The first part of the 12-day polemic: the Great Wall is tragic and pure, and BYD is proud of vertical integration and focus

The competition between car companies is fierce, BYD and the Great Wall's "12-day debate"

In recent years, the new energy vehicle market has been surging, and various car companies have set off fierce competition. In this car company war, the two giants, Great Wall Motor and BYD, have been entangled and contradictory for a long time, until a 12-day "polemic" will start in May 2024. The debate is focused on BYD's vertically integrated model and low-price strategy. Who's right and who's wrong? Industry insiders and public opinion have different opinions, and it is difficult to reach a consensus. As new media people, we have the responsibility to objectively and fairly present the ins and outs of this "debate" of car companies, and conduct an in-depth analysis of some of the key issues involved.

The grudge caused by the "fuel tank door" a year ago

The beginning of this controversy dates back to May 25, 2023. On that day, Great Wall Motors made a public statement, saying that it had reported to the relevant departments that BYD's two plug-in hybrid models used atmospheric fuel tanks, and the emissions were suspected of not meeting the standard. Subsequently, BYD quickly issued a statement opposing any form of unfair competition and reserved the right to sue. In just one day, this "war of words" began.

On the face of it, this is just an ordinary intra-industry competition dispute. However, a closer look at the reasons reveals the contradiction between the two car companies. It turned out that it all started with last year's "fuel tank gate" incident.

According to public information, due to the short engine running time of plug-in hybrid models, the oil and gas in the carbon tank cannot be flushed in time, and there is a risk of oil and gas overflow. In order to cope with the China VI emission standard, the use of high-pressure fuel tanks in PHEV models is a better solution to better collect volatile oil and gas. But in comparison, the cost of a high-pressure fuel tank is about 1,000 yuan higher.

In this case, some car companies choose to use atmospheric fuel tanks in order to reduce costs. Great Wall believes that this practice violates the emission standards, so it reported it to the relevant authorities. This obviously touched BYD's sore spot.

Although BYD later issued a statement saying that the product met the national standard, it still triggered a protracted war. Some BYD owners reported that their PHEV models will automatically start the engine in pure electric mode, which not only increases fuel consumption, but also has potential safety hazards. The 4S store said that this was realized by the manufacturer through the background upgrade program and could not be solved. The owners angrily demanded that BYD replace the high-pressure fuel tank.

The controversy continued until August 2023, when BYD shouted the slogan "Together, we are Chinese cars", which was interpreted by the industry as a gesture of goodwill. But the CTO of the Great Wall immediately replied, disagreeing with the "moral kidnapping" of "together". He bluntly said that if it is just "honey on the mouth and arsenic in the heart", it is better to fight first and then be together.

Behind this war of words, it reflects the tense relationship between the two major car companies. On the one hand, Great Wall believes that BYD's sales lead is based on non-compliance, which is an unfair competition; BYD, on the other hand, believes that the normal temperature fuel tank is not a major defect, and the Great Wall seems to be making excuses for its own sluggish sales. Both sides insist on their own words, and it is difficult to convince the other.

As a result, BYD did not receive the expected punishment, and its sales in 2023 exceeded 3 million units, becoming the world's largest new energy vehicle company. The sales volume of Great Wall will only be 1.23 million units in 2023, which is far from BYD. In the first five months of 2024, Great Wall's sales volume is only equivalent to 36% of BYD's in the same period.

Obviously, this controversy did not have much impact on BYD, but instead put Great Wall into passivity. This undoubtedly added to the frustration of the Great Wall and fueled its anger.

The Great Wall's "Justice and Purity" Polemic

The time came to May 26, 2024, and this dispute ushered in a new climax. Wei Jianjun, the founder of Great Wall Motors, said in a live broadcast that although Haval H6 is no longer the sales champion, it represents "justice and purity". He said that there is indeed some "disorderly competition" and "malicious competition" that have brought chaos to the industry. But the Great Wall has its own bottom line, and will not do those things that are "unkind" and "not follow the rules".

This exposition of "justice and purity" is undoubtedly aimed at BYD. Wei Jianjun's meaning is very clear, the Great Wall represents the right path of the industry, and BYD has embarked on a crooked path. As a "rule-oriented" company, even if Great Wall's product Haval H6 loses the sales champion, it will not "sacrifice quality", "sell at a loss" or even "suspected of financial fraud" like some companies.

This statement obviously caused BYD's dissatisfaction. Twelve days after Wei Jianjun expounded on the theory of "justice and purity", Wang Chuanfu, chairman of BYD, publicly stated at the Chongqing forum, saying that "Chinese entrepreneurs are very happy". His favorite Li Yunfei said bluntly, "Don't play if you can't afford it, don't find a reason if you lose." This is undoubtedly a kind of riposte to the Great Wall.

BYD's counterattack didn't stop there. On May 28, the company unveiled its flagship Qin L DM-i in Xi'an, priced at just 99,800 yuan. This means that B-class cars have also entered the "100,000 yuan era". This is undoubtedly BYD's response to the Great Wall's "theory of justice and purity": Didn't you say that we cut costs? Then I'll prove my strength at a lower price!

Industry insiders believe that this series of actions will undoubtedly escalate this "polemic" of car companies. Is BYD's low-price strategy based on a normal business strategy, or is it based on an abnormal practice of sacrificing quality? Is Great Wall's so-called "justice and purity" just an excuse for its own sluggish sales? These issues have become the focus of controversy.

Vertical Integration: A Panacea or a Hidden Danger?

The key to BYD's low-price strategy lies in its highly vertically integrated model. As an enterprise that controls the entire industrial chain from upstream parts to vehicle manufacturing, BYD does have a cost advantage.

This vertical integration model, in Wang Chuanfu's view, is an inevitable trend in the development of the automotive industry. He cited examples of brands such as Mercedes-Benz and BMW in the era of fuel vehicles that have also adopted similar models, and believes that BYD also needs to do the same in the new energy era to cope with the uncertainty of component supply.

Wang Chuanfu's view is not entirely wrong. In the early stage of new technology development, vertical integration can indeed improve the innovation ability and supply efficiency of enterprises. But the problem is that new energy vehicles in China is no longer a "baby", its market share has approached 50%, according to the national plan, new energy vehicles will occupy half of the country in 2035. In this context, Wang Chuanfu still insists on the layout of infancy, which seems to be somewhat contradictory.

The depth of BYD's vertical integration has also raised some questions. Che Jujun believes that excessive vertical integration may not only lead to the rise of management costs and communication costs, but also may lead to lax internal procurement quality control. More importantly, if the vehicle manufacturing process puts forward strict cost reduction requirements for suppliers, it is likely to harm product quality, how should the supplier respond? As an independent supplier, it's okay to refuse to cooperate; But if it's an in-house supplier, I'm afraid it's hard to refuse. This is tantamount to a return to the "people's commune" model.

In addition, BYD itself admits that looking at the manufacturing link alone may be loss-making, and only by considering the whole industry chain can it reach the level of flat or even a slight surplus. This means that the root cause of its low price strategy is not entirely due to the cost advantage brought by vertical integration. So, what are the considerations behind its continuous price reduction?

BYD's layout in the fields of insurance business and financial business has also aroused questions from the outside world. Some analysts have pointed out that the insurance business of new energy vehicles is not a smooth road, and many insurance companies have begun to raise premiums. Then, whether BYD can achieve profitability through these related businesses, so as to support its continuous price reduction strategy, has also become a question worth paying attention to.

In general, BYD's low-price strategy and highly vertical integration model have brought good sales results in the short term, but there may be some hidden dangers behind it. We cannot simply think that this is an "industrial miracle" or a "financial miracle". As new media professionals, we have the responsibility to objectively analyze these issues to help readers better understand the essence of this "debate" of car companies.

The homogenization of car companies is serious, who is the main ups and downs?

From the perspective of the entire automotive industry, whether it is a traditional fuel vehicle or a new energy vehicle, the homogenization problem is very serious. This inevitably led to vicious competition among peers, and the "polemic" between Great Wall and BYD was only the tip of the iceberg.

It is not difficult to find that in recent years, major car companies have tended to be similar in terms of product strength, technology research and development, and marketing methods. Taking new energy vehicles as an example, battery life and intelligent driving have become standard, and it is difficult to become a differentiated selling point. In this homogeneous environment, the only way out may only be a price war.

Previously, the price of new energy vehicles was generally high, but as the industry enters the fast lane of development, this situation is changing. BYD's low-price strategy has undoubtedly exacerbated this trend. In order to cope, other car companies also had to follow suit. This vicious circle of "you lower and I lower" not only damages the overall profit level of the industry, but also may endanger product quality.

So, who exactly is the winner of this "polemic"? BYD, with its rapidly expanding sales advantage, seems to have the upper hand for the time being. But in the long run, we should pay more attention to what kind of impact this price war will bring to the industry.

Perhaps, the future is no longer the era of single competition. Cooperation and synergy between car companies may become the key to breaking the situation. We have seen that Li Yunfei publicly expressed his hope that Chery would approach BYD as soon as possible and share some competitive pressure. This undoubtedly points the way for the consolidation of the industry.

On the other hand, car companies also need to re-examine their development strategies. A simple price war may be successful in the short term, but it is far from a long-term solution. More attention should be paid to the improvement of product strength, the drive of technological innovation, and the in-depth insight into consumer needs. Only in this way can car companies truly achieve sustainable development.

As new media professionals, we have the responsibility to provide readers with objective and unbiased reports to help them better understand the current trends in the automotive industry. In this "debate" of car companies, we should neither stand on the position of any party, nor should we judge arbitrarily. On the contrary, we should maintain an independent and rational attitude, deeply analyze the crux of the problem, and contribute to the future development of the industry. Only in this way can our reporting really play its due role.

The deep concern of China's auto "giant polemic".

Although this "controversy" provoked by Great Wall and BYD may be just a temporary turmoil in the industry, we still need to think deeply about some of the deeper issues behind it.

First, the controversy highlights the serious problem of homogenization in China's automotive industry. In terms of product strength, technology research and development, marketing strategy, etc., major car companies tend to be similar. This inevitably creates vicious competition, and the price war is undoubtedly the most direct result. BYD's low-price strategy has undoubtedly exacerbated this trend, and other car companies have had to follow up in order to respond.

This vicious circle of "you lower and I lower" not only damages the overall profit level of the industry, but also may endanger product quality. We can't help but ask, is it the winner of the price war who is really the final winner? Perhaps, the future competitive strategy needs to be driven by the improvement of product strength and technological innovation, rather than being confined to a single price competition.

Secondly, the sustainability of BYD's vertical integration model is also worth paying attention to. Some analysts pointed out that excessive vertical integration may lead to an increase in management costs and communication costs, and may also lead to lax internal procurement quality control. More importantly, it is worth further exploring whether there are other means of profit hidden behind this model, such as insurance business, financial business, etc.

After all, purely from the perspective of manufacturing, BYD itself admits that it may be a loss, and only by considering the whole industry chain can it achieve profitability. So, what are the considerations behind its continuous price reduction? This is undoubtedly another important issue that we need to dissect in depth.

In addition, this "controversy" also reflects some contradictions in the development of China's automotive industry. On the one hand, new energy vehicles are no longer "infancy" in China, and their market share has approached 50%, and even in the national plan, it will occupy half of the country by 2035. Against this backdrop, it seems paradoxical to still insist on "infancy" vertical integration.

On the other hand, the concept of "justice and purity" advocated by the Great Wall has also aroused doubts from the outside world. Is this just an excuse for its own sluggish sales? Or does it represent some more "rules-oriented" corporate demands? These require further in-depth discussion.

In general, this "polemic" provoked by Great Wall and BYD undoubtedly presents us with some deep-seated problems in the development of China's automobile industry. As new media people, we have the responsibility to analyze these issues objectively and rationally, rather than simply taking the position of either side. Only in this way can our reporting truly contribute to the future development of the industry.

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