Why does BYD's evolution fuel vehicles become a burden?
"Stop production of fuel vehicles from March 2022."
Just entering April, BYD publicly announced the end of the brand's nearly 20-year fuel era, and became the first car company in the world to announce the discontinuation of fuel vehicles.
At the moment when fuel vehicles are competing with new energy sources, it is not surprising that BYD has left its burden and chose to go to hybrid and pure electric, but the market ripples caused by the "abrupt stop" have not been settled for a long time.
A week later, BYD's Han series of pure electric and hybrid models were officially launched, with prices ranging from RMB 215,800 to RMB 329,800.
In 2022, BYD has an "ambitious" goal of selling 1.5 million vehicles.
By comparison, BYD sold more than 600,000 vehicles last year.
"Several new cars will be released in 2022. This goal is not out of reach." A person close to BYD told the Beijing News Shell Finance reporter that raising the brand image is still very important for BYD at present. New brands, technologies and products , which also means that the profit performance of the brand in 2022 may still not be too good.
The wheels of the new energy vehicle era can no longer be stopped.
Over the past year, auto giants have announced that they will stop production or sales of fuel vehicles in the future almost at a frequency of "one a month".
"2021 can be said to be the first year for international car companies to transform into new energy vehicles." According to experts, in the context of global environmental protection, the speed of new energy "fire prairie" will only continue to press the fast-forward button.
Beijing News Shell Finance reporter Bai Haotian Linzi
"The Eve" Before the Fuel Cut: The Fuel Vehicle Has Been Exited
"I came to the BYD 4S store two years ago. In the past two years, our 4S store has hardly sold pure fuel vehicles." Recently, a BYD Dynasty.com sales specialist in Beijing was not surprised that the production of fuel vehicles was stopped. In his opinion, Fuel cars are long gone.
"Our hybrid models are selling very well, and now there is a large backlog of orders, and some models have to wait for about 3 months." According to the sales specialist, hybrid models are a selling point.
"In a market like Beijing with a relatively high level of development, relatively high income levels, and some policy restrictions, users pay more attention to BYD's hybrid and pure electric models than fuel vehicles.
Front-line salespeople are keenly aware of changes in the industry.
"I worked at BYD for 3 years. I first worked on Dynasty.com, and then I was transferred to Ocean.com. At first, I sold fuel vehicles for a period of time. The changes in the past few years are really great." Another BYD Ocean.com sales specialist in Beijing told Shell Financial reporters, in the past, when introducing products, it was necessary to memorize the parameters. Now the brand power has come up, and users have a high understanding of the products.
However, almost no one asked about fuel vehicles.
The salesperson recalled that when he first came to BYD, the fuel versions of Song Classic, Song Pro and other models were still on sale, and there were many users at that time.
In terms of product quality, there are often feedback problems from car owners, which can cause some headaches.
A reporter from Shell Finance found that in the past year, BYD did not update the fuel series of other models except for the public release of Song's fuel vehicles.
Signs of the "brake" of fuel vehicles have already appeared in 2021.
In October of that year, when a reporter from Shell Finance visited a BYD 4S store in Langfang, Hebei Province, he learned that there were basically no fuel vehicles in the store. Except for Song series models that were still accepting orders, there was only a manual F3 with a price of 38,800 yuan. .
"This is the last car in stock in the store. It is estimated that production will be discontinued later. If you like it, take it away." The sales specialist introduced to the Shell Finance reporter.
The outside world expected the electrification of the auto industry to be aggressive, but they did not guess that BYD would quickly and decisively put an end to the production of fuel vehicles.
At the 2021 Electric Vehicle Hundred People's Meeting, BYD founder Wang Chuanfu said that as the battery, motor, electronic control and other technologies of electric vehicles have become more and more mature in recent years, acceleration, noise, energy consumption, maintenance convenience, intelligence and overall Life cycle cost and other aspects have surpassed fuel vehicles in an all-round way, and the time is ripe for electric vehicles to fully replace fuel vehicles.
Also in June of this year, in response to the news that "future fuel vehicle planning has stopped, and will be fully replaced next year", BYD refuted the rumors - there is no such plan at present, because the current market and consumers have demand, partner dealers have need.
"This (stop production) news is quite sudden." An insider close to BYD's dealer told Shell Finance reporter that for BYD, in general, fuel vehicles have a "retraction" factor in profit, "Han's New energy can be sold for nearly 300,000 yuan, but if it is a fuel version, it will definitely not be able to sell at this price.”
On April 3, BYD announced that it will stop the production of fuel vehicles since March, and will focus on pure electric and plug-in hybrid vehicles in the automotive sector in the future.
That night, BYD released a production and sales report. In March this year, BYD’s production and sales were 106,700 and 104,900 respectively, of which the production and sales of fuel vehicles were “0”.
A reporter from Shell Finance found that BYD's total car sales from January to February were 185,600 units, of which new energy vehicle sales reached 180,500 units. Fuel vehicles have become "invisible" in BYD's product structure, while the price is close to 180,500. The price of the Song fuel version, which accounts for 3/5 of the fuel vehicle sales in a few months, is nearly 1/3 different from that of the Song New Energy model.
The current guide price of the fuel version of Song PLUS is 115,800-143,800 yuan, while the price of Song PLUS DM-i has reached 152,800-202,800 yuan.
On April 12, BYD responded to a reporter from Shell Finance that the development of new energy vehicles has become the general trend, and the first is the acceleration of electrification.
The penetration rate of new energy vehicles continues to increase, and we expect it to rise to 35% by the end of 2022.
BYD said that last year, the annual production and sales of BYD new energy vehicles exceeded 600,000 units, a year-on-year increase of 220%, ranking first in China for nine consecutive years.
In March of this year, the production and sales volume of new energy passenger vehicles exceeded 100,000, creating a record high.
For the rapid growth, BYD listed many reasons: on the one hand, there are more and more positive factors promoting the accelerated development of new energy vehicles in terms of technology, products, markets, policies, etc.; Pressures such as energy conservation and environmental protection, industrial transformation, etc., have more and more negative factors restricting fuel vehicles.
In addition, many key technologies such as blade battery, DM-i super hybrid and e-platform 3.0 have been launched and applied to new models.
Subscription items for fuel vehicles?
Force high-end price to reach millions
From a traditional car company to a technology car company, fuel vehicles have undoubtedly become a burden for BYD.
According to BYD's plan, in 2022, the company will form a brand network with a matrix of Dynasty, Ocean, Denza and a high-end brand with a product price range of 500,000-1 million yuan.
As the "e-net", which had previously focused on cost-effectiveness, was gradually replaced by Haiyang.com, BYD seems to be gradually stepping out of the sinking market with its own new energy vehicle products, hitting the mid-to-high-end market with elements such as intelligence, safety, and luxury.
Zhang Hong, secretary general of the New Energy Vehicle Branch of the Circulation Association, said in an interview with Shell Finance reporter that BYD's brand positioning is power batteries and electric vehicles. The fact that BYD is still producing fuel vehicles will bring some confusion to BYD's brand image. .
No longer producing fuel vehicles can further purify BYD's brand image, which is beneficial to the future development of BYD's new energy vehicles.
Data shows that BYD's fuel vehicle sales began to decline rapidly in 2021 when the DM-i models were launched one after another.
According to BYD's financial report data, in 2020, BYD's sales of fuel vehicles will be 237,300 units, and the sales of new energy vehicles will be 189,700 units. Fuel vehicles are still the "main force" of the brand, and sales rose by about 2% that year.
However, in 2021, BYD's sales of fuel vehicles will only be 136,348, and the sales of new energy vehicles will reach 593,745, a year-on-year increase of 200%.
In 2021, BYD will successively launch Qin PLUS DM-i, Song PLUS DM-i, Tang DM-i, Song Pro DM-i and other models. According to the data of the China Passenger Transport Association, only one model of Qin PLUS DM-i has sales volume. It reached 110,000 units, accounting for 3.4% of the industry's new energy vehicle sales.
A former BYD employee introduced to Shell Finance reporters that BYD's fuel vehicles should have been discontinued long ago, so that the brand image may have a new upgrade.
"I have the impression that the engine of LibyD's pure fuel vehicle has not been iterated for many years, and the fuel vehicle cannot sell to its competitors, so it is full of sighs. In addition, fuel vehicles and new energy vehicles have the same appearance, and the price is doubled, and users will inevitably Affected by the difference between the price of fuel vehicles and new energy vehicles." He believes that some brands of fuel vehicles are a bonus item for companies, but for BYD, it has become a deduction item.
Therefore, stopping the sale of fuel vehicles does little harm to BYD, and even helps the brand develop and improve profit margins.
In the past 20 years, BYD can be described as "born in the rough", and the brand has a long way to go.
Whether it is its own battery company or the acquired Qinchuan Automobile, it is not very famous in the C-end market. The labels on the brand are similar to those of many independent brands, and they are all "grounded".
Electric vehicle products in the early years were lackluster in terms of price and brand power. The high-end Denza brand established in 2013 also declined in cooperation with Mercedes-Benz.
At present, data from the Passenger Federation shows that the sales of one car of this brand and two configurations of gasoline and electricity will be less than 5,000 in 2021.
Today, with the rise of the national tide, the brand's own battery safety and Chinese-style design elements are popular among users, and the average price of BYD's bicycles will only increase to 150,000 yuan in 2021.
At the same time, the average price of NIO bicycles is about 410,000 yuan, and the average price of Mercedes-Benz bicycles is about 350,000 yuan. BYD still has a lot of room for improvement.
"After stopping the production of fuel vehicles, we will stabilize Dynasty and Ocean.com, and impact high-end through Denza and the new brands launched in the second half of the year." Zhang Xiang, dean of the New Energy Vehicle Technology Research Institute of Jiangxi New Energy Technology Vocational College, introduced to Shell Finance reporters.
"As BYD removes the burden of traditional fuel vehicles and raises the brand's style, its financial report performance will be even better."
BYD's financial report shows that in 2021, corporate profits will fall by about 28% to 3.045 billion yuan. Although it has been at a relatively high level in the past five years, there is still room for improvement.
In 2022, the company will hit the sales target of 1.5 million vehicles.
In contrast, in 2021, the company will sell more than 600,000 vehicles and accumulate 400,000 orders. The main problem at present is to expand production capacity.
Shell Finance reporter learned that BYD will launch seals with a price range of 200,000-300,000 yuan, a Denza MPV with a price range of more than 300,000 yuan, and a brand-new brand of 500,000-1 million yuan. The first model may be an off-road model.
This series of actions are all trying to brand up.
BYD's fuel vehicle team has also quietly transferred to the hybrid technology research and development team, continuing to work on the application of internal combustion engines in hybrid technology.
Zhang Xiang believes that in addition to discontinuing the production of fuel vehicles and launching new brands and high-end models, BYD's battery and chip technology also has a good reputation.
If combined with the comprehensive upstream and downstream businesses of the industrial chain such as commercial vehicles, cloud rails, and upstream raw material layout, as well as a large number of core technologies, in the next 3-5 years, the gap between corporate brand value and Tesla will gradually narrow.
Zhang Hong said that BYD gave people the impression that it was a technology-based enterprise in the past, and it did not pay as much attention to technology research and development in terms of brand marketing, brand planning and brand activities.
With the advent of dynasty series products such as Tang and Han, mid-to-high-end brands began to call for the building of BYD's brand.
In 2019, BYD established a brand management center for the first time, and in 2021, it established a brand and public relations department.
At present, relying on core technology and user trust, it is steadily developing the high-end market.
Zhang Hong believes that in order to achieve brand development, the key issue is how to distinguish or even cut it from the traditional brand image. It is very important for BYD to launch a new image in the future.
Local car companies electrify, scrambling to overtake in corners
In fact, my country's local enterprises have already entered the new energy track.
In the fall of 2009, the country's 10 millionth car was born in Changchun, shining golden orange.
That is to say, in this year when people celebrate China as a major automobile country, the fork between fuel vehicles and new energy vehicles has quietly emerged.
In November of that year, BAIC established Beijing New Energy Vehicle Co., Ltd. (hereinafter referred to as "BAIC New Energy"), becoming the first independently operated new energy vehicle company in China.
In December of the same year, Changan's first pure electric car, Changan Benben MINI, rolled off the production line.
Zhu Huarong, then vice president of Changan Automobile Co., Ltd., put forward an ambitious goal: within three years, Changan's new energy vehicle research and development and industrialization will invest 1 billion yuan to build an innovative industrial base.
In 2014, Changan Automobile will achieve production and sales of 150,000 new energy vehicles, and in 2020, it will achieve production and sales of more than 500,000 new energy vehicles.
In January of the following year, BYD's electric car E6 appeared on the new car catalog released by the Ministry of Industry and Information Technology, which also means that the E6 obtained a "birth permit" and became BYD's first pure electric car.
Perhaps the outside world does not realize that new energy will start a prairie fire for decades, making global auto giants stand at the crossroads where they need to make choices.
In 2017, BAIC New Energy, which has been established for many years, completed the B round of financing in July, and went public in the backdoor shortly after, becoming the "first stock of new energy vehicles".
Changan Automobile, which once released rhetoric, has become a car company that "eats crabs". In October 2017, it took the lead among traditional Chinese car companies to propose a "complete suspension of sales of traditional fuel vehicles".
At that time, Changan Automobile announced that it would invest more than 100 billion yuan in the new energy field in the next eight years, and launched a total of 21 pure electric models and 12 plug-in hybrid models.
Although looking back five years later, fuel vehicles are still very important to Changan Automobile, but this decision still leads the way in 2017.
After years of development, BYD has sold more than 10,000 vehicles for seven consecutive months in December 2017, and sold 116,200 vehicles in total throughout the year, leading the national new energy vehicle market.
In June 2018, Haima also announced its product plan, announcing that it will eliminate traditional fuel vehicles in 2025, and announced that it will launch a new energy modular platform after 2020. In the future, it will develop on the new platform, including compact SUV, crossover Brand new car.
In addition, FAW Group stated that it will accelerate the development of electrification, and plans to launch more than 50 new energy vehicles during the 14th Five-Year Plan period, including more than 30 self-owned brands.
In 2025, the sales volume of new energy vehicles will account for more than 20%.
Great Wall Motor also set the turning point in 2025. Before this year, Great Wall Motor will launch a total of 12 products based on five model platforms, including pure electric vehicles, plug-in hybrid electric vehicles and fuel cell vehicles, involving the Great Wall brand, beam Car brand and ORA brand products.
"Actually, my country's local car companies' new energy transformation is very early," Zhang Xiang analyzed to Shell Finance reporters that some local car companies in my country do not have deep car R&D accumulation and development advantages, and it is difficult to compete with traditional cars with a century of development experience. Comparing companies, but on the new energy track, everyone is new to it, so the new energy track is a direction that local car companies are very willing to develop and try to overtake in corners.
On the other hand, my country's policies are also supporting car companies to develop new energy vehicles, and at the same time, to a certain extent, they have put forward higher requirements for the development of fuel vehicles.
For example, Zhang Xiang said that the emission standard of fuel vehicles has been upgraded from National V to National VI, but local car companies such as Haima Automobile have limitations in terms of capital and technology to upgrade technology. It is better to directly switch to new energy sources.
In 2017, the Ministry of Industry and Information Technology and other five departments jointly issued the Measures for the Parallel Management of Average Fuel Consumption and New Energy Vehicle Credits of Passenger Vehicle Enterprises (referred to as "Double Credits"). Three years later, the five departments revised the credit management measures to further complete credit management. Mechanism, two kinds of points for fuel consumption and new energy are formulated, and points are set to assess the achievement of energy-saving information goals of enterprises: if car companies fail to meet the standards, they will generate negative points, and companies that meet the standards will generate positive points.
According to the current dual-point management measures, passenger car companies can only declare new products within the fuel consumption limit before their negative points are offset to zero.
In order not to be suspended from the declaration or even production of some products, there are several ways in front of the car companies. One is to offset the negative points by producing new energy vehicles, but it will take some time for the production capacity release and market sales of new energy vehicles.
The second is the average fuel consumption score within the enterprise.
In addition, the corresponding amount of positive points for new energy vehicles can be purchased from other car companies.
At the beginning of 2021, Zhu Huarong, chairman of Changan Automobile, publicly stated that due to the double-point policy, the double-points generated by the six major auto groups in 2020 are all negative, and the price of positive points for new energy vehicles continues to rise, so car companies have increased losses. It is a common phenomenon. Taking Changan Automobile as an example, in 2020, the profit will be reduced by about 4,000 yuan due to the double-point bicycle.
Zhang Xiang said that Haima Motor's share of fuel vehicles has continued to decline. On the one hand, it is the result of the transition to new energy. On the other hand, this has also become an opportunity for Haima Motor to overtake in corners and change the track.
"my country's requirements for energy conservation and environmental protection in the automotive industry have a long history, and the requirements for automotive energy consumption will become more stringent in the future." Zhong Shi, an analyst in the automotive industry, told Shell Finance reporter that the practice of double points is actually forcing enterprises to save energy. Emission reduction or economic costs, while traditional car companies generally have both fuel vehicles and new energy vehicles. In the future, they will increase their efforts to develop new energy vehicles to meet national requirements.
Today, electrification has become a global trend. If traditional car companies do not take the road of electrification, there is no other way out.
Cui Dongshu, secretary-general of the China Passenger Transport Association, suggested that domestic car companies should take electrification as their core goal, achieve a strong electrification transformation, and try to promote electrification development through stronger intelligence. In the short term, it is difficult, but " Accelerating electrification is the only core goal of business transformation.”
Will 2021 be the first year of transition to new energy?
Giants enter a period of iterative acceleration
In 2021, the global auto giants seem to be pressing the accelerator button to transform into new energy sources, and they have announced that they will stop production or sales of fuel vehicles in the future almost at the frequency of "one family a month".
First, in February, Jaguar Land Rover announced that it will transform into a pure electric luxury brand, and will no longer produce fuel vehicles from 2025.
In March, Volvo announced that it would go fully electrified by 2030, becoming a pure electric luxury brand, and that all pure electric models would be sold online only.
Volvo will "phase out all internal combustion engine (ICE) models from its global product lineup, including hybrids," and "commits to be the leader in the fast-growing premium electric vehicle market."
In April, Honda announced it would electrify all of its models by 2040, ending production of purely internal combustion engine vehicles, a move aimed at achieving carbon neutrality and advancing the development of zero-emission powertrain solutions by 2050.
Shell Finance reporter sorted out the car companies' plans for the Chinese market. Honda hopes to launch more than 10 electrified models in the Chinese market by 2023, and by 2025, it will occupy more than 50% of the market share of electrified models.
Since May, the top three Germans have been transformed.
The old luxury brand BMW announced that it expects to stop production of half of its current engine powertrains by 2025, and by 2030, half of its car sales will come from electric vehicles.
In June, the CEO of Volkswagen Audi announced that Audi would stop production of diesel, gasoline and hybrid cars from 2026.
The following month, Mercedes-Benz also announced that it will be fully prepared for full-scale pure electrification by 2030. From 2025 onwards, the architecture of all newly released models will be pure electric platforms, and each model will provide users with a choice of pure electric versions. .
In order to promote the above transformation, between 2022 and 2030, Mercedes-Benz will invest more than 40 billion euros in pure electric models.
Ultra-luxury brands are not far behind. Lamborghini announced at the beginning of the year that this will be the last year for Lamborghini to use traditional internal combustion engines. Lamborghini has allocated 1.5 billion euros for the transformation of new energy, and plans to launch pure electric models after 2025.
Also in June 2021, Volkswagen, a veteran German car company, announced that it would stop production of gasoline and diesel engine cars in Europe as early as 2033, in order to accelerate the development of electric vehicles.
"2021 can be said to be the first year for international auto giants to transform into new energy vehicles." Zhang Xiang said that in 2021, environmental protection policies in Europe and the United States will change greatly, and domestic new energy vehicles will also experience subsidy declines, increasing environmental protection in the world. In the context of this, car companies have announced plans to stop production and sales of fuel vehicles.
Zhang Xiang said that the fuel vehicles of Volkswagen and Toyota have brought a lot of profits to the company. Once the fuel vehicles are quickly "cut off", they will lose a lot of profits.
Therefore, in the process of transformation, enterprises also need to consider issues such as speed and sales.
In order to promote integration, some car companies try to use the same platform to build the same model to reduce market development costs. For example, Volkswagen's MEB platform can be produced in Europe or China, which can share the research and development costs. .
Cui Dongshu said that the European new energy vehicle market experienced explosive growth as early as 2020, and the sales of new energy vehicles increased by 120% year-on-year. The reason is that the strict requirements of EU regulations have forced German and French car companies to produce new energy vehicles in large quantities. Achieve a cliff-like decline in carbon emissions.
With the acceleration of the new energy process in the European market, new energy vehicles have replaced traditional vehicles to become a new market blue ocean, and the future development potential is huge.
According to the new EU emission regulations, from 2020 onwards, 95% of new cars produced by European automakers must meet an average carbon dioxide emission of no more than 95 grams per kilometer; in 2021, 100% of new cars must meet the above standards.
Failure to meet the target will result in a fine of 95 euros per gram of carbon dioxide per vehicle.
In fact, many countries have announced the timetable for banning the sale of fuel vehicles. Among them, the Netherlands, Germany, India and parts of the United States will ban the sale of fuel vehicles in 2030, while France and the United Kingdom will ban the sale of fuel vehicles in 2040.
The United Nations Climate Change Conference at the end of 2021 raised the issue of stopping the sale of fuel vehicles in 2040. At that time, Volvo, GM, Ford, Mercedes-Benz, BYD, Jaguar, and Land Rover all participated.
Cui Dongshu said that the subsidy intensity of new energy vehicles in major European countries is higher than that of China, which will become a strong guarantee for demand, and the carbon emission policy will be a long-term escort.
Among the top six European countries in terms of sales, except for Norway and the Netherlands, there are relatively strong subsidy policies and supporting tax incentives.
In this context, car companies have stepped up their efforts to transform their vehicles into electrification.