BYD: split battery business independent operation

Wang Chuanfu decided to do an unprecedented major surgery on BYD. "BYD wants to split the power battery module and carry out the reform of the business department system. It is said that Wang Chuanfu, the chairman of the board, was accepted by Buffett." In May, such a news spread in the industry and became one of the most exciting news of the month. BYD has been in the closed battery business for a long time to open up, and indeed, it will usher in a reform in its development history. "Actually, as early as the beginning of last year, it was decided to split the battery business. In addition to the battery business, there are other business units that are facing reforms, but the resistance has been there and the progress is not smooth." A middle management inside BYD The staff told a media reporter that this was a systematic reform of Wang Chuanfu.

In fact, earlier, BYD sold its electronic components business on April 7, 2015. At that time, BYD encountered a rare opportunity for new energy vehicles. If this is to divest non-core business and focus on new energy vehicle strategy, then the split power battery module is the beginning of Wang Chuanfu's core link point for BYD's development strategy for the next decade.

Whether BYD's "electric future" concept or the recent cross-border cloud-traveling business, it is more clearly emphasizing BYD's battery advantages and surrounding it. A media reporter was informed that the most important part of BYD's future strategy is to use BYD's battery advantage to connect all modes of transportation. This means that BYD will enter other transportation areas, and the split battery business is “grain grass”. Go ahead."

"I am in my 50s. If I retire at the age of 60, there are still less than ten years. Before I retire, I will stabilize BYD's framework and management committee system. If all goes well, then BYD's scale advantage will form and compete. There is no chance for the opponent." Wang Chuanfu said this.

Battery overcapacity

"More and more car companies are beginning to realize the importance of the battery business. I judge that all companies that make new energy vehicles will have their own battery factories in the future. BYD's batteries will not be sold for the time being. We have to maintain BYD. Leading position in the battery field." Less than a year ago, BYD Chairman Wang Chuanfu said in an interview with reporters. But now, he overthrew the rhetoric himself.

The reporter verified from various channels that the battery business of BYD Auto was split and operated independently. This decision has already been implemented within BYD. This not only means that BYD will break the original vertically integrated production operation mode, but also means that BYD will supply the power battery module with core technology to the whole new energy vehicle market. In other words, BYD's previous competitors will become BYD batteries. customer of.

The reason why there is such a change, there is a set of vital data can not be mentioned. Due to changes in the subsidy policy for new energy vehicles in 2017, BYD's sales of new energy vehicles in the first quarter of this year have dropped significantly. According to the data of the Association, in the first quarter of this year, BYD's new energy vehicle sales fell to 8,719 units, a drop of nearly 50%. At the same time, BYD's domestic power battery supply also fell to second place due to a 63.9% year-on-year decline.

Due to the high expectations of the new energy vehicle market, BYD's investment in power batteries is a bit overdone at the moment.

At present, BYD has two battery factories in Shenzhen, among which the battery factory of ** can realize the annual production capacity of 1 billion watt-hours of batteries. This means that the battery factory's annual battery output can meet the demand for power batteries of 25,000 buses and 600,000 plug-in hybrid home cars. BYD's second plant also has an annual production capacity of up to 8 million kWh of lithium iron phosphate battery.

In addition to the above two construction projects, the new battery plant established by BYD in Qinghai will form an annual production capacity of 10GWh of power battery. Another set of data is that in 2016, when the orders for new energy vehicles were extremely hot, BYD lithium battery shipments were about 8Gwh, and the capacity utilization rate was only 80%. According to BYD insiders, BYD's power battery capacity has been expanded to 14GWh this year due to advance expansion.

Another more important reason is that the negative effects of BYD's vertical integration concept are increasing as the business continues to expand, quality and sales conflicts. BYD's current parts supply system is extremely single, and it is impossible to guarantee BYD's choices for the upgrade of vehicle quality. "A company like BYD only supplies its own products. All the parts are brothers. The disputes between different departments are also complicated. Not only the things (parts) are good or bad, but the price is also fixed. I have to choose." A manager who has worked in the auto parts industry for many years told reporters.

More critically, BYD is losing its cost control advantage in the vertical integration of the integrated supply chain. At present, BYD's new energy vehicle sales have been unable to make further breakthroughs, which makes its power battery cost sharing limited, and under the pressure of huge labor costs, BYD is under tremendous financial and operational pressure. For closed BYD, every dimension needs to change now.

Join the market cake to grab the battle

Comparing BYD's splitting action with the joint venture between SAIC and Ningde era, it is difficult to say that there is no connection between the two.

On May 3, SAIC and Ningde Times announced the joint establishment of the power battery company, which the industry believes will break the current pattern of the power battery market. The cooperation between the two can be said to have their own strengths. SAIC not only has the advantages of new energy vehicle production, but also has the expertise of modular system development. In the Ningde era, as a power battery rookie enterprise, it has won orders from FAW, GAC, Dongfeng, Geely and other automakers. It also won the BMW Power Battery Bill and won the full support of the latter. The width and flexibility far exceed BYD.

In the 2017 quarter, Ningde Times New Energy Technology Co., Ltd. (hereinafter referred to as “Ningde Times”) accounted for 25.8% of the market share of the 328,000 kWh automotive battery supply, surpassing BYD for the first time. In this context, in the face of SAIC and Ningde era to further cooperate to seize the orders of car companies, if BYD still adopts a conservative strategy, its voice in the field of power batteries will be further weakened, which is equal to the profits directly.

More importantly, compared to BYD's betrayal of lithium iron phosphate batteries, the diversification of battery routes and the rapid advancement of technology in the power battery market have made BYD unable to stick to its previous cautious strategy. For example, Dong Mingzhu, chairman of Gree Electric Appliances, who insisted on entering the door of new energy vehicles, abandoned the existing lithium iron phosphate battery and ternary lithium battery route in the automotive industry, but chose a lithium titanate battery that is not mainstream. In the face of a market that is highly dependent on policy and technology, it is clearly not the choice of loyalty.

It is reported that in BYD's split plan, whether it is the lithium iron phosphate that it has been betting on, or the ternary lithium battery that it has been involved in, it will be fully supplied to all car companies in the market. Because BYD's power battery only supplied its own products, the practice of BYD's exclusive components will be changed to further develop the market. BYD will produce power batteries that other manufacturers can use and support.

This will undoubtedly enable BYD to find an opportunity to share a huge profit cake in the power battery market. According to the national “13th Five-Year Plan”, by 2020, new energy vehicles will have to produce more than 2 million vehicles and produce more than 5 million vehicles in the same year. The rapid growth of demand for power batteries in the future market is difficult to change. By then, the corresponding demand for power batteries will be on the scale of 100 billion. For BYD power batteries that have already undergone considerable capacity expansion, it will find a double advantage in terms of time and products. "As an entrepreneur, we must choose the right direction. We believe that technology must first serve the strategy, and secondly for the product. The loss caused by the failure of one product is tens of millions or billions, but the direction is wrong, the loss It may be billions, tens of billions, and more valuable strategic time will be delayed for five years, ten years." Wang Chuanfu once sent such a feeling to reporters.

But there are still many unknown factors in the success of this major transformation. There will still be a question about whether other car companies will choose BYD batteries. Unlike the Ningde era as a rising star of power battery and no direct competition, the choice of BYD for other competitors means that the core component of the battery will be controlled by BYD. Under such circumstances, are new energy auto companies willing to take the initiative to purchase and be subject to people?

Ambition does not stop there.

BYD chose to open the battery business and cooperate with the outside world, which somewhat occupied the commanding heights of the game rules in the power battery market. But BYD wants to sort out not only the relationship with the outside world, but also its own ambitions.

BYD, which started as a battery, is not willing to just become a battery supplier and enters a field where it can use batteries in a wide range. Whether it is IT foundry, automobile, photovoltaic energy storage or cloud track, it can be said that all deployments of BYD are inseparable. battery.

On April 17 this year, BYD’s brand festival with the theme of “Electric Future” also implies the key to BYD’s future strategy. A media reporter was informed that there is a core think tank within BYD that includes only three people including Wang Chuanfu. What they have to do is to systematically “copy the case for BYD’s future development framework, and now it’s known that BYD is using BYD. The battery advantage connects all options in all modes of transportation.

Wang Chuanfu knows that if BYD was founded, the vertical integration is indeed the strategic choice of the time, then what BYD needs now is to carry forward its life, and the battery is undoubtedly a choice. "In the future, in the new energy auto sector, BYD models are likely to enrich the product sequence in a platform-based way; in the non-automotive sector, they will definitely choose to engage in battery-related business." BYD is not willing to be named inside. Relevant sources revealed.

At the moment, BYD's transformation is taking the cloud track (the first straddle monorail) project as a breakthrough. In the eyes of Wang Chuanfu, the cloud track business may recreate a BYD. In the list of cooperative cities, Guilin has become a key city of BYD. In the cooperation with the Guilin Municipal Government, Wang Chuanfu said that in addition to developing the IT industry and the automobile industry, BYD also uses its technological advantages to actively develop other new energy products. Areas including rail transit, bus, taxis and even tourist ships have also appeared in the options of cooperation between Guilin and BYD. "For example, as a power battery, BYD will not only do assembly or battery packs. BYD's battery industry chain starts from raw material lithium mines, from modules to monomers. This kind of investment and energy makes BYD unwilling to Just in the automotive field. Just like doing a new track business cloud track, in the future BYD will even be involved in all major transportation areas such as ships and airplanes. Of course, battery and electric power are the reasons and confidence of BYD to enter." Familiar with Wang Chuanfu According to relevant sources, BYD will cover the entire industrial chain of new energy transportation in the future.

Although BYD has always emphasized its technical genes, its success depends more on Wang Chuanfu's strategic vision. At present, Wang Chuanfu consciously adjusts BYD's framework. It is reported that BYD is not only preparing to split the battery business, but other parts, vehicle software, molds and other departments will all operate independently in the future. BYD is also choosing to introduce external suppliers while abolishing, merging its business units and selling some of its supporting companies.

It can be said that BYD is shifting from vertical integration to openness. This trend is also an inevitable choice for Wang Chuanfu before BYD. A new "top-level architecture" BYD is on the road.