In recent years, BYD has performed commendably in the field of new energy vehicles. In January this year, the sales of its new energy vehicles exceeded its own fuel vehicles for the first time, accounting for 65% of the total sales.

However, the change of sales structure of BYD models and the rapid growth of sales of new energy vehicles have a slightly embarrassing impact on the group's performance. In 2018, BYD's total sales increased by 111000 vehicles year on year, including 134100 new energy vehicles year on year, while the group's expected net profit decreased by about 1.139 billion yuan year on year.

Photographed by BYD Zhongxin Jingwei Wu Qilong

The sales volume of new energy vehicles exceeded that of fuel vehicles for the first time

According to the statistics of the China Association of Automobile Manufacturers, the production and sales of passenger cars in China in 2018 were 23.529 million and 23.71 million, respectively, down 5.2% and 4.1% year on year. After more than 20 years of rapid growth, the Chinese automobile market ushered in its first decline.

Affected by the weak environment of the car market, there are not a few car companies that failed to meet the annual sales target last year and their sales declined. In this case, although BYD has not achieved the annual sales target of 600000 vehicles, the sales of new energy vehicles have increased significantly.

In fact, BYD's sales of new energy vehicles have been rising steadily in recent years. According to BYD's 2017 financial report, the group sold 409700 vehicles that year. Among them, the sales volume of traditional fuel vehicles was 296000, down 9.2% year on year; The sales volume of new energy vehicles was 113700, up 13.4% year on year, ranking first in the sales volume of global new energy vehicle enterprises.

According to the 2018 sales data officially released by BYD, the annual sales totaled 520700 vehicles, up 27.09% year on year. Among them, the sales volume of fuel vehicles was 272900, accounting for 52.41%; The sales volume of new energy vehicles was 247800, more than double that of 2017, accounting for 47.59%.

Recently, BYD Auto released the latest production and marketing express report that in January 2019, the Group sold 43900 vehicles, including 43300 passenger vehicles and 3600 commercial vehicles. Among passenger cars, new energy vehicles totaled 28000, up 292% year on year, accounting for 65% of the total monthly sales; A total of 15200 fuel vehicles were sold.

So far, BYD's new energy vehicles exceeded fuel vehicles in monthly sales for the first time.

Photographed by Wu Qilong of BYD Tang DM Zhongxin Jingwei

Embarrassment of "increment without increasing profit"

The client of Sino Singapore Jingwei noted that BYD has performed commendably in the field of new energy vehicles in recent years, but in 2018, with the total vehicle sales increasing by 27.09% year on year, the annual net profit declined significantly compared with 2017.

According to BYD's 2017 financial report, the group sold 409700 vehicles that year, with a net profit of 4.066 billion yuan. According to the annual performance forecast released by BYD at the end of October 2018, the company's annual net profit in 2018 is expected to be 2.727 billion yuan to 3.127 billion yuan, 4.066 billion yuan in the same period of last year, a year-on-year decrease of 32.94% to 23.1%, while the average net profit growth rate of the automobile industry is 10.04%.

In fact, changes in BYD's performance expectations are closely related to changes in the structure of the models sold. In 2018, BYD sold 520700 vehicles in total, an increase of 111000 vehicles compared with 2017, of which, the total sales of fuel vehicles in 2018 decreased by 23100 vehicles compared with the previous year. Based on this calculation, BYD's sales of new energy vehicles in 2018 actually increased by 134100 compared with the previous year.

"Compared with fuel vehicles at the same price, new energy vehicles not only have much lower profits, but also occupy a large amount of funds." Cui Dongshu, secretary-general of the National Passenger Vehicle Market Information Joint Conference, told the client of Sino Singapore Jingwei that because the new energy subsidy funds did not arrive in the account in the same year, and many car dealers will make national subsidies (national financial subsidies) and local subsidies (local financial subsidies) The "one size fits all" operation was carried out to make up the part of the ground that was not made up, so that the cost of each vehicle increased.

Jia Xinguang, an auto industry analyst, pointed out that compared with fuel vehicles, new energy vehicles currently rely mainly on subsidies. If there is more subsidy funds, it (new energy vehicles) can basically maintain a profit similar to that of fuel vehicles. "However, because subsidies are declining every year, the profits of new energy vehicles will also decline," Jia Xinguang added.

"The cost of new energy vehicles is also higher than that of fuel vehicles at the same price," Jia Xinguang further explained that the main reason for the high cost is the high cost of batteries. Generally speaking, the larger the quantity is, the lower the price should be. But in fact, the price of lithium metal has risen with the increase of demand, and the price of lithium batteries is difficult to go down in the short term.

It was a good thing that the sales volume had increased and the leading position in the new energy vehicle industry had become more stable, but BYD's net profit expectation had declined. In fact, it was "incremental without increasing profits".

"After the subsidy goes downhill, the profit of bicycles will continue to decline. After the subsidy completely exits next year (2020), the vehicles will still need to be sold at a price acceptable to the market, which will be a very severe test for BYD and even the whole new energy vehicle enterprise." Jia Xinguang said.

Photographed by BYD Zhongxin Jingwei Wu Qilong

The "money view" of new energy vehicles is worrying

In fact, if BYD's sales in 2018 are divided into new energy vehicles and fuel vehicles, the former has sold 247800 vehicles in total, successfully completing the sales target of 200000 vehicles set at the beginning of the year; However, the sales performance of 272900 fuel vehicles is still far from the target of 400000 vehicles.

In 2019, BYD's sales of new energy vehicles surged and the sales of fuel vehicles continued to decline, which caused concern among industry insiders. Some analysts pointed out that BYD had better "two legs are the same length", otherwise it would be unstable to walk. If consumers were to buy new energy vehicles in advance in January this year before the decline of subsidies, BYD would be in a bad situation this year.

"For new energy vehicle enterprises, the market will change after the subsidy is cancelled." Jia Xinguang pointed out to the analysis of the Zhongxin Jingwei client that the market originally generated by the government procurement and the restriction of the purchase restriction policy is small, and the market needs to be reopened in the future, so that ordinary consumers can choose to buy new energy vehicles.

At present, in addition to internal combustion engine vehicles, hybrid vehicles such as Toyota in Japan have pushed the cost to only a little higher than fuel vehicles, and the fuel consumption is very low, which is also the pressure that the development of new energy vehicles in China has to face. "In the next few years, BYD will inevitably face the challenges brought by market changes and price competition," said Jia Xinguang.

"The increase in the proportion of new energy vehicles in BYD's total sales makes it more vulnerable to the impact of new energy related policies, which is also a potential risk." Cui Dongshu suggested that BYD should produce more products that are less dependent on subsidies, and like Tesla, turn to the development of high-end models, so that the profits of a single vehicle will be relatively high; However, the subsidy for low price cars accounts for a high proportion, and the cost pressure may be very great due to the decline.

In fact, as subsidies continue to decline, BYD is also facing a very critical issue, that is, whether it will raise the price of new energy vehicles.

Jia Xinguang said frankly that now BYD's subsidized price is not particularly competitive, and it is almost impossible to raise the price again. Previously, Yan Jinghui, an auto industry analyst, told the Zhongxin Jingwei client that these consumers who choose to buy domestic electric vehicles are very sensitive to the price, and auto enterprises should try to avoid the terminal price rise caused by the decline of subsidies; If the price is raised significantly, it is likely to lead to a decline in sales and a vicious circle.

Cui Dongshu, however, believes that with the gradual decline of subsidies, auto companies are likely to raise prices. Although the new subsidy policy has not yet been introduced and the price rise range cannot be evaluated for the time being, the simultaneous reduction of national subsidy and land subsidy will cause great pressure on enterprises. "However, the sales of new energy vehicles may become very difficult after the price rise," he added.