introduction
On the first working day after the start of 2024, BYD, the giant of China's new energy vehicle industry, unceremoniously "showed its sword". The company took the lead in launching a sharp price reduction of the 05 Glory Edition and Qin PLUS DM-i models, with the standard prices of 79,800 yuan and 79,800 yuan respectively, which immediately triggered a strong shock in the automotive industry.
Industry insiders pointed out that this is only the beginning of a new round of BYD's price war. It is reported that in the next few days, BYD will also launch a number of new models such as Dolphin Glory Edition and Yangwang U9, and the price strategy will not be let go. This series of actions has undoubtedly once again ignited the "gunsmoke" of China's new energy vehicle market.
What is the reason for BYD's fierce price offensive at the beginning of the new year? What are the deep-seated considerations behind it? A comprehensive analysis of the multiple motivations for BYD's move shows us that we can more clearly observe the overall picture of the development of China's new energy vehicle industry.
The 2024 sales target has forced BYD to start a price war
In 2023, BYD will achieve its sales target of 3.02 million units and successfully enter the top 10 list of global car sales, which undoubtedly brings a huge sense of achievement to this long-established car company. However, as we head into the new year, BYD faces an even more daunting challenge: the company will aim for a sales target of 4.5 million units in 2024.
This figure is undoubtedly a big challenge for BYD. On the one hand, China's new energy vehicle market has seen the rise of many new power companies, such as Xiaomi, Wenjie, Celis, etc., which are constantly grabbing the attention and market share of the industry. On the other hand, traditional fuel vehicle companies have also begun to accelerate the transformation to the new energy field, and BYD is facing increasing competitive pressure.
In this case, BYD must find ways to occupy the commanding heights of the market to ensure that it can successfully achieve its sales target of 4.5 million units. And adopting a large-scale price war is BYD's most powerful "killer feature". Stimulating consumer demand by slashing prices and rapidly expanding market share is undoubtedly the quickest and most effective strategy for BYD.
The new energy vehicle market is in the right place, suppressing the transformation of traditional car companies
2024 is undoubtedly a key "big year" for the Chinese auto market. On the one hand, new car companies are constantly strengthening their position with technological innovation and unique product charm. On the other hand, traditional fuel vehicle companies have also accelerated the transformation to new energy vehicles. This also means that the competition between the old and new forces will inevitably become more intense in the coming period.
In this context, BYD obviously does not intend to let the traditional auto giants easily share the "cake" of the new energy market. By implementing a strong price war, BYD is trying to quickly seize the initiative in the market and suppress those established car companies that are transitioning to new energy.
In the past, these traditional car companies were able to occupy a place in the field of new energy vehicles to a certain extent by virtue of their own brand advantages and channel advantages. But now, BYD, with the advantages of the whole industry chain, is dismantling the advantages of these old car companies through price reductions. Once BYD occupies a dominant position in price, it is bound to greatly reduce the enthusiasm of traditional car companies to enter the new energy market.
In other words, the deep purpose of BYD's round of price war is to firmly gain a foothold in the new energy vehicle market, and take the lead in carving up more market share, and finally squeeze traditional car companies into a corner.
Build momentum for your new product launch and attract more attention
In addition to the consideration of sales targets and market structure, another important motivation for BYD's price war this time is to build momentum for the company's upcoming series of new model launches.
We noticed that BYD launched a number of new cars intensively in the days after the year, including the Dolphin Glory Edition, Yangwang U9 and the new models of the Han series. This rhythm undoubtedly means that BYD is at the peak of new product launches. And through this round of price war, it can undoubtedly create more topics and attention for these new models in the market.
On the one hand, the sharp price reduction will undoubtedly arouse widespread market attention, so that consumers will have more interest and expectations for BYD's new models. On the other hand, the "sensational effect" of this price war can also bring more exposure and topic heat to the subsequent new car launch, so as to achieve better warm-up and marketing effects.
For an ambitious automotive company, how to stand out from the crowd of competitors is undoubtedly a key question. BYD's choice of the most direct and effective way through price war undoubtedly reflects the accuracy and decisiveness of its marketing strategy.
Eliminate the negative impact during the Spring Festival in 2023
During the Spring Festival in 2023, Hubei suffered a rare heavy snowfall weather, which led to serious congestion of many highways, which brought a lot of negative impact to the new energy vehicle market, which was in the peak sales season at that time.
As a leader in China's new energy vehicle market, BYD has naturally suffered the impact of this incident. Although the company still achieved its annual sales target of 3.02 million units in the end, this unexpected event is still a hidden danger for BYD in the context of hitting the target of 4.5 million units in 2024.
Therefore, through this large-scale price war, BYD is obviously trying to quickly weaken this negative impact and restore market heat and consumer confidence as soon as possible. On the one hand, a sharp price reduction can undoubtedly stimulate consumers' desire to buy and boost market demand; On the other hand, this proactive response has also helped to establish BYD's brand image as an industry leader.
Give full play to the advantages of the whole industry chain and build a price war moat
As a veteran car company that has successfully transformed into the main force of new energy vehicles, BYD undoubtedly has a unique advantage that is difficult for other manufacturers to achieve - the layout of the whole industry chain.
For a long time, BYD has been deeply engaged in new energy technology research and development, battery manufacturing, vehicle production and other links, forming a whole industry chain pattern from upstream to downstream. This not only greatly reduces its own costs, but also provides a solid foundation for its price competition.
In contrast, some other new power car companies or traditional car companies, although they are also investing heavily in the new energy business, it is not easy to replicate BYD's advantages in the whole industry chain in a short period of time. This gives BYD an innate advantage in the price war.
Through independent technology research and development and the scale advantage of the whole industry chain, BYD has the ability to withstand greater price exploration space, so as to be comfortable in price competition. This undoubtedly builds a solid "moat" for it, which greatly increases the difficulty of other manufacturers to conduct price wars.
It can be said that BYD's confidence in launching the price war this time comes largely from its deep strength accumulated in all links of the industrial chain. This advantage can not only help it quickly occupy market share, but also lay a solid foundation for long-term price competition in the future.
summary
Based on the above analysis, it is not difficult for us to find that BYD launched a fierce price war at the beginning of the new year, which contains multiple considerations:
First, in order to achieve the sales target of 4.5 million units in 2024, it will be forced to rapidly expand its market share through price wars; Second, in order to firmly block the commanding heights of the new energy vehicle market and suppress the pace of transformation of traditional fuel vehicle companies to electrification; the third is to build momentum for the upcoming launch of new models to attract more attention; Fourth, in order to eliminate the negative impact of the heavy snow incident in Hubei on the market during the Spring Festival in 2023; Fifth, give full play to the advantages of its own whole industry chain and build an insurmountable price war "moat".
It can be said that this round of price war undoubtedly marks that China's new energy vehicle market has entered a new era of "battle of the gods". Different companies are actively competing for more market share through their own unique advantages and differentiation strategies. As the industry leader, BYD is obviously using the price war as the main means to consolidate its position and block the attack of other car companies.
This process will undoubtedly bring more stimulation to China's auto market, and will also test the comprehensive strength of various enterprises. However, it is foreseeable that only those enterprises that can deeply cultivate the industrial chain and continue to innovate can finally stand out in this "battle of the gods" and become the final winner.