Wang Chuanfu needs business partners

Tide Business Review

·2024-12-11 13:51

Are suppliers still willing to support the trend of intelligence?

In November, BYD celebrated its 30th anniversary with the production of its 10 millionth new energy vehicle. In addition, BYD sold approximately 506800 new energy vehicles this month, a year-on-year increase of 67.87%.

BYD is undoubtedly the "king" of China's new energy vehicle market.

This is thanks to a huge decision made by Wang Chuanfu four years ago, "I won't make gasoline cars anymore, only new energy vehicles

He laid out in advance, leading other car companies in everything from three electric technology to factory construction. BYD, which seized the opportunity, achieved standardization, reduced costs, and gained a voice in the industry by integrating the industrial chain, establishing a sound system.

This also led BYD to initiate a price war among car companies.

Most car companies, especially the new forces in car manufacturing, do not have the industrial chain advantages like BYD. If they don't lower their prices, they will die, and if they lower their prices, they will lose money. In order not to be left too far behind by BYD and to survive, we can only grit our teeth and lower our prices.

In this way, while the average price of BYD bicycles decreased, its market share increased, and its revenue and profits also skyrocketed, making real money in the price war. In the first half of this year, BYD's semi annual report showed that its profits were still growing.

However, car companies that follow the trend and lower prices find it difficult to be happy. The vast majority of car companies are losing money, and in the future, more than 80% of Chinese domestic brands will face closure and merger.

Under the impact of the price war, component suppliers have also been greatly affected. They are becoming increasingly afraid to speak loudly in front of their elder brother BYD.

Many people who claim to be suppliers of BYD have revealed on social media that BYD is constantly extending its payment terms, poaching technical talents from suppliers, and using supply chain finance to gain more benefits.

This statement doesn't seem to be groundless.

A supplier who dares to challenge

According to BYD's 2024 semi annual report, its total liabilities reached 535.6 billion yuan, with a debt ratio of 77.47%. It is worth noting that this is not bank loans or other borrowings.

This is the corresponding payable loans from component suppliers due to the increase in production capacity and sales volume, as well as accounts payable for purchasing land to expand production rooms and equipment.

On September 30, 2024, BYD's payable notes and accounts reached 240.5 billion, of which 237.5 billion was payable. In the past three years, its accounts receivable have continued to rise and the increase has not been small.

According to Bloomberg's statistics on the average payment time for mainstream electric vehicle (EV) manufacturers in the Chinese market to their suppliers, BYD's payment time has approached 300 days in 2023, while Tesla's payment time has remained at around 100 days in recent years.

To some extent, the risk of BYD's price war has been transferred to its competitors. It is not difficult to understand why, on the occasion of Wang Chuanfu's 30th anniversary of entrepreneurship, some suppliers stepped forward to add obstacles and refused to continue lowering prices.

Not all friends are soft persimmons, or they all value BYD's sales scale. After all, any large enterprise will have weak areas.

BYD is negotiating with suppliers at the end of the year, hoping to lower prices mainly for electronic control and sensor suppliers, with a quantity of around dozens.

Like traditional automotive parts suppliers, such as tires or glass, holding onto BYD's thigh, they can eat meat or drink soup. Due to the quality of the car body, BYD will not aggressively lower the price. If a component supplier in a certain category dares to challenge, it indirectly indicates that BYD may have weaknesses and limited say in this field.

In fact, it is true.

Friend merchants of roll value promote intelligence

In August of this year, the launch of the 2025 BYD Seal lowered BYD's high-end intelligent driving model to the 200000 yuan range. And Xiaopeng Motors has already established the reputation of "the only high-end intelligent driving under 200000 yuan" with Xiaopeng MONA M03.

Another off-road vehicle, the Leopard 8, is equipped with the Huawei Qiankun Intelligent Driving ADS 3.0 system and has a starting price of 379800 yuan. This also reflects BYD's lack of intelligent driving capabilities, which means that the product cost is extremely high.

It cannot be denied that under multiple cost controls, BYD's sales have continuously reached new highs and are expected to exceed the sales target of 4 million vehicles for the whole year of 2024.

But car companies such as Xiaopeng and Huawei have shifted their focus to the field of intelligence, seeking their own voice.

At the 2024 Future Automotive Pioneer Conference, Yu Chengdong stated that BYD should be the world's number one car manufacturer due to its ultra-low cost. He emphasized that Hongmeng Zhixing should focus on value, especially in terms of intelligence.

On November 30th, GAC Group and Huawei signed a strategic cooperation agreement for intelligent vehicles, and the two sides signed a deepening cooperation agreement. At present, Huawei's advanced intelligent driving technology has been installed in 11 car brands and over 15 models.

Xiaopeng has also regained his confidence by leveraging the advantages of intelligence. New car manufacturers such as NIO and Ideal, as well as established car companies such as Great Wall Motors and Changan, have successively entered the urban NOA field battle, each with their own expertise in technology.

However, BYD does not have an advantage in the field of advanced driving and lags behind its competitors in urban NOA.

This is also due to Wang Chuanfu's directional mistake in intelligence, which even affected the process of high-end development.

Advanced intelligent driving that is one step behind

At BYD's financial report exchange conference in early 2023, Wang Chuanfu bluntly stated, "Autonomous driving is nonsense. Making a fool of oneself is all deception. It's the emperor's new outfit

Half a year later, Wang Chuanfu felt a sense of urgency brought about by the industry trend. He changed his mind during an internal meeting and explicitly upgraded "smart driving" to BYD's core strategy.

Subsequently, BYD launched its independently developed "Eye of the Sky" advanced intelligent driving assistance system, which was installed on the Tengshi N7. But in terms of sales, both N7 and N8 have average performance. The main reason is that vehicles of the same price range are equipped with higher-level intelligent driving systems, which perform better in terms of intelligence.

In early 2024, BYD proposed vehicle intelligence and developed the intelligent architecture "Xuanji" that integrates intelligence and electricity, as well as the first dual cycle multimodal AI Xuanji large model.

This architecture integrates multiple technologies in the direction of electrification and intelligence, including EasyFour, Yunlian, body systems, intelligent cockpit, and intelligent driving. However, compared with Huawei's automated ecosystem, it is still not comprehensive enough, and there is also a gap with car companies such as Xiaopeng and Ideal.

Last year, companies such as Ideal Auto and NIO launched advanced intelligent driving features, reducing reliance on high-precision maps and achieving the implementation of NOA in more cities.

In early November, the newly launched Xiaopeng P7+comes standard with advanced intelligent functions across the entire range, which not only eliminates high-precision maps, but also can handle complex road conditions. As long as you purchase a car, you can use the highway and city NOA functions.

BYD only has high-end models equipped with advanced intelligent driving functions. To some extent, top tier manufacturers of advanced intelligent driving technology such as Xiaopeng and Huawei will take away some of BYD's users.

This may be something that troubles Wang Chuanfu. He later said, "Cars were electrified in the first half and intelligent in the second half

According to iResearch Consulting's prediction, the penetration rate of advanced intelligent driving is expected to exceed 25% by 2025. Currently, the market is in the blue ocean stage and is a battleground for manufacturers.

Nowadays, intelligent technology is rapidly penetrating into mid to low price models, and entry-level electric vehicles priced around 100000 yuan are also equipped with autonomous driving functions. Intelligence is no longer exclusive to high-end models.

For example, models such as Xiaopeng G3i, GAC Aion Y, and Chery QQ Ice Cream have lowered their profile on basic intelligent driving functions and quickly entered the mass market, equipped with high-speed navigation, automatic parking, and other functions.

For BYD, if it cannot achieve intelligent popularization in the main price range of 100000 to 200000 yuan, it will be difficult to maintain a leading advantage in the future market.

High end intelligent driving is difficult to equip with mid to low end models

At the shareholders' meeting in June this year, Wang Chuanfu stated that BYD has invested nearly 5000 R&D personnel and plans to invest 100 billion yuan in cutting-edge technologies such as generative AI and end-to-end big models in the future, in order to maintain competitiveness in the wave of intelligence.

At the 30th anniversary press conference, Wang Chuanfu expressed his emphasis on BYD's intelligent driving technology.

BYD has partnered with Nvidia, Huawei, and other companies, and has recruited Liu Yi, the former head of parking regulation business at Xiaopeng Motors, to join the team responsible for the self-developed intelligent driving regulation business.

BYD has also established a forward-looking department to focus on end-to-end technology implementation. At the same time, two self-developed intelligent driving teams, the "Tianlang" R&D department and the "Tianxuan" development department, will be merged into one.

According to Interface News, the core focus of the self-developed team is currently on the mass production and landing of advanced intelligent driving on low-end platforms, with the latest goal of adapting 50 models by March next year. Zhang Zhuo, General Manager of BYD Ocean Network Sales Division, revealed to the public that he hopes to install an intelligent driving system on Seagull to truly achieve equal rights between technology and intelligence.

Wang Chuanfu said in public that only by popularizing intelligence to a wider price range can we further consolidate our market share.

However, BYD's transformation journey is not so easy.

Rich intelligent driving data can drive algorithm progress, and AI computing power has become the key driving force determining algorithm iteration speed. In addition, the high cost of LiDAR and light map technology makes it necessary to overcome the challenge of relying solely on visual networks, and BYD also needs time to overcome these technical difficulties.

The core consumer group of entry-level car models is extremely price sensitive, and even a few thousand yuan extra can affect purchasing decisions, which may not be easy.

The success or failure of this strategy lies not only in the adaptation and cost compression capabilities of intelligent driving technology, but also in BYD's ability to quickly adapt to the needs of the mid to low end market and find a balance between intelligent experience and cost control.

The market position of BYD's high-end models is also not reliable.

Now, BYD's high-end price range of over 200000 yuan is being blocked by intelligent terminal host manufacturers such as Huawei and Xiaomi, while the price range of 150000 to 250000 yuan in the hinterland cannot stop new forces such as Zero Run and Xiaopeng from penetrating deeper.

If BYD cannot maintain the sales of high-end models above 200000, it may be difficult to support the scale of solid-state battery installation, and it will also be difficult to achieve rapid cost reduction and technological iteration optimization of solid-state batteries.

Solid state batteries are regarded as the next generation battery technology due to their high energy density, long lifespan, fast charging capability, and higher safety. This new type of battery has high research costs and high construction costs, requiring the sales scale of high-end car models to diversify costs.

Nowadays, domestic and foreign car companies are accelerating the research and development of solid-state batteries. Foreign car companies such as Toyota and Nissan have entered the trial stage of solid-state batteries, and domestic companies such as Huawei and CATL have announced relevant patents to the public. Almost all car companies have high hopes for solid-state batteries.

At present, mainstream battery companies in China have successively announced the mass production schedule of solid-state batteries, most of which are concentrated between 2026 and 2030.

BYD is also slower than other car companies.

Take care of the suppliers more

The current new energy vehicle industry has faster technological iteration. Whoever leads in technology, uses it properly, and has a high cost performance ratio can seize the limelight for a while. Even with BYD's size and position in the industry chain today, Wang Chuanfu has not reached the time to sleep soundly.

Value creation and upgrading products may be the only choice for car companies to survive.

But when Wang Chuanfu catches up with the wave of intelligence, are suppliers still willing to support him?

BYD can occupy supplier accounts and prolong payment cycles. The management teams of various departments may have already immersed themselves in this "privilege", and may even cultivate a management atmosphere that is satisfied with the status quo. There may also be corruption and a situation of unity and supremacy.

BYD may take more care of its suppliers in the development of intelligence and solid-state batteries. Learn from Toyota and establish long-term stable cooperative relationships with suppliers. This relationship is based on risk sharing and benefit sharing, which can motivate suppliers to invest in research and development and process optimization, and consolidate their industry position.

reference material:

1. BYD exerts extreme pressure on suppliers, may become a major international concern for Fortune Chinese website

2. Changan President: Out of 71 passenger car brands, only 3 are profitable. In the future, over 80% of Chinese brands will face closure. Fast Tech

This article is from the WeChat official account "floriyang01" (ID: daily case). The author: Tim， Editor: Ray， 36Kr is authorized for release.

The viewpoint of this article only represents the author himself, and the 36Kr platform only provides information storage space services.

王传福需要友商