With the removal of NEV sales subsidies and acquisition tax exemptions in China from 2023, price increases for NEVs are expected to be necessary to maintain profitability. However, in January 2023, Tesla has implemented price reductions for the Model 3 and Model Y, to the contrary. Chinese OEMs are also competing with Tesla, with AITO Qiajie (in partnership with Huawei), Xiaopeng (Xpeng), Zero (Bao in the footnote) and others following suit in rapid succession, and BYD dealers also implemented price reductions in February.

Meanwhile, looking at Japanese OEMs, Toyota has cut prices by up to RMB 60,000 in response to weak sales of the bZ4X. Nissan is involved in a price war, with the Ariya announcing a 60,000 yuan price cut for a limited period until 31 March. The bZ4X and Ariya, developed under the initiative of the Japanese headquarters, have received some recognition in their home market of Japan. Japanese OEMs, which are latecomers to the NEV market, have an increasing need to develop NEV products for the Chinese market.

In-depth research into BYD’s product line-up strategy, development of strategic components, production system, sales situation, organisational personnel, etc. We are convinced that this report will be an important reference for Japanese car manufacturers and parts suppliers in the planning of their electric vehicle strategies.

BYD has announced the discontinuation of internal combustion engine vehicles in March 2022 and is attracting global attention as an automobile manufacturer that has successfully shifted to a PHEV and BEV product line-up, fully adopting a BEV-specific platform, the DM-i PHEV system, blade batteries, etc. The company’s product and cost competitiveness has been refined through the full adoption of BEV-specific platforms, the DM-i PHEV system, blade batteries, etc., and it is certain to grow to become the largest ethnic Chinese car manufacturer by 2022.

Reasons for the rapid growth include lower NEV product prices resulting from an in-house manufacturing rate of over 90%, semi-automation of equipment and government assistance. In terms of product prices, the most mass-market models, the Song Plus DM-i PHEV SUV and the Qin Plus DM-i sedan, are cheaper than the Toyota RAV4 HEV and Corolla HEV in the same class, while the first model Dolphin on a BEV-only platform is almost as expensive as the competitor Honda Fit. The price difference between BEVs and internal combustion engine vehicles has almost disappeared in the mass-market segment, which has had a significant impact on the industry. The low price of the product was achieved by in-house production of not only the elemental technologies required for NEVs, such as batteries, motors, inverters and engines, but also HMI, interior components and Si/SiC/MC semiconductors. On the other hand, to minimise the risk of capital investment, the company promotes a semi-automated philosophy, introducing automation equipment only for critical processes. In addition, financial information reveals that BYD has obtained many development and production subsidies from the central and local governments, as well as wage subsidies for employees. In order to properly understand how much these factors have influenced BYD’s rapid growth, it is necessary to make a judgement on the overall picture of BYD’s business.