BYD: Sales champions are difficult to hide behind the transformation anxiety

In the 2018 China Electric Vehicles 100-member forum, Wang Chuanfu, known for his compelling speeches, made a new and controversial statement. As the CEO of BYD, he urged the government to provide more support for plug-in hybrid vehicles, including financial subsidies and the removal of consumption taxes. However, Yang Yusheng, an academician from the Chinese Academy of Engineering who attended the event, challenged this by stating that plug-in hybrids are not considered new energy vehicles. Let’s explore this topic with insights from a car electronics editor. Wang Chuanfu’s call for policy changes has sparked mixed reactions within the industry. Some view it as a reasonable suggestion from a leader in the new energy sector, while others suspect it may be a move to benefit BYD itself. With the current Chinese policy gradually phasing out subsidies for new energy vehicles, Wang’s remarks have drawn considerable scrutiny. Is there something behind these statements that reveals BYD’s growing concerns about its own transformation? Despite being a sales leader, BYD is not immune to pressure. The company has been a key player in the new energy vehicle market for years, holding a 13% share globally. It has expanded into Europe, the U.S., and Japan, becoming the first Chinese automaker to enter those markets. Its electric vehicles are now sold in over 50 countries, and domestically, more than half of its sales come from non-subsidized cities. BYD also holds a 70% market share in high-end new energy vehicles, and its cloud-track technology has seen major breakthroughs this year. In 2017, BYD sold over 113,669 new energy vehicles, surpassing its target of 100,000 units. This achievement made it the top-selling new energy vehicle brand in China, and it became the first domestic automaker to exceed 300,000 cumulative sales in the category. However, despite its success, BYD faces increasing competition. Traditional automakers like BAIC, Geely, and SAIC have started to invest heavily in the new energy sector. Even companies like Zhongtai, which were previously less involved, have entered the battery market with significant investments. Meanwhile, new players such as NIO, XPeng, and Li Auto have gained attention through strong fundraising and product launches at events like the Consumer Electronics Show. BYD's market focus has largely been on electric buses and hybrid passenger cars, with fewer models in the pure electric passenger car segment. The current subsidy policies favor pure electric vehicles over hybrids, which puts pressure on BYD's profitability. In 2017, the company reported a net profit decline of 23.75% and 23.82% in the first half and third quarter, respectively, with non-core profits falling by over 40% year-on-year. Currently, plug-in hybrid models account for half of BYD’s 300,000 new energy vehicle sales. While they perform well, their presence in the pure electric passenger car market remains limited, and their profitability is still low. In contrast, SAIC New Energy, which started later, has surpassed BYD in terms of profitability. BAIC New Energy saw a 50% year-on-year increase in sales in 2017, outpacing BYD’s performance. As the new energy vehicle market becomes more competitive, BYD must navigate challenges from both traditional and new entrants. Companies like NIO and XPeng are pushing the boundaries of innovation, while international giants are also entering the fray. With evolving policies and a rapidly changing landscape, BYD will need to adapt quickly to maintain its leading position. The pressure is mounting, and the race for dominance in the new energy sector is far from over.

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