From vertical integration to open ecology, what kind of chess is BYD playing?

As an international case teaching leader, guest business studies have been tracking and observing the latest global business practices for a long time, and how to grasp the general trend to make strategic layout and adjustments in the development of enterprises, and constantly lead the market, which is also an important topic in guest business research.

In 2021, more than 6 million new energy passenger vehicles are expected to be global, and this number will be only 2.8 million units in 2020, more than doubling in one year. Among them, the Chinese market is about 3.5 million units, accounting for more than half of the global market.

At the beginning of 2020, the penetration rate of new energy passenger cars in China was only about 6%, and by December 2021, this figure is close to 21%; it is no exaggeration to say that for every five cars sold in China, one is a new energy vehicle.

It can be said that the era of new energy vehicles has really arrived.

Among them, ASD, as the forerunner and leader of the new energy automobile industry, has established a good brand image on the new energy track with excellent technology and product strength, ushered in the development of quantitative change to qualitative change, single-month sales have repeatedly reached new highs, and market share has continued to rise.

In December 2021, BYD's monthly sales of new energy vehicles reached 93,000 units, far ahead of Tesla's monthly sales in the Chinese market. That's a remarkable number.

But within BYD, there is a saying that achievements belong only to the past. In the surging new energy vehicle market, how does BYD define the future?

On January 8, 2022, the guests sent a visit to Shenzhen Station to enter BYD. Li Qian, secretary of the board of directors of BYD Group and general manager of BYD Investment Office, brought wonderful lectures to the students, talked about the current cutting-edge trends of the new energy automobile industry, and BYD's technology-driven and innovative construction of new energy industry ecology in the new era, which gave the students great inspiration.

Below, enjoy~

"Every morning, Mr. Wang would show up at the company in his own car. Every car that BYD will go on the market, he will drive it for a month or two first, personally experience and feel. In the guest class, Li Qian mentioned such a detail when telling the students about the bydder Wang Chuanfu, the founder of BYD.

In Li Qian's view, Wang Chuanfu is a proper technical school. He is bydy's "chief engineer" and knows every technology of BYD. He doesn't smoke, he doesn't drink, he doesn't socialize, and his favorite thing is not only to meet with executives, but to discuss the details with front-line engineers, design teams and R&D teams.

The founder of a company will bring a distinct cultural imprint to the enterprise, and Wang Chuanfu's addiction to technology has created BYD's strategic idea of promoting the development of enterprises with technological innovation. Technological innovation is the core gene of BYD, which has made BYD today and continues to define bydir's future.

The core technology should be firmly in their own hands

During the epidemic, the supply of masks around the world is in short supply, and BYD makes people shine: 3 days out of drawings, 7 days out of equipment, 24 days to achieve the world's first, a day can produce up to 100 million masks. Even meltblown cloth, the core raw material of masks that cannot be bought on the market, BYD has achieved self-production through independent research and development equipment.

In this regard, Li Qian explained: "It is easy to produce one or two thousand masks, but to achieve such a rapid and large-scale production, the requirements for machinery and equipment are very high, and this strong productivity, to a certain extent, is brought about by BYD's strong vertical integration ability." ”

Vertical integration is a major feature of THE BYD model, which often attracts heated discussion. Li Qian admitted that he often hears such voices from the outside world: BYD has no suppliers. He believes that there is a misunderstanding about this.

In fact, BYD has been committed to creating an open and win-win ecosystem, BYD is not without suppliers, but BYD must firmly grasp the core technology in its own hands.

Li Qian introduced: "There are tens of thousands of auto parts, and BYD can't do them all, but we will basically put the most core technology and parts in our own hands." ”

The purpose of this is precisely to gain a voice in the increasingly uncertain international competition. At present, when Europe and the United States are blocking Chinese brands, BYD's approach is the same as Huawei's and quite forward-looking.

"In the current complex economic environment, whoever has the ability to integrate vertically can achieve the stability of the industrial chain supply chain, and can rely on their own hands and feet to win the hard battle and occupy the opportunity." Li Qian said this to the guests.

As we all know, BYD started with batteries and expanded all the way to the field of new energy vehicles. In addition to electric vehicles, BYD's previous battery business, mobile phone components and assembly business have adopted a vertical integration strategy.

In terms of electric vehicles, BYD has also realized the layout of the whole industry chain, with the production and research and development capabilities of core technologies and components, including the whole vehicle, the three major electric (batteries, motors, electronic controls), and three small electrics (electric air conditioning, electric steering and electric brakes).

Technology, to serve the strategy

"Technology is not only for products, but also for strategy." This is a saying circulating within BYD, from the mouth of Wang Chuanfu.

This sentence has guided BYD all the way to this day. It is precisely with such a sentence that every transformation of BYD has not gone wrong, including the transformation from fuel vehicles to electric vehicles. It is precisely because of this sentence that BYD can formulate a development strategy for the next 5 to 10 years with a forward-looking perspective and technology.

In the current automotive sector, there are already two major deterministic trends, namely electrification and intelligence. There is no doubt that this will bring a major reshuffle to the global automotive industry.

In this regard, Li Qian said that the increase in electric vehicles will come from two aspects: first, the replacement of electric vehicles for traditional fuel vehicles; second, intelligence will make the cake of electric vehicles bigger.

In this process, with the continuous iteration of software and hardware and the continuous increase of automotive functions, the upstream and downstream of the industrial chain of electric vehicles will also usher in new growth. In this regard, BYD laid out early.

Over the years, BYD has been deeply engaged in a number of technical fields, such as: plug-in hybrid, vehicle-grade semiconductors, battery technology and so on. According to Li Qian, BYD's annual R& D investment accounts for about 6% of sales revenue.

It is worth mentioning that in the key components of semiconductors, after accumulation, BYD has become the only vehicle manufacturer with automotive-grade semiconductor IDM capabilities, breaking the monopoly position of international giants such as Infineon, ABB, Mitsubishi and Fuji on semiconductors in one fell swoop.

At the same time, IND has also taken the lead in layout in terms of silicon carbide semiconductors with higher work efficiency, better performance and more conducive to optimizing the cost of vehicle batteries. Li Qian predicted: "Although the current cost of silicon carbide is relatively large, it should drop sharply in the next two or three years." ”

While firmly grasping the core technology, BYD is committed to creating an open ecosystem, and has been constantly seeking partners in semiconductor, new materials, Internet of Things, AR and VR technology to form a two-way empowerment of industrial collaboration to further consolidate the advantages of the industrial chain.

Li Qian believes that with the intelligentization of automobiles and domestic substitution, in the next few years, the chip industry will usher in a golden period of development, "looking back at the Chinese automobile market, the traditional fuel vehicle industry chip demand is limited, and overseas companies have no to fight, but with the development of electric vehicles, it will bring great opportunities for development." ”

It is in this situation that BYD invested in the leading brand horizon of artificial intelligence chips, and it is also a company founded by Yu Kai, an alumnus of the guest faction.

Define brands with technology

It can be clearly felt that in the past two years, BYD's brand power has been greatly improved. First of all, everyone mentions electric vehicles and thinks of BYD. Secondly, from the perspective of unit price, the average unit price of BYD cars has increased from 60,000 to 150,000, which is a big change.

Previously, domestic car brands dared to imagine being able to sell more than 200,000 models until the emergence of BYD Han.

According to the data, SINCE THE LISTING OF BYD HAN, MONTHLY SALES HAVE STABILIZED AT MORE THAN 10,000 UNITS, AND SOLD 13,700 UNITS IN DECEMBER 2021, RANKING THE WANTAI CLUB. For more than 200,000 domestic car brands, this is the first time.

"If a car is done well, it can greatly enhance BYD's brand." Li Qian said.

Such achievements are inseparable from China's national conditions. In the Chinese market, 100,000 to 150,000 models account for 50%, which is the largest piece of cake. BYD's strategy is to firmly grasp the market space below 300,000.

To do this, we need to return to the technical level, that is, use technology to reduce costs. BYD relies on strong technology, supply chain control and efficiency to use affordable electric vehicle explosives to penetrate the industry, BYD Han and BYD Tang are two masterpieces.

Change is the eternal theme of the market, and with the upgrading of consumption, BYD must find its own definition of the brand. "Young people's perceptions of brands have changed, what they like and what is the best brand." Li Qian said.

So, how does BYD touch the hearts of young people?

In the second half of the electrification and intelligence of automobile brands, what BYD has to do is not to deliberately do the brand, but to rely on technological innovation to make things that consumers like.

"In this era of information explosion, brand promotion is not a particularly difficult thing, but brands are not deliberate, they must pay attention to the consumer experience, consumer feedback is more important than anything else." Li Qian said this to the guests.

It is true that the second half of the competition of electric vehicle brands must give consumers a more comfortable, better product and a safer and smarter driving experience.