Lei Gang From Front Seat Temple
Intelligent Vehicle Reference | WeChat Official Account AI4Auto
This Qingming Festival, BYD officially bids farewell to fuel vehicles.
As announced in the latest production and sales report released in March, BYD made the official announcement:
From March 2022, vehicle production of fuel cars will be stopped.
Yes, it was announced in April, but it was implemented in March. In BYD’s sales report for March, projects related to fuel vehicles are all marked with zeros.
With the cessation of production of fuel vehicles by BYD, it also became the world’s first automaker to stop producing fuel vehicles. This news has quickly caused heated discussions and even became the top search topic.
As fuel becomes exhausted, new energy is unstoppable. This is a consensus already established in the global automotive industry.
However, more automakers have chosen a relatively moderate transition path, either in 2030 or 2040, before they truly make fuel vehicles a thing of the past.
BYD, on the other hand, is fast, accurate and ruthless, even showing a hint of radicalism.
Those who praise BYD for its actions are not few:
Some say that BYD has courage, confidence, and more importantly, the ability to revolutionize and evolve itself, becoming an example of Chinese automakers in the new era.
Some also say that BYD is making a bold and determined move, abandoning the role of fence-sitter and truly embracing and accelerating the transformation towards new energy.
Critics, on the other hand, claim that BYD is merely taking advantage of the “political correctness” of new energy and turning the act of removing outdated capacity into a public relations show.
There are also netizens who know little about BYD and were surprised to see the news on the top searches:
BYD has fuel cars?
In reality, not only does BYD have fuel cars, but they also accounted for a significant portion of the company’s production and sales data last year, with a percentage as high as 18% and not a business that can be easily abandoned.
In addition, BYD is bidding farewell to fuel vehicles and not internal combustion engines. In BYD’s present system, internal combustion engines will still play an important role in the company’s development of hybrid solutions.
Why is BYD stopping the production of fuel cars?
On April 3, with the release of the March production and sales report by BYD, the company announced:
Based on its strategic development needs, the production of fuel cars will be stopped from March 2022.
BYD also emphasized that in the future, the company will focus on pure electric and plug-in hybrid vehicles in the automotive sector.Byton will continue to provide comprehensive services and after-sales guarantees, as well as lifelong supply of spare parts to existing customers of gasoline vehicles to ensure worry-free driving.
In summary, BYD will no longer produce gasoline vehicles, but will continue to provide good customer service for previously sold vehicles.
In the March sales announcement, BYD sold a total of 104,900 cars in March, all of which were new energy vehicles, and did not produce or sell gasoline vehicles.
So this is not a “pre-announcement” notice, but an “informative” announcement.
Furthermore, based on BYD’s January and February new energy passenger car sales figures of 180,399 vehicles, BYD’s first quarter 2022 sales figure for new energy passenger cars has already exceeded 284,737 vehicles, with an electrification rate of 98.3%.
This new energy sales data is second only to Tesla on a global scale. According to the latest announcement, Tesla’s Q1 sales exceeded 310,000 vehicles.
Not to mention BYD’s ranking in the proportion of new energy among traditional car companies, which is also among the top in the world.
So for BYD, ceasing production of gasoline vehicles is not just a transformation, but a decision to catch the wave and ride the wind.
However, after the news broke, some netizens who were not aware of the situation asked:
Does BYD still have gasoline vehicles?
Yes, BYD still has them, and their proportion is not small.
This is BYD’s production and output statistics for the entire year of 2021:
Gasoline passenger vehicles account for 18.78% of the total production capacity, with an annual output of over 140,000 vehicles, accounting for more than 1/5.
What does this mean?
This figure alone exceeds the annual production and sales data of many small car companies or new car manufacturers.
In terms of sales for the full year of 2021:
BYD sold over 130,000 gasoline vehicles for the full year, accounting for 18.42%, also more than 1/5.
This means that BYD’s decision to cease production of gasoline vehicles is not a “borrowing the slope from the donkey” move that cannot sell, but rather a strategic decision made based on market trends.
Even though BYD will no longer produce gasoline vehicles, their gasoline vehicles still remain for sale in the official product lineup.
However, understanding why BYD stopped producing conventional fuel vehicles may require a comprehensive understanding of its historical development.
Because BYD, born for new energy from the very beginning, producing conventional fuel vehicles was not only a last resort for survival in its entrepreneurial ventures, but also reflected the bitter experience of China’s auto companies in the global auto industry.
Why did BYD make conventional fuel vehicles?
On February 10, 1995, Anhui engineer Wang Chuanfu registered and founded BYD Company Limited in Shenzhen.
The company mainly developed and produced nickel-cadmium and nickel-hydrogen batteries for electric tools.
From that moment on, advancing towards new energy and electric vehicles was considered Wang’s greatest ambition.
In 2003, this ambitious goal took its most important step with BYD’s 269.5 million yuan acquisition of a 77% stake in Xi’an QinChuan Automobile Co., Ltd..
BYD not only obtained the qualification for automobile production, but also circumvented the production process from 0 to 1 in automobile manufacturing.
In May of the same year, renamed BYD Auto, Xi’an QinChuan Automobile began taking over the production and sales of the Fuluier sedan and entered the microcar market.
Like all Chinese private entrepreneurs of the same era, Wang’s strategic tactics were clear: enter the market, stay in the market, and finally play even more high-end cards.
Therefore, the first step BYD took in automobile production was to redesign the appearance of the Fuluier and gradually introduce reverse-engineered 0.8 displacement inline three-cylinder engines.
This is also why BYD, which started with batteries, produced its first vehicle as a conventional fuel vehicle.
Nevertheless, limited by the industrial capabilities of China’s independent industry at the time, the engine, transmission, and even interior parts of BYD’s first car were far from competitive.
On the market, like many other independent auto companies, they could only cut the cake in the low-end market.
In 2005, BYD’s first self-built car, the F3, went offline, and later the S6 was launched, signifying that they had truly mastered the skills of car manufacturing.
It is also based on this inherent strength of independent car manufacturing that the initial aspiration of new energy finally began to be realized.In June 2006, BYD’s first iron-based power battery pure electric sedan F3e, equipped with BYD’s self-developed ET-POWER technology iron-based power battery, had a range of 350 kilometers on a single charge. This also established BYD’s position in electric vehicle technology.
In 2008, the F3DM dual-mode electric model, which was equipped with the DM dual-mode hybrid system, was released. This means that in addition to the pure electric model, BYD also has a ticket for plug-in hybrid models. This was also the starting point for BYD’s two-legged strategy of pure electric EV and plug-in hybrid DM.
It is worth noting that the starting point for BYD’s EV and DM was to “overthrow” fuel vehicles. Although there is still an internal combustion engine in the DM plug-in hybrid, it mainly serves as an auxiliary power source for pure electric vehicles. Even in the latest generation of DMi technology, BYD has achieved an astonishing fuel consumption of 3 liters per 100 kilometers during battery depletion.
This is absolutely different from the “new energy” range-extender route and also represents a difference in technological strength.
It is also worth mentioning that the complete appearance of BYD’s EV and DM two-legged strategy in the core technology of new energy vehicles has brought not only influence but also investment. First, well-known Chinese investor Li Lu entered the stock, and then Berkshire Hathaway, owned by Warren Buffett and Charlie Munger, invested heavily and took a 10% stake for HKD 1.8 billion, becoming BYD’s largest foreign shareholder.
Since then, BYD has truly stayed on the table of the automotive industry. Even before new energy, pure electric, and Tesla’s phenomenon-level attention, BYD’s fuel vehicles were one of the key reasons why BYD could stay at the table.
Although the positioning is low-end, and the gross profit margin is not high, it has benefited BYD’s vehicle engineering, manufacturing and branding. It has also laid the foundation for BYD’s high-end positioning in new energy.
However, as new energy becomes the mainstream and infrastructure improves, BYD’s pure electric and hybrid brands have received widespread acclaim, with both production and sales on the rise, while “fuel vehicles” have become increasingly insignificant, even a burden.
It is time for BYD to stop producing fuel cars and fully and rapidly transition to new energy.
The impact of stopping fuel car production is obvious in three aspects. Firstly, it allows for capacity transfer.The production lines previously used for fuel vehicles can be transformed to produce new energy vehicles.
Secondly, turning wholeheartedly to new energy.
Whether it’s the global ban timeline for fuel vehicles, China’s carbon neutrality strategy, or BYD’s strides towards high-end vehicles through new energy, this is a move that hits two birds with one stone.
Thirdly, brand promotion.
In the century-old automotive industry, Chinese independent automakers have received a lot of attention but have always been a sore subject.
Because of the lack of advancements in crucial technology, such as the engine, Chinese independent brands have been only able to survive in the low-end, low-priced vehicle market.
However, in the field of new energy, the situation is fundamentally changing with overtaking on the inside lane.
In terms of BYD, with the application of the DMi platform and blade batteries, its reputation in new energy has begun to gain an impression and label of technological leadership.
This is evident in the success of flagship sedan models such as the Han.
Currently, BYD has basic coverage of the “mass” market worth between 100,000 and 300,000 yuan through the Imperial series: Qin, Han, Tang, Song, Yuan, and other derivatives.
The brand’s influence and price have escaped from the shadow of “low-end” and “low-price.”
BYD has even become the designated official car for the royal family:
Furthermore, BYD is also planning to launch higher-end luxury vehicle types in the 300,000-500,000 yuan and 500,000-1 million yuan segments.
Therefore, the discontinuation of fuel models is also an embodiment of not settling for lesser quality, and not compromising for small profits.
Of course, BYD has forward-thinking concerns.
Its most pressing concern is in the slow development of its intelligence applications.
According to statistics, BYD’s new energy sales exceeded 600,000 units in 2021, ranking fourth globally without an insurmountable gap with the leader, Tesla.
However, despite its size, BYD’s efforts to be at the forefront of intelligence applications have not earned it the appropriate momentum, whether in the cockpit or in intelligent driving. The company lacks both force and data-driven intelligence transition.
Many BYD vehicle owners are quite regretful about this, feeling that BYD can build first-class cars but still use second-class onboard systems and third-class intelligent driving.
However, Wang Chuanfu is not unaware of the current reality.
When the latest vehicle architecture platform was released, he called out:
Be brave, don’t be afraid of difficulties.This difficulty is exactly the difficulty of intelligent transformation and survival.
So can BYD rise to the challenge again and win in the era of intelligent cars?
The conclusion cannot be drawn yet.
But the resilience that BYD has already demonstrated makes everything not to be underestimated.
Elon Musk, former CEO of Tesla, was once asked, “How about BYD?”
At that time, Ma Yilong, who had not yet solved the challenge of production capacity, smiled somewhat impolitely. He believed that BYD’s product strength was inadequate and had never been regarded as a competitor to Tesla. He also suggested that BYD’s core issue was how to survive in the Chinese market.
However, Musk’s words may have a sense of being hit if they are reviewed after the release of Han and the current sales figures.
Even globally, the only new energy vehicle model that can truly be regarded as a competitor to Tesla from the perspective of price and sales is basically only Han.
Therefore, never underestimate the heart of a champion.
What do you think?
— End —
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.