news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Introduction:Although many people are aware of the strength of BYD, most people still do not realize how powerful it is.

Whetstone | Author Lishi Business Review | Produced by

1

As BYD is the only company in China's new energy vehicle market, it has become the target of attack by many new energy vehicle peers in the past two years. However, BYD's foundation has not been shaken by these peers, on the contrary, its competitive advantage continues to expand.

According to the latest sales data of major automobile manufacturers in the first half of 2024, BYD (including Denza, Yangwang, Fangchengbao and exported vehicles) sold 1.607 million vehicles, far ahead of the entire industry.

Readers familiar with the Chinese auto industry will know that the first half of the year was not BYD Auto's peak period. Dmi5.0, which represents its most cutting-edge technology, was just released in May, and the first two models equipped with this technology, Qin L Dmi and Haibao 06 Dmi, also just experienced their first full delivery month in June. Although they were only recently launched, BYD's new technologies and products have shown great power.

Recently, I have seen some newly delivered BYD Qin L and Haibao 06 Dmi models on the street. I have seen the real cars of these two cars in 4S stores before, but seeing them again on the street, I am still amazed that these two cars with a starting price of only 99,800 yuan can be made of such high quality. Although other car companies may also make a model that is not inferior to Qin L, the cost will be at least 20% higher than BYD, which gives BYD sufficient cost advantages and pricing power. And this cost advantage and pricing power are almost difficult to be copied by competitors, because it is accumulated by BYD's strategic advantages, organizational advantages, management advantages, technical advantages, scale advantages and integrated supply chain advantages.

The impact that Qin L and Haibao 06 have brought to the author is also reflected in the specific market sales. Sales data in June showed that the sales of Qin L and Haibao 06 reached 20,100 and 14,000 respectively. With the increase in production capacity and delivery speed, these two models will continue to set new sales records in the coming months.

Qin L and Haibao 06 are just the beginning of BYD's product development in 2024. In the second half of the year, BYD will launch a wave of new products at an unprecedented pace. On the one hand, BYD's existing products under the main brand will complete the Dmi5.0 upgrade and the L, Haibao and Haishi product lines will be completed. On the other hand, a series of flagship products of the three high-end brands of Denza, Fangchengbao and Yangwang will be launched.

For example, recently, BYD's main brand has successively exposed several heavyweight SUV models that will be launched soon, namely Song L DMI, Song Pro DMI, Song plus DMI and Haibao 05 DMI. These four new products are all concentrated in the compact and medium-sized SUV product fields with the largest market share. According to the product information that has been made public, the above products have a far-leading competitive advantage among products of the same price, which is bound to push BYD's sales to a new peak.

The compact and mid-size sedan and SUV markets are the largest sales base for BYD's main brand. After stabilizing this basic market, BYD will gradually start to make a full-scale attack in the mid-to-large and large product markets. For example, the mid-to-high-end models such as Han L, Tang L and Tang MAX, which have been highly anticipated by the outside world, are expected to be officially announced one after another.

At present, BYD has taken an absolute leading position in the market with a price-performance ratio of less than RMB 200,000 with its main brand BYD, and has taken the lead in the market of luxury cars priced at RMB 1 million with its Yangwang brand. However, due to its previous strategic rhythm, it has not made systematic efforts in the mid-to-high-end market of RMB 200,000-500,000, which has given other brands such as Ideal, Wenjie, Weilai, Zeekr, Lynk & Co and Tank some opportunities.

But next, BYD will make full efforts in the price range of RMB 200,000-500,000. In addition to the two most price-competitive products of BYD brand Han L and Tang L mentioned above, the flagship new products such as N9 and Z9 of the Denza brand and Leopard 8 of the Fangchengbao brand are all aimed at this price range. Judging from the public information currently released, these products have obvious advantages over products in the same price range. If nothing unexpected happens, the second half of this year will be a key node for BYD to catch up in the mid-to-high-end market. By then, BYD's advantage in China's new energy vehicle market will be further expanded.

2

At present, although many people are aware of the strength of BYD, most people still do not realize how strong it is. In the process of business research over the years, I have witnessed many excellent companies, but I have never encountered a company in China that has brought such a huge shock like BYD. Even Huawei, its development experience in the operator and smartphone business is far less exciting than BYD's growth experience in the field of new energy vehicles.

To deeply understand the difference of BYD, we need to go back to its inception. BYD was founded in 1995 and has a development history of 29 years.Looking back over the past 29 years, it can be roughly divided into four stages of development.

The first stage was the entrepreneurial stage when BYD focused on the battery field.

During this stage, BYD, relying on the profound technical background of its founder Wang Chuanfu in the battery field, started with the most basic nickel-cadmium batteries, and then entered the field of nickel-metal hydride batteries and lithium batteries, gradually developing into a core battery supplier for many well-known mobile phone companies in the world.

The second stage is to enter the consumer electronics OEM industry with mobile phones as the core.

Thanks to its cooperation with many of the world's top mobile phone companies in the battery business, BYD has the best customer resources on the one hand, and on the other hand, by meeting the stringent needs of these companies, it has developed world-leading production and manufacturing capabilities.

As overseas consumer electronics giants increase their demand for OEM in China, BYD's accumulated resources and capabilities provide it with an opportunity to enter the mobile phone OEM industry. After entering this field, BYD has relied on its outstanding management capabilities to eventually become the world's second largest mobile phone OEM after Foxconn.

The third stage is entering the automotive industry.

As mobile phones involve many precision components, their production is one of the most complex categories in all product areas. BYD's accumulation of capabilities in the field of mobile phone OEM has given it the confidence and strength to enter other complex product areas.

Since the beginning of the 21st century, the automobile industry has been recognized as one of the biggest industrial opportunities. With his experience in mobile phone OEM, Wang Chuanfu believed that it would not be difficult for BYD to build cars, and he eventually entered the automobile business by acquiring Xi'an Qinchuan Company in 2003. Combined with BYD's deep gene in the field of battery technology, Wang Chuanfu invested heavily in the research and development of power batteries in the field of new energy vehicles, and regarded pure electric vehicles as BYD's ultimate vision in the automotive field.

However, in 2003, when the Chinese pure electric vehicle market was far from mature, BYD adopted a product route that included three types of power: traditional fuel, pure electric and hybrid. It first launched its first fuel vehicle, the Flyer, in 2005; in 2008, it released its first hybrid vehicle, the F3DM; and in 2010, it launched its first pure electric vehicle, the e6.

During this process, since the sales volume of electric vehicles is still relatively small, BYD has always insisted on using the profits from businesses such as batteries, mobile phone OEM and fuel vehicles to feed back the research and development of electric vehicles, and brought about continuous iteration and upgrading of BYD's electric vehicle technology and products, thereby achieving comprehensive leadership in the field of new energy vehicles.

The fourth stage is the stage focusing on new energy vehicles.

Tesla's huge success in the field of new energy vehicles has attracted a large number of traditional automobile manufacturers and new car-making forces to enter the market, which has jointly promoted the global automobile industry to accelerate its transformation to the new energy vehicle era.

The improvement in product quality on the supply side of new energy vehicles has also led to a surge in demand from users on the consumer side, which has fully demonstrated BYD's technological and product advantages. Since 2020, BYD's new energy vehicle sales have begun to rise rapidly.

Especially in the field of plug-in hybrid vehicles, BYD has been able to achieve the same pricing as traditional fuel vehicles of the same level by virtue of its scale advantages and strong integrated supply chain advantages. This prompted it to officially announce in 2022 that it would completely withdraw from fuel vehicles and focus only on the field of new energy vehicles.

Due to its focus on new energy vehicles, BYD has shown an increasingly strong compound interest effect in the field of technology and products, which has also driven its market sales to soar. In 2022 and 2023, BYD achieved sales of 1.8634 million and 3.02 million vehicles respectively, occupying the absolute leader position in China's and even the global new energy market.

Entering 2024, BYD continues to expand its advantages, and we have the product and sales boom we talked about earlier. Due to the outstanding performance in the first half of the year and the certainty expected in the second half of the year, the capital market has also gained greater confidence in BYD. For example, JPMorgan Chase, a well-known global investment bank, believes that BYD will achieve its annual sales target of 3.6 million in 2024 with little suspense, and has raised its 2024 annual sales forecast to 4 million vehicles, and raised BYD's A-share target price to 440 yuan. At the same time, it is expected that by 2026, BYD's global deliveries will be expected to reach 6 million vehicles, of which about 1.5 million will come from overseas markets.

3

After a detailed review of BYD’s four development stages, the author believes that BYD has brought four most important inspirations to the Chinese business community.

First, BYD's success in new energy vehicles, mobile phone OEM and other larger fields is based on its industry leadership in the battery field. This is a reminder to other companies that they must first focus on their areas of expertise and achieve perfection. When they achieve perfection in their main business, new opportunities will automatically emerge, rather than attacking everywhere before their main business has reached perfection.

Second, BYD's huge success today was not achieved overnight, but after long-term exploration and multiple strategic iterations. This tells us that companies should actively seek change, but should not be too ambitious in strategy, and should strike a balance between strategic aggressiveness and strategic patience.

Third, in the development of all its businesses, BYD has keenly grasped the two most critical factors that determine the long-term development of the company, one is quality and the other is cost, and has implemented a combination of short-term and long-term strategies around these two key factors. The short-term strategy is to make full use of the domestic labor cost advantage and build a semi-automatic model combining "manual + fixture"; the long-term strategy is also the most fundamental, that is, to achieve leadership in "quality and cost" through breakthroughs in core technologies.

For example, BYD currently has 10 major technical teams with a total number of more than 100,000 engineers. Among them, the electrification team has 25,000 engineers, which is BYD's largest R&D team and is led by Lian Yubo. The semiconductor team has 5,000 engineers, led by Chen Gang. The intelligent team has 15,000 engineers, led by Yang Dongsheng. The rail transit team has 2,000 engineers, led by Ren Lin. The automotive integration team has 10,000 engineers, led by Luo Zhongliang. The new materials and basic science team has 3,000 engineers, led by Gong Qing. The powertrain team has 7,000 engineers, led by Yao Wei. The electronic R&D team has 11,000 engineers, led by Jiang Xiangrong. The battery team has 10,000 engineers, led by Liu Siyuan. The commercial vehicle team has 3,000 engineers, led by Peng Wang.

These technical teams ultimately brought BYD all-round leadership in core technology fields. Leading technology, on the one hand, brought BYD absolute leading cost advantages and pricing power, and on the other hand, brought product differentiation and high-end branding.

BYD's technical practice has important implications for most Chinese companies, that is, do not expect to achieve quick success through differentiation of non-critical elements such as appearance and fancy functions, but must grasp the real key elements that determine the long-term success of the company. And we must fully realize that the leadership of these key elements must rely on technology to break through in the long run. The earlier you invest in technology, the sooner you will see results. In contrast, some new car-making forces in the current industry focus more on appearance and fancy functions, but lack accumulation in the most core key elements such as quality, cost and technology.

The last point is to return to the origin of "employment". Because even if the company's strategy and tactics are correct, it will be useless if there is no group of loyal and capable talents to implement them. In the past, public opinion paid too much attention to BYD's technological breakthroughs and commercial achievements, but greatly ignored BYD's outstanding practice in the field of "talent development". In fact, BYD is a company that attaches great importance to talent development.

For example, in the early days of BYD's development, it had a very famous "car dismantling culture". This means that in the early days of BYD's development, it widely recruited student soldiers from well-known universities. In order to train these students to become talents quickly, it spent tens of millions of yuan every year to purchase cars of various brands and let the newly graduated students dismantle the cars for research. And the products purchased were all first-tier brands. Wang Chuanfu believed that it was meaningless to research second-tier brands. Under this "car dismantling culture", BYD quickly cultivated a large number of outstanding engineers, and these engineers became the talent base for BYD's future technological transformation.

The above-mentioned "car dismantling culture" is only a partial microcosm of BYD's talent training. Its strategy in the field of talent can be summarized as two key words: "human sea strategy" and "heart strategy". "Human sea strategy" means to over-allocate the number of talents in advance and increase the density of talents; "heart strategy" means to create a "family culture" and create a work and living environment for talents to fully unleash their potential from various dimensions such as spiritual and material, so as to dispel the idea of ​​employees leaving.

At the current stage, BYD is even more unconventional in recruiting talents. For example, the heads of BYD's five major passenger car sales systems, including Dynasty.com, Ocean.com, Denza, Fangchengbao and Yangwang, are all internally trained by BYD, and many of them were previously unknown in the industry.

Among them, it is worth mentioning that among the persons in charge of the three high-end brands, Yangwang, Fangchengbao and Denza, Hu Xiaoqing, the person in charge of Yangwang, and Xiong Tianbo, the person in charge of Fangchengbao, are both women, while Zhao Changjiang, the person in charge of the Denza brand, is a young man born in 1986. This shows BYD's boldness in employing people.

4

In addition to the above core inspirations, BYD has excellent practices in various specific functional areas such as R&D, products, supply chain, brand, marketing and channels, which are also worthy of systematic learning by other companies. However, these practices are to some extent the result of the above core ideas.

At present, more and more companies are beginning to study and learn from BYD. The author suggests that these companies that want to learn from BYD's successful experience must not only regard some "results" as the "cause" of its success, but also find its deeper evolutionary logic and roots of success behind these superficial "results" in order to more accurately learn the core essence of BYD.