Electric fairy Wang Chuanfu

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Text/Wang Tsai

Source: slightly larger reference (ID: hyzibenlun)

BYD is a company that makes Japanese manufacturing suffer hardships. In the lithium battery market 20 years ago, it took advantage of China’s labor cost advantage to squeeze out the market share of Sanyo, Sony, and Panasonic, and dominated the lithium battery industry for more than ten years. In the field of new energy vehicles, BYD’s surpassing of Japanese cars is no longer a single cost suppression, but also includes strategic choices.

01

Times Dividend

China’s new energy vehicles usher in the ‘BYD moment’.

In the middle of the year, BYD’s market value exceeded one trillion yuan, becoming the first domestic auto brand to reach a trillion-dollar market value. With a record of 640,000 vehicles sold in half a year, it surpassed Tesla and became the world’s largest sales volume.

Mixed with the full market sentiment, in line with the public’s expectations, they all feel that there should be one or several Chinese companies to change the century-old pattern of the automotive industry and achieve corner overtaking on the new energy vehicle track.

BYD’s ‘first’ has become one of the symbolic events.

In the social network that is accustomed to join in the fun, ‘BYD’ has become a new round of scrambled traffic passwords. On Xiaohongshu, the blogger recommended its Dolphin series models. The content in the video shows that during the heavy rain in Zhengzhou, when other models are lying in their nests, the dolphins can continue to move forward in the stagnant water. ‘The Lonely Brave’ is the hottest image setting this year.

At station B, the master of Up was busy narrating the successful experience of BYD’s ‘Chinese brand’ and vindicating the ‘grievances’ it had suffered. In the barrage, Wang Chuanfu was called an ‘electric fairy’. Because Wang Chuanfu said that BYD is the first company in the world to master the core three-electrical systems of electric vehicles – battery, motor and electronic control. It is a Chinese car company with independent R&D and production capacity for almost all core components except tires and glass.

Young people describe Wang Chuanfu with a title with a middle-class atmosphere, not to express jokes, but to love BYD’s technical contributions.

A representative brand that came out of an era can best reflect the charm and core of that era. When Jobs introduced the iPod, rebellion was at the heart of it. It was a period when Silicon Valley was advocating the spirit of pirates. Individuality, freedom, adventure, and perseverance were far more attractive than the rice, noodles, grains and oils distributed by the company in the trunk of the car.

Disney’s “Pirates of the Caribbean” has a strong presence in the “Teen Choice Awards” in the United States, and won a lot of awards for best movie, best screenplay, best martial arts, best actor… Don’t talk about the gold content of the awards, the focus is on the influence of the youth group.

The iPod is a product that embodies this spirit. Users of iPods can freely choose a combination of songs, which is a rebellion against the record company’s ‘album’ system. The personal preference of the user trumps the will of the record company.

In this way, music tastes become ‘dominant’ social currency. Bush, then the president of the United States, also released his own playlist to win the favor of the American people. Moreover, the niche surpasses the popular and becomes a more sought after taste, which implies that a person has his own style, does not follow the trend, and listens to whatever song is widely spread.

Speaking of BYD, it has recently become a popular content recommended by the ‘algorithm’ to the public, because of the keyword of the era contained in it – ‘China’s self-confidence’. Honor, recognition, and glory for the country have become a strong style under the narrative of the big era. Under the new trend, brands with ‘technological bullshit’ are more able to hit user preferences.

Even this kind of ‘advanced’ in exchange is a corner of peace, a recognition that is only digested internally. However, after spreading a snowballing magnification effect, it can always ‘roll’ from one corner to another, and glue becomes a consensus.

02

Japanese company nemesis

The move to enter the Japanese market has once again magnified the ‘confidence in China’ represented by BYD.

This is related to BYD and the development of China’s new energy vehicle industry. According to incomplete statistics, in the past ten years, new energy vehicle companies have successively received nearly 150 billion yuan in subsidies from the Chinese government. The industry has grown from nothing, and is supported by the policy, and the bet is an opportunity to overtake in a corner.

Resources poured into the pursuit of the ‘Centennial Opportunity’, and car building became the new ‘favorite’ of the previous generation of middle-aged entrepreneurs. Car companies have become the career choice for more people. Lin Fan, CEO of Maimai, said that Internet talents are flowing into the field of new energy vehicles and chips.

BYD stood outside the finish line closest to the opportunity, waiting to make up for it and hand in a good result. At least in terms of sales, BYD doesn’t need to worry too much. A few months ago, Wang Chuanfu said at the shareholders’ meeting that BYD’s complete vehicle orders exceeded 500,000 units and were constantly increasing.

Today, when buying BYD cars, the test is the owner. The delivery cycle for buying a car may take 5 to 6 months. Some car owners who want to rush to pick up the car can buy a top-ranked BYD order on the second-hand idle platform for a few thousand yuan. More anxious car owners can only choose hybrid models of Japanese brands such as Toyota, Honda, and Nissan as an alternative. The Japanese car companies that have dominated the global sales list for a long time have become a spare tire option.

BYD is a company that makes Japanese manufacturing suffer hardships. In the lithium battery market 20 years ago, it took advantage of China’s labor cost advantage to squeeze out the market share of Sanyo, Sony, and Panasonic, and dominated the lithium battery industry for more than ten years.

In the field of new energy vehicles, BYD’s surpassing of Japanese cars is no longer a single cost suppression, but also includes strategic choices. Toyota chose hydrogen energy and BYD pressure-injected lithium batteries. Choices in different directions have brought about different outcomes for the two companies in new energy vehicles. In 2021, the global sales of hydrogen energy vehicles will total 15,500 units, which is about the delivery volume of Xiaopeng, Ideal, and NIO, the new Chinese car-making forces, in one month. Compared with the monthly sales of Yadi, it is one ‘0’ less.

Wang Chuanfu attaches great importance to strategy, and some media once described him as a ‘strategic master’. In the early years, BYD stole Nokia’s battery business from Sanyo, and subsequently became an OEM for Nokia. The cooperation of the two companies allowed Wang Chuanfu to observe Nokia closely and its ‘fall’. Wang Chuanfu said, ‘We have seen a lot of problems from the fall of Nokia, and it’s not because of quality problems. Nor is it a management issue. It’s a question of strategy, not Android, but Symbian’.

It is Wang Chuanfu’s long-cherished wish to surpass Toyota. He once made a bold statement, “BYD plans to sell more than 10 million vehicles in 2025, surpassing Toyota to become the world’s No. 1”.

Toyota has long been the target of car companies to catch up. Since its sales exceeded 10 million in 2014, Toyota has been a popular candidate for the global sales crown. After the decline of Volkswagen’s growth in 2019, Toyota is firmly seated in the sales crown. . Although electric vehicles are Toyota’s shortcoming, with fuel vehicles and hybrids, Toyota’s global sales will still exceed 10 million in 2021, or about 10.5 million.

A while ago, BYD entered the Japanese market and launched a local attack on Japanese cars. Rather than grabbing the market, it is more like a demonstration exercise, as Japan has had a shortage of power supply. At the end of 2016, Toyota sold all of its shares in Tesla and cancelled plans to jointly develop electric vehicles with it. Toyota’s external statement is that the company has turned to hydrogen energy and there is no need to cooperate with Tesla.

One of Toyota’s considerations in switching from lithium batteries to hydrogen energy is that after the Fukushima nuclear leak, nuclear power projects were shut down on the island of Japan, and electricity was tight. Tesla, which entered the Japanese market a few years ago, sold more than 5,000 vehicles a year at that time.

However, in a script that emphasizes ‘confidence’, going to the home field of the previous hegemony has a particularly symbolic meaning of challenge. It is self-evident in its motivation and agitation to emotions and people’s hearts.

03

Create a hit

At the product launch two years ago, BYD launched a blade battery, a lithium iron carbonate battery with a cruising range increased by more than 50% and reaching the same level as a ternary lithium battery. Wang Chuanfu personally stood for the blade battery. He said that the blade battery completely erased the word ‘spontaneous combustion’ from the dictionary of new energy vehicles.

The mainstream directions of lithium batteries for vehicles are lithium iron carbonate batteries and ternary lithium batteries. The former is the advantage of BYD, and the latter is the signature of the Ningde era. The battery life of lithium iron carbonate is average, but the cost is low and the safety is high. The ternary lithium battery has a higher battery life.

For new energy car companies with anxiety about battery life, the ternary lithium battery was once the best solution. Tesla and new domestic car manufacturers tend to choose it. Therefore, the Ningde era surpassed BYD in 2017 and became the new generation battery king.

Losing the ‘Iron Throne’ means losing trust and support, and BYD’s market value has plummeted from the end of 2017 until May 2020. One of the men behind BYD, Dong Chengfei, who was then the manager of Societe Generale Global Fund Management, was not firm enough and began to sell BYD. Societe Generale was the only public fund that participated in fundraising when BYD listed on the A-share market in 2011. Dong Chengfei’s choice is not difficult to understand. BYD’s ROE return is still poor even when it receives a large amount of government subsidies every year, and even the return on capital is close to bank deposits.

Until 2020, when the blade battery came out, BYD made a comeback in the field of lithium batteries.

The ‘Han’ of the BYD Dynasty series is the first to use a blade battery.

On the 5th floor of the Beijing Internet celebrity shopping mall, there are nearly ten exhibition halls of new energy vehicle brands, Xiaopeng, Ideal, and Nezha. Ne Zha and other new car-making forces and new independent brands from traditional car companies have gathered together. In March this year, BYD also joined in, occupying a corner of the exhibition hall. Only one Han EV Qianshan Cui limited edition is displayed in the entire exhibition hall, and the top price is 329,800 yuan.

Among the 300,000-level new energy vehicles, ‘Han’ has traffic blessings, and many business people do promotion. Yu Minhong, chairman of New Oriental Group, Cao Dewang, chairman of Fuyao Group, the “glass king” of automobiles, and He Youjun, son of the gambling king, all purchased the ‘Han’, which was delivered by Wang Chuanfu himself. Yu Chengdong, CEO of Huawei’s consumer business, also posted photos of his experience of ‘Han’ on Weibo. The person sitting in the co-pilot explaining it was Wang Chuanfu.

‘Han’ has become the most important model for BYD to reach the 300,000 mark, with sales exceeding 100,000 by the end of 2021. In the first half of this year, Han EV orders exceeded 300,000 units.

Explosive models are the most direct proof of identity for “China’s self-confidence”. A model that has not yet been successfully launched overseas has been recognized by sales, and BYD has used the market advantage of its home market. Wang Chuanfu waited until the era when domestic brands were popular, he once said, “I think the old problem that Chinese people look down on independent brands needs to be changed, because we have indeed changed now. Before buying a car, you can go to the store of the independent brand to see it. Look, go open it, and compare it again.”

Companies standing on the top of the wave must first choose the trend and mood of the times.

04

from ‘0’ to ‘1’

The ‘dream’ of new energy vehicles is given by capital.

Compared with Weilai, Xiaopeng, and Ideal, the three new car-making forces that took at least US$4 billion in financing from the capital market before the IPO, the amount that BYD took from the capital market was not huge.

Li Lu, the investor behind BYD, once said that Wang Chuanfu only used a loan of $300,000 to start the company, and there were no other outside investors until the listing. In 2008, Buffett acquired nearly 10% of BYD’s shares at a price of 1.8 billion Hong Kong dollars. In 2011, BYD listed on the A-share market, realizing the dual listing of Hong Kong stocks and A-shares, but only raised nearly 1.4 billion yuan.

BYD got big money from the capital market after 2016. In the same year, BYD issued nearly 15 billion yuan from the A-share market. In 2021, it will raise nearly 30 billion Hong Kong dollars in the Hong Kong stock market.

This is almost the main capital that BYD has raised from the market, but it is far from its main competitor Tesla. The latter has been listed for nearly 12 years and has taken at least US$17 billion from the capital market.

When Wang Chuanfu just started his business, he had contacted the industrial fund Huiya Fund, but due to the problem of financing quota, the first financing plan was in vain. He did not meet other investors later, and his cousin who was a securities investor later invested 3 million, which started the story of BYD.

That’s not the case with Tesla. This company, which was not born on the West Coast of the United States, belongs to the manufacturing industry, but it is one of the symbols of Silicon Valley. Musk has also become the new representative of the spirit of Silicon Valley.

It builds a global resource system with ‘consensus’ and integrates global financial, material and intellectual resources. It uses American technology and design advantages to establish a global supply chain system and a global market. It also integrates the advantages of different regions of the world. American factory, get the North American market and automated production mode. The Shanghai factory is mainly engaged in markets such as Asia and Africa, and uses China’s supply chain advantages to produce sales models. The German factory is mainly for the European market and high-end customers.

Tesla is a company that does its best to strive for multi-party cooperation. In 2008, on the eve of Tesla’s bankruptcy, Musk sent someone from Mexico to get an oil-burning Smart car and performed a ‘head replacement operation’ on it, and installed the Roadster’s drive unit and modified battery pack into the Smart car. inside.

It is a bespoke ‘service’ for incoming Daimler executives. Tesla makes Smart perform 100km acceleration, lifts the front of the vehicle, and the fancy operation is just to show the advantages of electric vehicles and win Daimler’s electric vehicle orders.

This is Silicon Valley’s ‘leverage’ thinking. With advanced ideas and concepts, all resources are pooled and leveraged, and the head effect is remarkable.

Twenty years ago, BYD fought against Japanese companies, and the winning weapon used was efficiency. To beat its rivals by improving efficiency and reducing costs, it’s called BYD’s vertically integrated model to be as self-sufficient as possible.

Today, the advantage of labor cost has gradually disappeared—the advantage of human resources is easily flattened by the supply chain advantage of the automobile industry for nearly a century.

Wang Chuanfu divided the development of new energy vehicles into the first half and the second half. The first half is the electrification of the car, and the second half is the intelligentization of the car. It reflects the development path of BYD, and for Tesla, regardless of the first half and the second half, it is also exploring autonomous driving while researching battery mileage. Electrification and intelligence are one.

The advantages of personnel and factories in the traditional manufacturing industry are not necessarily strong resources in the competition of new energy vehicles. In 2017, delivery problems had plagued Tesla, and with the opening of factories in Shanghai and Germany, the problem is no longer there. Because of efficiency and speed, it has been solved by manufacturing companies a long time ago. It is not a new problem that needs to be studied. It is good to use someone else’s answer directly.

The movie “The Martian” sets a survival problem for the protagonist, trapped alone on Mars. But it also gives its survival philosophy: when you are in a difficult situation, solve all the problems and you can go home. Enterprise competition, the key link is to solve the problem from ‘0’ to ‘1’, from ‘1’ to ‘100’, the test is to copy and promote.

The first condition is to determine clearly which problems solve the link from ‘0’ to ‘1’. Technology is not a dazzling skill. It will not create a first-class enterprise by ‘creating’ the former model in a high-efficiency and low-cost way.

Enterprises that have won the crown of new energy vehicles must grasp the trend of the times and solve the problems of the times.

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