Earn 80 million a day, and peel off the secret of BYD's high profits!

Hello everyone, good morning!

In 2023, BYD's report card was announced:

The net profit is 290-31 billion, and according to the minimum standard, the daily income is 80 million.

The total sales volume was 3.02 million units, and the net profit of a single vehicle was 9,600 yuan.

In the past year, BYD can be said to have made a lot of money and won hemp.

But here's the problem:

The whole industry of new energy vehicles is generally losing money, why is only BYD making so much money?

Take the initiative to launch a price war, why do you make more money the more you fight the price war?

The most popular are 100,000-level cars, why is the gross profit margin higher than Tesla?

Is blade battery + DM-i really a black technology, or a weapon to reduce costs?

Let's take a look at the secret of BYD's high profits:

Every miller draws water to his own mill

There are tens of thousands of parts for a car, and generally speaking, car companies only need to master the three major parts, the three electric systems, etc., and the rest rely on the supply chain.

But BYD is different, it originally started as a mobile phone battery, and later began to make semiconductors and automotive batteries, so it was already a core supply chain enterprise before it made cars.

Maybe it was because when he was a supply chain enterprise, it was too cool to make the difference, so after starting to build the whole vehicle, Wang Chuanfu resolutely implemented a principle, that is, never let the supplier make the difference, and make everything he can make himself.

As the old saying goes, "fertilizer doesn't flow into outsiders' fields", and in today's jargon, it's called "vertical integration".

If nothing else, let's introduce BYD's Fodi legion:

Foday Power (responsible for motor and hybrid system), Foday Battery, Foday Vision (lights), Foday Technology (electronic parts, chassis), Foday Mold.

Let's put it this way, in China, BYD + Fuyao + Baosteel + Zhongce (tire companies) can basically be equal to the complete automobile industry chain.

And the benefit of vertical integration is not only that the profits of each link are eaten by themselves, but also that these Fodi legions can also supply to other car companies. For example, Tesla's battery comes from Fodi Power.

Therefore, vertical integration is a proper win-win situation, win twice: save a profit for yourself, and earn a profit for others.

Economies of scale

The R&D cost and marketing cost of a car are basically fixed, and the larger the sales, the thinner the cost of a single car.

BYD Qin sold 480,000 units last year, a little more than the total sales of NIO + Xpeng + Leap.

BYD Song sold nearly 430,000 units last year, which is basically equal to Wenjie + Extreme Krypton + Nezha + Zhiji + Lantu.

A car sells more than other people's entire enterprises, and in terms of scale effect, BYD is basically invincible at present.

In addition, scale effect and vertical integration can also form a closed-loop flywheel:

Because of vertical integration, the cost is lower, the cost is low, the selling price is low, the selling price is low, the scale effect is low, and the scale effect is to make vertical integration more efficient. Otherwise, if you only sell 100,000 units a year, it is not worth any vertical integration.

And BYD's cleverness lies in putting the most advanced technology on the cheapest model, and then giving a bug-level price, so that it can take the lead in driving this flywheel to spin.

This great car is the Qin PLUS DM-i, blade battery + DM-i, and it is also exempt from purchase tax, as long as 998. Later, it was simply reduced by another 10,000, and 89,800 drove home.

Do not do superfluous

"As long as the volume does not die, it will be rolled to death", in the past year, various car companies have rolled wind resistance, volume zero hundred, volume ultra-fast charging, and volume city NOA. But if you are careful, you will find that BYD almost never participates in these, and BYD only rolls one thing, that is, cheap.

An engineer from BYD once said: "Car owners don't need extra performance, the core is cheap!".

The so-called lowest wind resistance in the world, how much has the battery life increased?

Is there a difference between 003 seconds, 4 seconds or 5 seconds for daily driving?

No matter how fast the ultra-fast charging is, how many piles are there in the country?

No matter how cool the city NOA is, do you dare not stare at it?

Instead of rolling these, it is better to make the car price 20,000 cheaper, take Qin PLUS DM-i as an example:

Friends have long been two-speed and three-speed gearboxes, and the DM-i is still single-gear.

The competitor's competitor has reached 6.5 seconds, and it is still close to 8 seconds.

Competitors have long used a 1.5T engine, and it is still 1.5L.

However, only Qin PLUS DM-i sold the terminal price to more than 80,000 yuan.

Qin is like this, Song is like this, Han is also like this, even the latest launch is Song L, there is no ultra-low wind resistance, no 800V architecture, no ultra-fast charging, no map city NOA, but the same level of models are sold for more than 200,000, the main version is even 25-300,000, and Song L is less than 190,000.

Don't do superfluous things, don't pile up redundant configurations, and try to be the cheapest on the premise of meeting the needs of use. It not only reduces the cost, but also allows the car owner to get benefits.

Crowd tactics

In 2023, BYD will have 570,000 employees and produce 3.02 million vehicles. Tesla produced 1.81 million vehicles with only 140,000 people. In terms of human efficiency, Tesla is almost 2.5 times that of BYD.

Why is this so? It's certainly not that Tesla's employees are more diligent, because Tesla and BYD have very different business philosophies.

To put it simply, Tesla has chosen to reduce costs with more advanced equipment and fewer people, while BYD has done the opposite, using less advanced equipment and more people to reduce costs.

For example, Tesla pioneered the application of integrated die casting, which directly reduced the cost of the rear floor assembly by 40%.

Then, a large number of domestic car companies don't know whether they were really fooled and lame, or just to follow the trend and grab gimmicks, they began to launch die-casting machines, and even rolled up the tonnage of die-casting machines, from 6,000 tons, 9,000 tons, to 12,000 tons, and formed a chain of contempt.

However, the cost of the extruded part is indeed reduced, but the die-casting machine itself can easily cost tens of millions, hundreds of millions, and the cost of maintenance and use is not low.

According to the statistics of CICC Securities, the production line with an annual output of 100,000 vehicles adopts the traditional stamping and welding process, and the equipment investment is about 520 million. If integrated die-casting is used, the total investment of the equipment is 710 million, which is almost 200 million yuan.

BYD's method of cheap equipment + hiring more people can be said to kill three birds with one stone: one is to reduce the initial investment, the other is to directly lay off employees when there is overcapacity, without bearing the depreciation of expensive equipment, and the third is to give full play to China's human resource advantages.

One-piece die casting is just one example, and this concept also runs through all aspects of production.

Write at the end

Cost control was the lowest level of a manufacturing company, and Ford invented assembly line production, making it the greatest automobile company of its time. Toyota invented lean manufacturing, making it the most profitable company today.

BYD has also gone out of its own way in reducing costs, although this road is not as cool as Tesla's underlying engineering innovation and technological innovation, but it is a suitable path for BYD to explore according to the soil of its own survival. And this road has successfully brought BYD to the first position in China and the first in the world.

In fact, in 2024, most of China's new energy vehicle companies are facing the most serious issue, that is, turning losses into profits. For car companies, if they continue to lose, they may not be clear today. For the entire auto market, if new energy vehicles are always generally losing money, then the achievements we have achieved today are likely to become a chicken feather.

Therefore, in 2024, I hope that car companies can brag less, roll up less, reduce costs more, and make more money!