code.
For traditional auto companies, especially leading auto companies like BYD, they are facing the dilemma of "the old revolution has encountered new problems". There are significant differences in the management models of industrial manufacturing enterprises and technology companies, and how to integrate the strength of automotive enterprises with the capabilities of Internet companies has become a major problem that needs to be solved urgently.
Although BYD has become the largest car company in China in terms of market capitalization and sales, the deep-seated challenges of the product and technology race still exist at a time when the new energy vehicle revolution is still unfinished, implying potential variables. BYD has not yet completely passed this competition.
In the face of this situation, BYD must find a practical breakthrough at the strategic level to make up for the current gap. Otherwise, its leading position in the industry may be weakened.
After all, under the "Iron Throne" are swords as dense as thorns. The car industry is still in flux, much like Game of Thrones, where war never stops.