At the just-concluded Guangzhou Auto Show, BYD was undoubtedly the biggest winner. Whether it was the 2.1 Hall fully booked by BYD, or the stage outside where emergency floating water performances were held, both were packed with visitors, as if saying: “50.000 monthly sales is far from the limit.”
To be honest, BYD’s achievement of 500.000 monthly sales last month left all its critics speechless. Many people—whether BYD fans or detractors—did not believe that BYD's sales would explode again in 2024. However, what no one expected was that within just 10 months, BYD had already surpassed its total sales from the previous year.
It’s worth noting that BYD’s annual sales of over 3 million vehicles last year was already a massive feat. It was 1.6 times more than the second-place competitor and even exceeded the combined sales of the 8th to 10th ranked companies.
Moreover, although BYD set off a boom in the PHEV market and enjoyed tremendous market dividends, it’s been three years since the launch of its Super Hybrid DM-i in 2023. and all the other carmakers capable of following suit have done so. The market has shifted from blue to red, and competition has immediately intensified.
In such an environment, it’s already remarkable that BYD was able to maintain its sales of 3 million vehicles.
What’s even more surprising is that in 2024. BYD continues to show strong growth resilience, with monthly sales increasing by more than 30% year-on-year. This explosive growth, this miracle created by BYD, is as unbelievable as Mount Everest suddenly rising to 9.000 meters.
“I really don’t understand. So many brands are relentlessly chasing after BYD, but instead of taking market share from BYD, they can’t even suppress its rapid growth,” I overheard a colleague complain at the BYD Ocean Network’s third anniversary celebration when BYD released its October sales figures.
“In the background music of BYD, how do you defeat BYD?” I replied.
01. BYD's "From 0 to 1" Is Also the "From 0 to 1" of the New Energy Industry
For a company to go from 0 to 1 is not so difficult, but it's not so easy either. Take the automotive industry, for instance. If you have sufficient startup capital and a mature supply chain, it’s not hard to produce a car that can reach the market. But for an entire industry to go from 0 to 1. that’s really difficult. It’s like a chef wanting to cook, but the market doesn’t even have the basic tools—pots, bowls, and plates—making it impossible to get started.
What makes BYD great is that when it started producing new energy vehicles, the industry was essentially a blank slate. BYD used its own development to drive the growth of the entire new energy sector.
When BYD was founded in 1994. there were very few battery manufacturers, and most of them had to rely on imports. At the time, the global lithium battery industry had just begun to shift from Europe and the U.S. to Asia, and Japan held the core technology. BYD entered the field at that time, and it was destined to proceed alone.
“From slurry machines, winding machines, to injection machines and laser welding machines, almost all of the key production equipment on the entire production line was made by us,” recalled Wang Chuanfu, reflecting on those early days. This was how BYD created the world’s first manual lithium-ion battery production line, filling a technological gap in China and becoming the first company in the country to mass-produce lithium-ion batteries.
BYD’s investment in battery technology laid the foundation for its dominance in the new energy vehicle market.
Once BYD mastered battery technology, it began thinking about how to integrate the batteries into cars.
In 1996. the Guangdong Provincial Government formed an "Electric Vehicle Coordination Group." BYD, being known for its battery production, was included in the invitation list. BYD lived up to expectations, successfully installing nickel batteries into a test vehicle by 1997. and lithium-ion batteries into another test vehicle by 2002.
No one expected these vehicles to eventually become the prototypes for today’s widely popular new energy vehicles.
In 2003. BYD acquired the Qin Chuan Automobile Factory in Xi'an, Shaanxi, and officially entered the car manufacturing business. Although BYD’s initial goal was to produce electric vehicles, the electric vehicle industry was still very immature at that time, and gasoline cars were relatively more developed. As a result, BYD continued to produce gasoline cars to survive while also persisting in the development of electric cars in an effort to change the energy structure of the automotive industry.
The year 2008 was pivotal, not just because of the Beijing Olympics, but because BYD successfully launched the world’s first mass-produced plug-in hybrid electric vehicle, the F3DM. It later introduced the e6. China’s first mass-produced pure electric vehicle, which entered Shenzhen’s taxi fleet in 2010. reaching 800 units by the end of 2011.
The commercialization of the e6 also forced BYD to consider the charging infrastructure for pure electric vehicles. In 2008. BYD introduced a 2kW AC slow charger based on a 220V household outlet, marking the industry's first step from nothing to something. In 2010. BYD also launched the industry’s first 50kW DC fast-charging station.
What followed is history. Even when the market was highly skeptical about new energy vehicles, especially plug-in hybrids, and even when BYD's profits sharply declined, pushing the company to the edge, BYD never gave up on electric vehicles. It persisted through thick and thin for 30 years, eventually reaching the light at the end of the tunnel.
Not only did BYD achieve a breakthrough from 0 to 1 in electric vehicle development, but the entire new energy sector did as well. BYD can be said to be the founder of the entire new energy vehicle industry. During this journey, BYD moved forward alone, but also laid a solid foundation for its vertical integration capabilities.
02. The Advantage of Vertical Integration Enables BYD to Have Pricing Power in Electric Vehicles
On January 11. 2021. despite the cold weather in Shenzhen, where temperatures were only 9°C, BYD’s headquarters was bubbling with excitement.
That night, three vehicles equipped with the super hybrid DM-i system were officially launched. Among them, the Qin PLUS DM-i, after subsidies, was priced at just ￥107.800. setting the lowest price ever for a plug-in hybrid vehicle, and officially starting a revolution against traditional gasoline vehicles.
Bringing the price of a plug-in hybrid vehicle down to the level of its gasoline counterparts was a shocking feat at the time. After all, plug-in hybrid vehicles have both an engine and a transmission, which are specific to hybrid systems, along with an electric powertrain that includes batteries, motors, and electronic controls. Just in terms of hardware, plug-in hybrids should be much more expensive than gasoline cars.
But how was BYD able to bring the price of plug-in hybrids down? The answer lies in its vertical integration capabilities.
In car manufacturing, to use a quote from Luo Yonghao, most companies are “integrators of parts suppliers.” After determining the product positioning and R&D, the automaker needs to source components from different suppliers—for example, transmissions from Aisin, ESP from Bosch, tires from Michelin, and so on.
However, in the early stages of the new energy vehicle industry, many components were not available domestically, and automakers had to rely on foreign brands. But foreign brands were not only expensive but may not even sell to Chinese manufacturers. This forced BYD to develop and produce many of the necessary components in-house.
Some media jokingly said that apart from glass and tires, BYD almost manufactures all of its car components.
For consumers, the biggest advantage of vertical integration is lower costs. As Zhang Zhuo from BYD Ocean Network puts it, “We can reduce a lot of transaction costs, allowing us to maximize the benefits to consumers.” It’s like others buy vegetables to cook, while BYD grows the vegetables and cooks the meal, emphasizing self-production and self-consumption, and even selling the surplus.
In 2020. BYD bundled most of its business into separate companies under the "Fudi" brand: Fudi Power (motors, hybrid systems), Fudi Batteries, Fudi Vision (car lights, etc.), Fudi Technology (automotive electronics, chassis), and Fudi Molds, with the goal of supplying these products to the industry and becoming the "Bosch" of the new energy sector.
Self-production not only lowers costs but also offers the added benefit of being environmentally friendly, as there are no pesticides—essentially, it’s healthier! Beyond reducing costs, BYD's vertical integration gives it a natural advantage in vehicle performance, especially in areas such as smart features.
03. In the Second Half of the Game, Smart Technology, BYD Will Go Further
When purchasing external parts, there is a common industry rule: even if you buy a component, it doesn’t necessarily mean you get access to all of its features.
Take the transmission in gasoline cars, for example. Even with the same transmission, some cars have the function of parking in neutral, while others do not, meaning that the latter will experience noticeable engine vibration at traffic lights. This is because the functionalities of many components are incremental.
To unlock more advanced features, you not only need money but also patience. Suppliers and manufacturers do not always have an equal relationship, so if an automaker lacks bargaining power, it must tolerate delays from suppliers, potentially missing product launch deadlines and losing market opportunities.
BYD has fully realized this situation and is determined to take charge of its destiny. By directly developing new energy vehicle technologies and offering them to third-party suppliers, BYD has ensured that it does not have to compete with competitors in terms of software and smart functions. BYD's most significant innovation now lies in the integration of powertrains and smart capabilities, creating vehicles that are beyond just driving machines.
Ultimately, the ability to lead this change comes from BYD’s industry-leading position. Will competitors be able to challenge BYD’s supremacy?
