文 | TY Joey

At 12 o’clock on June 1st, I listened to the roar of high-displacement engines that were constantly whistling outside the window on the Middle Ring Road, and suddenly I felt as if my soul had been awakened. Such sounds seemed to have completely disappeared from everyone in Shanghai during the past 80 days. But at that moment, Shanghai was restarted.

The reactivated city not only brought about the all-night revelry of the Bund and the citywide work the next day, but also the revival of the entire automotive industry.

When I saw the sales data of BYD in May, my long-lost confidence was rekindled. Maybe it shows me many possibilities in the automotive industry, or maybe it makes me feel a sense of identity as a Chinese brand. Anyway, this excitement is no less than that of a fan of a celebrity.

BYD’s sales of new energy vehicles in May reached 114,943 units (the first time the monthly sales exceeded 110,000 units), an increase of 250.44% year-on-year; and the cumulative sales from January to May 2022 reached 507,314 units, an increase of 348.11% year-on-year.

In such difficult times, BYD once again surpassed itself. Four words popped into my mind: “The strong are self-reliant.” After experiencing an epidemic, BYD seems to have arrived at its best tipping point.

During the epidemic, BYD still “sings” loudly

During the lockdown period in Shanghai, we talked with several manufacturers about their expectations for the auto market after the epidemic. BYD was indeed the most confident one, “The sales volume will be as large as the production capacity, and the epidemic will not have a big impact on us.” This feedback was expected.

At the same time, we also learned from various brand dealers in the Shanghai area that many salespersons said that the days were too difficult, and the basic salary of less than 3,000 yuan a month was hard to come by, let alone orders. Having a few pre-orders a month was already considered good. Moreover, the deposit can be refunded or exchanged at any time on the basis of various promotional packages such as 99 yuan gift package and 199 yuan gift package. “There is no other way but to wait until the resumption of work. Now I can only watch short videos at home and there is really nothing to do,” said a salesperson of a certain joint venture brand in helplessness.

When it comes to BYD’s dealers, the atmosphere of the whole conversation is different. There is a restrained excitement on the phone. A salesperson of BYD in a certain district of Yangpu said, “Currently (the interview time is May 26th), there are more than 100 orders, which is slightly better than in April, but it is definitely not as high as before the lockdown. Many people are not in a hurry to place an order because they cannot see the car or test drive it. I don’t pay much attention to these customers during the epidemic period, because they are closed and I cannot meet their current needs. The existing orders are already good enough.”After this survey, I do have high expectations for BYD’s May sales, and in this market, the monthly sales of over 110,000 are particularly fierce. Looking at individual models, there are also many highlights, and the sales of one BYD model are roughly equivalent to, or even surpassing, the sales of a new energy brand.

The highlight is the Han family, which sold 23,934 in May, with 12,804 of Han EV delivered and 11,130 of Han DM-i delivered, an increase of 359% YoY.

Similarly powerful is the Song family, which sold 31,989 in May, up 779.4% YoY, with EV models accounting for 5,528 and DM series totaling 26,461.

The Qin family also broke through the 20,000 mark in May, selling 20,753, up 109.9%, with 11,095 Qin PLUS DM-i delivered and 6,849 EV delivered.

The Tang family sold 8,449, with 7,504 Tang DM-i delivered and 945 Tang EV delivered.

The Yuan family sold 13,333, with 11,480 Yuan PLUS delivered and 1,853 Yuan Pro delivered; the just-launched Destroyer 05 sold 4,558.

Dolphin sold 6,430, and the e-series sold 3,900, up 156.7% MoM.

In this wave of the epidemic, where did BYD win?

“Many fledgling entrepreneurs worship the success of their predecessors and carve out their models – the same products, names, similar advertising slogans, prices, and indistinguishable channels. The result of swarming is that everyone dies together.” These words from Wang Chuanfu in the early years are particularly apt in today’s market environment.

During the more than two years of being trapped by the epidemic, many car companies have failed and retreated, which highlights the importance of a company having core competitiveness. Faced with the past two months, whether it is traditional car companies with historical precipitation, or new energy brands with unique skills or innovative models, they have been whipped more or less by the epidemic. At this time, the tactic of “one move to beat the enemy” seems to be ineffective. In such a period full of uncertainty and crisis, one must have multiple strengths to stand firm.It is well known that BYD has strong moats in product technology, vertical management of the supply chain and brand awareness, and these advantages have been fully demonstrated during the two-month shutdown. What’s more, BYD took a targeted approach by leveraging its strengths to fight a very successful battle during the crisis.

Firstly, not putting eggs in one basket.

The areas most affected by the epidemic were the Yangtze River Delta and Northeast China. Many automakers had to stop production due to factories being concentrated in these two areas. Even Tesla did not escape the shutdown, and there are reports that Tesla also started layoffs yesterday. However, BYD has nine production bases in China, which are widely dispersed in locations such as Pingshan in Shenzhen, Xi’an, Changsha, Changzhou, Fuzhou in Jiangxi, Jinan, Hefei and Zhengzhou. This effectively avoids all kinds of uncertainties caused by the outbreak of the epidemic in a certain area.

Even if factories belong to areas that are strictly sealed off, BYD responds quickly. For example, when the epidemic broke out in Xi’an at the beginning of the year, BYD immediately implemented a closed management of 69,000 employees in the park, ensuring the normal operation of its Xi’an factory, which can produce 1,500 cars per day.

Secondly, mastering key technologies.

The impact of the epidemic on the automotive supply chain is also huge, and the automotive supply chain is complex and lengthy. If one link of the chain is stuck, the car cannot be completed. Wang Chuanfu realized early on that in order to earn a “long-term meal ticket,” he must have his own core technology and independent intellectual property rights. In recent years, BYD has made many deployments in the automotive industry chain. In Wang Chuanfu’s words, “BYD is the only company in the world that can make batteries, electric motors and electronic control systems.” In several core technologies, BYD not only achieved self-sufficiency but also has the discourse power of technology. The blade battery, DM-i super hybrid, and the recently launched CTB technology are all unique technical labels of BYD.

These independently manufactured components depend entirely on the three research institutes responsible for electronic materials, energy storage technology and technical research and development at BYD. In addition, a series of links such as automotive mould manufacturing and vehicle production rely on the seven industrial parks they have built in China. In other words, four assembly plants that we often pay attention to have already reached the end of BYD’s entire “self-circulation” supply chain system.# BYD’s self-developed ability stands out in the current scenario of chip shortage and continuous price increase of automotive components.

We do our own thing, regardless of price increase of raw materials, and even maintain a highly close relationship with suppliers.

It is known that many auto parts, focusing on BYD. The sales drive capacity expansion, and high capacity promotes delivery efficiency, which ensures a stable loop for BYD.

Thirdly, having more children is better in fighting.

In recent years, BYD has been seeking market preferences mainly through a wide range of product strategies. As we can see from BYD’s product line, almost every model has nearly a dozen to twenty specific models, including traditional energy, hybrids and pure electric vehicles.

Currently, BYD’s automotive business is mainly composed of four segments: Dynasty Network, Ocean Network, DENZA, and High-end Brand. In the Dynasty series, the DM-i hybrid and pure electric models of the Qin, Song, and Yuan series were priced between 100,000 and 200,000 yuan. The Tang and Han series were priced from 200,000 to 300,000 Yuan.

The Ocean series is divided into marine biology and battleships, both equipped with the E-platform 3.0 technology and DM-i super hybrid technology. Among them, the dolphin of the marine biology series is priced between 93,800 and 121,800 yuan, and the presale price of the sea lion is from 212,800 to 289,800 yuan. According to BYD’s product planning, the marine biology series models will also have a small sedan seagull and a medium SUV sea lion. The destroyer 05, representing the A-class sedan in the battleship series, is priced between 119,800 yuan and 155,800 yuan. In addition, there are cruisers as an SUV representative and landing ships serving as an MPV representative.

As a luxury brand under BYD, DENZA brand has recently made a strong return. Its first MPV, DENZA D9, has a presale price of 335,000-460,000 Yuan. According to the plan, DENZA will launch a medium SUV and a medium-to-large SUV this year.

A while ago, some media reported that BYD may cooperate with Huawei to launch a high-end new brand named “Interstellar”. The price range is expected to be between 800,000 and 1.5 million yuan. The first product will be a tough off-road SUV, targeting the Mercedes-Benz G-Class.

According to the existing product plan, BYD’s product series cover the price range between 10,000 and 150,000 yuan. If successfully implemented, the layout will be spectacular.In addition, BYD still has more business expanding globally. For example, their pure electric buses are currently the market leader in Europe and have the highest global sales volume. Just last month, BYD’s buses also appeared at the largest clean transportation expo in North America. In addition, as of May 30th, BYD’s energy storage product, BYD CUBE T28, has achieved an overall supply scale of 1.6GWh+ in North America since the beginning of this year.

Obviously, this is a very Japanese way of corporate development, and BYD has expanded their product line more rapidly over the past year. The advantages of this product strategy have been reflected in the sales of each month. In May, Dolphin was affected by the Changsha factory and delivered 5,610 fewer vehicles than in April. However, “Mom is not worried” because there is still Kingtro holding up the sales growth, and sales will not be affected by a single car model.

Of course, all this is based on BYD’s strong R&D capabilities. No matter how many products are in their lineup, it’s all in vain if their supply chain is broken. Therefore, when BYD truly relies on technology to expand their business in various fields and radiate energy from the periphery to the core business, it is also a good market expansion method, which is the Kabushiki Kaisha (株式会社) mode.

Fourthly, a company’s greatest asset is its people.

Behind all the technologies, products, strategies, etc. mentioned above, “people” are the most core driving factors.

The R&D center and marketing department of BYD are full of top talents in the domestic battery industry. Regarding recruitment, Wang Chuanfu had a detail that he personally went to universities all over the country to select excellent graduates majoring in batteries every year. He said, “With talented people, you are a calm and confident general who is not afraid to fight against any opponent.”

In terms of talent management, Wang Chuanfu also has his own special way. For example, he directly manages the two core departments of the R&D center and marketing department, without any middle layers, reducing information asymmetry and time delays at all levels. In Wang Chuanfu’s view, research and development and marketing are the two wings of BYD’s success. As the founder and leader of the company, he needs to grasp market trends and technological trends at any time, and this vertical management can ensure that he is at the forefront of the market and technology.In the management mode of the whole company, Wang Chuanfu advocates the “military-school-family” trilogy. As a company, the style of the military should be adopted in tackling tough problems, with everyone united and working together towards a common goal. At the same time, the company should also cultivate talents, even if the turnover of talents may lead to the company’s silent cost, it is still something that a company should do. Finally, as a company, every employee should find their own value in BYD and feel at home. Therefore, BYD set up an employee stock ownership mechanism very early on. This year, it also launched an employee stock ownership plan equivalent to “giving away for free”. The plan is to repurchase company shares for 1.8-1.85 billion yuan to implement the company’s employee stock ownership plan. The acquisition price of this employee stock ownership plan is 0 yuan per share.

Of course, we cannot ignore the large number of Difens, who are fervent BYD fans. If BYD’s employees perform well, it is partly due to the stimulation of the equity mechanism and BYD’s corporate culture. As long as BYD sells well and develops well, Difens in the stock market can also benefit. Therefore, the support and love of Difens for BYD is very prominent in the auto industry.

BYD, It’s the Best Time to Power Up

Regardless of the external environment, BYD has undoubtedly encountered a good time. The crisis in the entire auto industry has given BYD, which holds a large number of patents and has completely self-developed core technology, the confidence to call the shots. Gradually recognized for its hardcore strength, and catching up with the mainstream in design manufacturing, it also gives BYD the possibility of becoming a leader in the new energy era.

First of all, looking at the overall environment, China’s new energy market is in a period of outbreak. As a new energy brand that controls core technology, this trend could be said to be a once-in-a-lifetime opportunity. BYD has also expressed its determination. On April 3rd, BYD announced that it has stopped production of fuel-powered vehicles. This is the first automaker in the world to formally announce the cessation of fuel-powered production. BYD’s transformation to new energy will undoubtedly enable it to take the initiative in future market competition.

Secondly, the subsidy policy for new energy vehicles is expected to expire on December 31, 2022. The next six months are the most advantageous time for BYD. The two-month test of the epidemic has already allowed BYD and other automakers to move forward to a certain extent. At least, while most automakers are still in the “post-sickness” period, BYD can still strive to move forward.

In addition to the outstanding sales performance, BYD has also been making big moves in brand, product, and technology. The development of high-end brands, the launch of CTB technology, cooperation with Horizon, and the small news mentioned earlier of cooperating with Huawei, are all part of BYD’s rapid and powerful sprint.Translate the Chinese text below into English Markdown text in a professional manner. Retain HTML tags inside Markdown and only output the results.

Furthermore, BYD’s strong risk resistance is what enables it to navigate effortlessly through the uncertain environment in the future. The relentless COVID-19 pandemic has made us acutely aware of the many unforeseeable circumstances that exist in the world, and it necessitates the need for a strong capacity to resist risks.

Such strength, however, cannot be achieved overnight, and BYD’s industrial foundation and supply chain layout cannot be caught up with in a short period. Therefore, besides BYD’s core technological prowess and independent research and development capabilities, its accumulated strength in development will also become an advantage for BYD in the current market competition.

Of course, BYD is not perfect. Currently, its weak points remain in the areas of intelligence and high-end branding. Historical experience teaches us that the road to the high-end market is not easy for independent brands. Although the DENZA D9 received over 20,000 orders during its initial pre-sales, earning over 100 million in deposits in just one week, the final verdict of the market remains to be seen. In the meanwhile, as intelligence becomes the next big trend, how BYD can make up for this shortcoming is also worth pondering.

As Wang Chuanfu once said, “There’s a certain hardness to life. If you have an indomitable spirit, a solid land will definitely be beneath your feet”. This applies not only to individuals but also to companies. I believe BYD is now standing upon such a solid ground.

The above information is sourced from “40 Years in the Business World (Complete Collection)”.

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.