Pressing “Ning Wang”, trillions of “Di Wang” are coming

Author: Zhou Zhiyu

The second trillion-dollar company in China’s new energy industry chain was born.

On June 10, BYD’s share price hit a record high, with the highest intraday share price of 350 yuan per share, and its market value exceeded one trillion for the first time. This is also the second trillion-dollar market value company ushered in by the GEM after the CATL surpassed the trillion-dollar mark on May 31 last year. Prior to this, BYD had ranked third in terms of market value among listed car companies in the world, after Tesla and Toyota Group.

In just two years, BYD’s share price has risen from around 50 yuan per share, and has risen 7 times so far.

Behind this is the continuous increase in the penetration rate of new energy vehicles in China, and local governments, industries and capital have invested in this industry one after another. The industrial cycle rotates, and the story of human nature is vividly and delicately reflected in the capital market.

And this upsurge is still going on. Technology giants such as Apple, Google, and Baidu are gearing up for their efforts. The traditional “BBA” and the new force “Wei Xiaoli” continue to enter the market, and the stories of success and failure are staged one after another.

BYD, which is popular in the market, has its own secrets. At the recent shareholders meeting, BYD Chairman Wang Chuanfu revealed its strategy, which is “fast”.

“Now it’s not the big fish that eats the small fish, but the fast fish that eats the slow fish.” Wang Chuanfu believes that overtaking can only be done in the fast process.

That is to say, at this stage, for players in the new energy industry, scale and market share are the core criteria for evaluating a company. Whether it is a car company, a battery manufacturer or a manufacturer in other links, in the rapid growth period of the industry, once it falls behind, it will be a “lost decade”.

BYD’s recent operating data is very vigorous. In the first five months of this year, BYD sold more than 500,000 units, reaching 507,314 units. Especially in the past three months, BYD’s average monthly sales have remained above 100,000 units, and sales in May hit a new high of 114,200 units.

With the continuous improvement of BYD’s follow-up production capacity, BYD’s conservative sales volume is expected to be 1 million units this year, and it also has the ambition to hit 2 million units.

A meeting minutes obtained by Wall Street News showed that at the shareholders’ meeting on June 8, BYD’s management revealed that BYD’s undelivered orders are currently as high as 600,000 vehicles, and the delivery is expected to be 5-6 months.

Judging from the public information on production, after BYD’s new production capacity is put into production, the overall production capacity will increase to 2.2 million vehicles in 2022, and further increase to 3.6 million vehicles in 2023.

According to Wang Chuanfu, chairman of BYD, the process of electrification in China is accelerating. At this stage, whoever has more resources, a more complete supply chain, and products with greater advantages will win a larger market.

In the sales of new energy vehicles, Wang Chuanfu’s BYD is already dancing on the same stage with Musk’s Tesla, competing for high and low.

However, the forecast of car sales is not enough to support BYD’s trillion-dollar market value, after all, Tesla’s current price-earnings ratio is less than 100 times. In contrast, BYD’s current price-earnings ratio of more than 280 times is a bit expensive. Trillion “Di Wang” still needs to give the market more stories.

The capital market believes that business spin-off is another important point of view for BYD. Wang Chuanfu also said that the subsidiary only earns BYD’s money, which is not a skill. It is a skill that makes money from the market, and it means that the product is competitive.

The listing process of BYD Semiconductor is already in progress, and Fudi Battery and Fudi Power, BYD’s powertrain division, will also be listed at a mature time.

At present, the development momentum of Fudi battery is flourishing. According to data from market research firm SNE Research, BYD surpassed Panasonic and LG New Energy in the ranking of global electric vehicle battery installed capacity in April, and was only behind CATL.

On June 8, Lian Yubo, executive vice president of BYD Group, revealed that BYD will provide battery products for Tesla. This is the first time a company executive has confirmed the news since last year when BYD was rumored to supply batteries to Tesla.

The rise of the Ningde era is closely related to the surge in sales of Tesla, the largest customer. Battery manufacturers such as Panasonic and LG New Energy, which have been ranked first in the global power battery list, have also received large orders from Tesla first, and have gradually been recognized by the market, standing out from the market.

If BYD successfully enters Tesla’s battery supply system next, it will also become Tesla’s second battery supplier in the Chinese market and the fourth battery supplier in the world. This is also an example of BYD’s technological breakthrough in the field of electrification.

With Tesla’s brand endorsement, the corresponding cooperation with other new energy vehicle companies will also be smoother. This is a first-mover advantage at a time when many car companies are seeking second and third supply.

According to the plans of various battery manufacturers, by 2025, the production capacity of CATL will reach 670GWh, that of BYD and Honeycomb Energy will also reach 600GWh, and the production capacity target of China Innovation Airlines is 500GWh. In the field of power batteries, a fierce competition of princes for hegemony has just begun.

However, the story of the penetration rate of new energy vehicles will eventually come to an end, and the power battery production capacity will also get rid of the dilemma of shortage. Intelligence will be a whole new story after scale. Whether the new energy vehicle can really become the “next-generation smart terminal” after the mobile phone as the industry expects is the most interesting part in the second half of the industry.

Wang Chuanfu is very confident in this. He said that the first half of new energy vehicles is electrification, and the second half is intelligent. In the field of intelligence, BYD will open up all core technologies and conduct full verification just like in the field of electrification.

Fifteen years ago, when Wang Chuanfu set his ambition to be “world first” in the auto industry, no one could have predicted how far he would go. Today’s trillion-dollar market value is a vote of confidence cast by investors, believing that BYD can go further in the rapid industry changes.

May “King Di” live up to the times.


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