Fuel Cars a Minus? The High-End Price Is Heading For a Million

From a traditional car company to a technology company, fuel cars have undoubtedly become a burden for BYD.

According to BYD's planning, in 2022 the company will form a brand network with Dynasty, Ocean, Tengsi and a high-end brand with a product price range between 500,000 and 1 million yuan. As the "e network", which previously focused on cost efficiency, is gradually replaced by Ocean, BYD seems to be gradually taking its new energy vehicle products out of the sinking market, with intelligent, safe, luxury and other elements, impacting the middle and high-end market.

Zhang Hong, secretary-general of the New Energy Vehicle Branch of the Circulation Association, said in an interview with Shell Finance that BYD's brand positioning is that of power batteries and electric vehicles, and that the fact that BYD is still producing fuel cars will in itself bring some confusion to BYD's brand image. No longer produce fuel cars, can make BYD brand image further pure, is conducive to the future development of BYD new energy vehicles.

Data shows that BYD's fuel car sales started to decline rapidly just as the DM-i models have been launched in 2021. According to BYD's financial data, in 2020, BYD's fuel car sales were 237,300 units and new energy vehicle sales were 189,700 units, with fuel cars still being the brand's "mainstay" and sales rising by about 2% that year. However, in 2021, BYD will sell only 136,348 fuel vehicles and 593,745 new energy vehicles, an increase of 200% year-on-year.

In 2021 BYD launched a number of models such as Qin PLUS DM-i, Song PLUS DM-i, Tang DM-i, Song Pro DM-i, etc., and data from the Passenger Association shows that sales of just one model, Qin PLUS DM-i, reached 110,000 units, accounting for 3.4% of the industry's new energy vehicle sales.

A former BYD employee told Shell Finance that BYD's fuel cars should have been discontinued a long time ago, so that the brand image might have a new pluck,. "I have the impression that BYD's pure fuel car engines have not been iterated for many years, and fuel cars cannot be sold to competitors, all hanging by a thread.

In addition, fuel cars and new energy cars with a look, the price difference is double, users will inevitably be affected by the price difference between fuel cars and new energy cars." Its view is that some brands of fuel cars are a plus for the company, in the case of BYD, but has become a demerit. So, stop selling fuel cars, the harm to BYD is not big, even in help brand development, improve profitability.

Over the past 20 years, BYD has had "reckless beginnings" and has had a long way to go in terms of brand development. Both its own battery company and its acquisition of Qinchuan Automotive are not very well known in the C-suite market, and the brand carries a similar label to that of many other independent brands, being "grounded".

The brand carries a similar label to that of many independent brands, being "grounded". The electric car products of the early years were also lacking in terms of price and brand power, and the high-end Tengse brand, which was established in 2013, has also fallen into decline in its partnership with Mercedes-Benz. The current data from the Association of Passenger Associations shows that the brand will sell less than 5,000 vehicles in 2021 in both oil and electric configurations.

Now, with the rise of the national trend, the brand's own battery safety and Chinese-inspired design elements are quite popular with users, and BYD's average price per vehicle has only increased to 150,000 yuan in 2021. At the same time, the average price of a single vehicle in Azera is about 410,000 yuan, and the average price of a single vehicle in Mercedes-Benz is about 350,000 yuan, BYD still has more room for improvement.

"After the discontinuation of the fuel car is to stabilize the dynasty, ocean network, through the Tengsi and the new brand launched in the second half of the year to impact the premiumization." Zhang Xiang, director of the Jiangxi New Energy Technology Vocational Institute of New Energy Vehicle Technology Research Institute, told the Shell Finance reporter. "As BYD unloads the burden of traditional fuel vehicles and brings the brand upscale, its earnings performance will be even better."

BYD's earnings report shows that corporate profits fell by about 28% to 3.045 billion yuan in 2021, which is a high level in the last five years but still has room for improvement. 2022 will see the company hit its sales target of 1.5 million units. In contrast, in 2021 the enterprise sales exceeded 600,000 units and accumulated 400,000 orders, the main problem now is to expand production capacity.

Shell Finance reporter learned that BYD will launch a seal in the price range of 200,000-300,000 yuan, a Tengis MPV above 300,000 yuan, a new brand of 500,000-1 million yuan, and the first model may be an off-road model during the year. This series of moves are all attempts to move the brand upwards. BYD's fuel car team, too, has quietly moved to a hybrid technology research and development team to continue working on the application of internal combustion engines in hybrid technology.

Zhang Xiang believes that in addition to discontinuing fuel vehicles and launching new brands and high-end models, BYD's battery and chip technologies also have a good reputation and are at a high level in the industry, which can side-step the brand's upward mobility. If combined with commercial vehicles, cloud rail, upstream raw materials layout and other industry chain upstream and downstream quite comprehensive business, as well as a large number of core technology, in the next 3-5 years, the enterprise brand value and Tesla's gap gradually narrowed.

According to Zhang Hong, BYD has given people the impression that it is a technology-based company that does not attach as much importance to brand marketing, brand planning and brand activities as it does to technology research and development. With the introduction of dynasty series products such as Tang and Han, mid- to high-end brands began to call for BYD branding.

2019 saw BYD set up a brand management centre for the first time, followed by a branding and PR division in 2021. It is now steadily making a push into the high-end market with its core technology and user trust.

According to Zhang Hong, to complete the brand upward, the key issue is how to differentiate or even cut from the traditional brand image, and it is important for BYD to launch a brand new image in the future.