Geely executives shouted to Wang Chuanfu in the air, who is losing money and making money? BYD has also made money by cutting prices
In recent days, around BYD's 79,800 Qin PLUS Glory Edition, the topic of the involution of the domestic new energy vehicle market in 2024 has been very loud, and "electricity is lower than oil" seems to be about to become a reality, and other manufacturers and brands have quickly followed up and adjusted the price of relative models. Therefore, we can only continue to promote the price war, use the low price to leverage the market share, and use our own large volume to "squeeze" those competitors who are not strong, when there are only a few competitive manufacturers and brands that can remain at the market level, and then through the launch of models with higher profit margins, to obtain higher profits!
However, different manufacturers, or manufacturers with different positions, seem to have completely different views on the price war. A few days ago, the chairman of BYD pointed out at an event that the penetration rate of new energy vehicles is expected to exceed 50% this year, and relevant media broadcast relevant news. On the evening of February 19, Yang Xueliang, an executive of Geely Automobile, forwarded the media broadcast and commented: We can't just stare at the penetration rate, if the development of new energy vehicles is just a loss to make money, most of the development of enterprises is not sustainable, and it is not a good phenomenon, or to the market for high value and good experience!
After Yang Xueliang's statement was issued, many netizens said that this is the connotation of BYD Auto's recent price trends and Wang Chuanfu's statement, but in our opinion, although it is a little meaningful, it is definitely not aimed at BYD, or rather, this statement must not be a kind of anger, and there is a certain truth in it.
In fact, the penetration rate of new energy vehicles is indeed like a tempting indicator, and the continuous and rapid growth of the penetration rate of new energy vehicles has made many new energy vehicle practitioners lose their way, thinking that this is an opportunity for everyone to get a piece of the pie and eat a lot of food. But the fact is that as everyone enters the new energy vehicle market, in fact, the domestic new energy vehicle market has entered a stage of saturation, the reason is very simple, that is, when the new energy vehicles enter a certain stage, the growth will encounter a bottleneck.
The reason why there will be a bottleneck is because in many third- and fourth-tier cities and rural areas, there are a large number of consumer bases, but these consumers' acceptance of new energy vehicles is not very good, so many consumers in these cities and rural areas still tend to buy fuel vehicles. Therefore, in the past one or two years, the penetration rate of new energy vehicles has grown rapidly, to a certain extent, only covering those consumers who are willing to try new things and accept risks, and these consumers have appeared in a large number of first- and second-tier cities. Therefore, when the potential users of these cities are almost covered, the penetration rate of new energy vehicles will not grow so fast.
Therefore, Yang Xueliang said that most car companies are unsustainable and are making money at a loss, which we deeply agree with, the reason is very simple, that is, in addition to some large-scale and large-sales car companies, many brands withdraw from new energy vehicles, their own research and development costs are very large, and the sales volume is relatively average, and they also have to reduce prices to deal with the price war, so if the scale does not go up, then under the continuous price war, many new energy vehicle companies are naturally unsustainable.
So what netizens are concerned about, BYD launched a "lower electricity than oil" product, Wang Chuanfu claimed that the penetration rate of new energy vehicles this year will exceed 50%, is it also part of the loss of money?
In fact, in our opinion, BYD and Tesla may be the most confident brands in terms of price among the new energy vehicle brands sold in China, for the simple reason that sales and volume have gone up. Take BYD as an example, the production and sales of more than 3 million new cars last year can amortize a large number of previous research and development costs, and with the more new cars, the lower the cost of amortization on each new car, the speed of this cost decline may be exponential. Therefore, after the upfront cost is diluted by large sales, BYD's models do have the ability to continue to reduce prices.
According to the sales volume of BYD's estimated net profit in 2023, BYD's single car profit is about 10,000 yuan, and with more vehicle production and sales, the cost must be diluted.
Moreover, BYD is one of the few new energy vehicle manufacturers in China with a full set of core supply chains, and the core battery of new energy vehicles, BYD has its own Fodi battery, and the battery of BYD models all comes from this company.
With such its own suppliers, the benefits are self-evident, cost control is the most direct, what is the cost of Fodi power, when it comes to loading, it is how much, there are almost no middlemen to make the difference, and when the price of core raw materials for power batteries falls, BYD can immediately benefit. Unlike manufacturers and brands that rely on third-party battery suppliers, even if the price of raw materials falls, there is a contract, and the large drop in purchase price cannot be quickly extended to the production end, which is the advantage. The Foday series of supplier companies covers almost all core levels of new energy vehicles from the inside to the outside, even including automotive chips.
Therefore, under this advantage, BYD can take the lead in launching new energy products with a relatively lower threshold after the year, which is essentially the comprehensive result of scale advantage and cost advantage. In fact, although the penetration rate of new energy vehicles has not exceeded 50%, the competition in the entire industry has obviously become white-hot, and many small-scale car companies will become victims or eliminated products in the process of large-scale car companies competing for market share with each other, such as Evergrande Automobile, WM Motor, and Gaohe Automobile!