Author: Wang Xuan

This is an interlude article, about the present, the past, and the future.

Yuan Jiazhen, who was the chief engineer of the Beijing Second Automobile Manufacturing Plant in that year, led the development of BJ6490D electric vehicle, when he heard that BYD was going to import electric cars to test batteries in 1997, he invited Wang Chuanfu, the general manager of BYD, to test the domestic electric car. After comparing the performance and price of domestic and foreign electric vehicles, Wang decided to buy the Beijing brand electric car, which became the first publicly sold electric car in China.

In Yuan’s self-report, there is an interesting piece of knowledge: Wang Chuanfu was the first person in China to use an electric car. BYD’s first contact with new energy vehicles was much earlier than we expected, 25 years ago.

The reason for telling such a story is that on April 3, 2022, BYD announced the cessation of production of gasoline cars from March 2022 in an official statement. That evening, a problem appeared on the Zhihu platform, “BYD suddenly announced the cessation of production of gasoline cars, will this be a new era of new energy? Will it lead to a wave of cessation of production of gasoline cars?” For this question, Zhihu users focused on whether BYD’s move was a matter of course or premature.

Indeed, in a time when the automotive industry is moving rapidly towards electrification, BYD is the first automaker to complete the “cessation of production of gasoline cars,” while most are still in the planning stage, perhaps in 2025, or 2030, everyone will give themselves some adaptation space.

Let’s look at some actual situations:

Careful observation of BYD’s recent moves will reveal that they are already prepared to stop producing gasoline cars. In the official statement, BYD claimed that it will focus on developing pure electric vehicles and plug-in hybrid electric vehicles in the future. On the second day after the announcement of the cessation of production, BYD released its sales ranking for March 2022, selling a total of 104,338 vehicles, a year-on-year increase of 160.9%. Among them, 53,664 were pure electric vehicles, and 50,674 were plug-in hybrid vehicles, with no sales record of pure fuel vehicles.It’s interesting that BYD has only released sales data for February and March of this year on its official website in the past five years. According to the data, sales of BYD new energy vehicles reached 87,473 units in February, a year-on-year increase of 764.1%, while sales of pure gasoline vehicles were only 2,795 units.

BYD’s move sends a key message to the outside world that it is doing better by phasing out gasoline cars. By stopping production of gasoline cars, BYD is not cutting off its own arm but rather lightening its burden. If you are a potential user of BYD who is holding onto your money, you will find that the entire DM-i series is in short supply. We have learned from dealers that if you ordered a car in October last year, you might not be able to get a DM-i model until May of this year.

Undoubtedly, the popularity of the DM-i model has become one of the key factors driving BYD to phase out its gasoline vehicle product line. Although today’s BYD can sell 100,000 units per month and looks impressive, they were in a dark period the same time last year. At that time, BYD sold only 20,695 units per month, which was very poor for a car company with an extremely comprehensive product line, with 10,123 units sold being new energy models and more than half of the sales coming from gasoline vehicles. Can BYD dare to phase out gasoline cars under such circumstances?

In fact, BYD had long planned to phase out gasoline cars. As early as 2019, BYD had adopted a product logic of pure electric, DM plug-in hybrid, and gasoline three forms of coexistence in all its models. And high-end models like the BYD Han completely abandoned the gasoline power form. In 2020, BYD attempted to compress the market space for its own gasoline products, encouraging users to switch their gaze to DM models. You will find that at the end of the BYD product line, there are only one or two configurations available for gasoline products, but this did not work out as hoped.

Remember the “542” label on the first-generation BYD Tang DM? Proud BYD even put it directly on the car’s fender. 5 represents acceleration in less than 5 seconds per hundred kilometers (in a fully charged state), 4 represents four-wheel drive, and 2 represents a comprehensive fuel consumption of 2L. 5 and 4 are fine, but the 2L fuel consumption really doesn’t add up. Early NEDC test procedures confounded all plug-in hybrid models, and the specific test procedures will not be discussed here. The result is that most plug-in hybrid models were able to achieve extremely low fuel consumption of about 2 liters in the test, but their performance was no different from that of normal gasoline vehicles in actual operating conditions.Actually, Chinese consumers are very conscious of their purchases. In the early days, the BYD DM model was slightly more expensive than the gasoline version, but the price difference mainly resulted in performance upgrades. For the target consumer group, whether this deal is worthwhile still needs to be carefully considered. Therefore, DM is completely unable to replace the fuel product.

BYD released its all-new DM-i plug-in hybrid technology on January 11, 2021, and achieved comprehensive boarding in the second half of 2021. Compared with its own original DM plug-in hybrid technology, BYD’s DM-i technology is a qualitative change. With the DM-i model, users can buy a product that is more efficient, with fuel consumption equivalent to that of Japanese powerful hybrid cars, and with more powerful power at the same price. This is also a blow to its own fuel cars.

In a sense, BYD has already relegated fuel car users to the DM-i camp. In the second half of 2021, BYD’s fuel car sales plummeted. Out of the total sales of 740,000 units for the year, only 100,000 were fuel cars. Pure electric and plug-in hybrid models truly achieved “two legs, walking in unison.” Therefore, transferring production capacity to plug-in hybrid models and quickly resolving the backlog of orders on hand will help achieve another breakthrough in annual sales this year.

Growing with China’s new energy vehicle plan, BYD, as a supplier of electronic consumer batteries in 1997, had no reason to turn its attention to electric cars, and electric cars were still a non-existent market at the time. In China, national policies are a strong momentum for the rapid development of an industry. Wang Chuanfu was one of the first to see the direction of the wind. Here we will explain the background of the times.

In March 1986, the country proposed the “863 Plan,” the full name being “National High-Tech Research and Development Program.” Its main purpose is to address the severe challenges posed by the booming development of world high-tech and increasingly fierce international competition. New energy vehicles are also a key project of the “863 Plan.”

As we all know, the country proposes an important development policy every five years. In 1995, the Ministry of Science and Technology of China designated the development of electric vehicles as a landing project in the “Ninth Five-Year Plan,” and the following year, an electric vehicle exhibition was held in Beijing, attended by then-Prime Minister Li Peng. The BJ6490D from Beijing Automotive, which Wang Chuanfu purchased, is a product of the “863 Plan.” At the beginning, national car companies were the pioneers in participating in new energy development plans.# The New Energy Vehicle Industry in China

In the early 21st century, after more than a decade of preparation, China’s new energy vehicle industry began to bear fruit. In 2000, a Hongqi sedan was transformed into a hybrid model in the Guangdong new energy test zone, and made its debut at the Beijing new energy vehicle exhibition the following year. At the same time, Dongfeng, Tongji University, Chery, and Tianjin Qingyuan also pushed their products to the public.

Many people may wonder, where is our protagonist Wang Chuanfu? Clearly, BYD, which started with battery business, should be the pioneer of this automobile energy revolution, and its transformation from a battery enterprise to a car manufacturer feels like what an internet enterprise would do in the current era of intelligent vehicles.

But the truth is always cruel. Electric vehicles were a pipe dream for all private car makers at that time. Here is a quote from Ms. Yi Ran’s response on Zhihu.

As early as 2007, BYD had already envisioned the ideal scenario for electric vehicle use in Elon Musk’s mind, similar to SolarCity, so why has it only just begun to take shape today? In fact, BYD is a car company with the dream of new energy vehicles. BYD was established on February 2, 2003. In 2004, it launched a pure electric MPV model – BYD ET, which appeared at the Beijing Auto Show of that year.

At the same time, BYD also launched an almost production-ready pure electric sedan EF3. These little-known models were much earlier than the well-known BYD e6 and F3DM models that came later.

Facing a dream from 25 years ago, “stopping production of fuel cars” is just the first step taken by BYD. Therefore, “love” cannot generate electricity, but “money” can. When BYD’s F3 ran through the streets of China, we always joked about BYD with the punchline “one Corolla lasts ten years”. In fact, BYD was in a very difficult situation. Electric vehicles did not exist in the market at that time. No matter how much investment was made, it would not make a splash. They had to start over in the field of fuel cars, and learning was an essential process on the development path.

Setting Sail AgainAround 2010, BYD’s self-developed DM hybrid technology was successfully implemented. In 2009, BYD’s pure electric sedan, the e6, was launched in the Chinese market. While maintaining its normal operation with fuel vehicles, BYD never gave up on R&D in energy technology. Finally, after 12 years, DM and EV achieved the “two legs, same pace” strategy.

In the new energy industry, BYD has achieved high integration of the upstream, midstream, and downstream sectors, forming a closed loop of the entire industrial chain. In terms of battery materials, it covers lithium ore resources; and in terms of R&D, BYD independently develops batteries, motors, control systems, engines, and transmissions, with simultaneous vehicle production.

Regarding chip issues, as early as 2009, BYD initiated a plan to develop its own chips. After several iterations, by the end of 2021, mass production of IGBT 5.0 technology had been achieved, making BYD the only domestic automaker with a complete IGBT industrial chain. At the same time, BYD’s independently developed MCU vehicle-grade intelligent control chip reached over 10 million units produced by 2021.

On March 9, 2020, BYD launched the “Blade Battery.” From that moment on, BYD began to fully leverage its advantages as a battery supplier. The “Blade Battery” is known for its safety, long life, and long range. According to market feedback, sales growth of BYD’s new energy vehicles reflects the recognition of this technology by users and consumers.

In terms of power batteries, BYD is at the forefront of the world layout. According to data, BYD’s expected power battery production capacity in 2022 will exceed 70GWh. In terms of power batteries, BYD has served dozens of automakers worldwide as a supplier, including the long-established Toyota.

Wang Chuanfu once said in an interview that in the future competition among cars, electrification is the first half, and intelligence is the second half. After halting the production of fuel vehicles, BYD still has a remarkable sales performance. It is no exaggeration to call it a leader in the first half of the competition.However, this is only the first half, the competition in the field of vehicle-mounted artificial intelligence, such as autonomous driving and intelligent cockpits, has just begun. What kind of performance will BYD present? The next 25 years are definitely worth looking forward to.

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.