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BYD electric cars & strategy
- 1. ELECTRIC CARS BUILD YOUR DREAMS
- 3. 3 History
- 4. 4 SBUs
- 7. 7 Corporate level strategy Market penetration (cost leadership): • Vertical integrations (lithium mines, suppliers): Value chain + cost control • Economies of scale & Synergy (batteries & parts: 80% internal production) R&D: 31 dec 2017: 12,258 patents (China) 1,727 patents (overseas)
- 8. 8 Electric vehicle: Business-level strategy 01 Cost leadership03 02 diversification strategy Synergic strategy "7+4"
- 11. 11 NEV sales NEV sales’ evolution (China)
- 12. 12 Competition and strategic alliances
- 13. 13 Emerged on the pure electric car market in 2012 Small models with a size comparable to the SMART ZHIDOU Main competitors Mainly produce luxury electric cars Highest level on technology TESLA State own enterprise Cooperating with Baidu for the development of driverless vehicles JAC Working on a new artificial intelligence to integrate into its vehicles and plan to launch this feature in a near future BAIC
- 14. 14 NEV sales by cities / provinces
- 15. 15 Batteries
- 16. 16 China: SWOT analysis (main points) 16 Strengths Weaknesses Threats Opportunities S W OT Limited segmentation/targeting Brand image (low end) Weaknesses Control over the supply chain and value chain Economy of scope and scale Offers financing solutions Strengths Fierce competition Technology and patent war Threats Rising oil price Low developement of electric transportation and charging stations networks in 2d/3d tier cities Opportunities
- 18. 18 Overseas: SWOT Analysis (main points) Strengths Weaknesses Threats Opportunities S W OT Global strategy (international) Brand image (low end) / “made in China” Low brand awareness for individuals Weaknesses BYD can provide integrated solutions (EV+ solar panels+ dock stations) energetic independence Strengths Foreign markets protectionism, exchange and tax rates International integration and management Threats , Rising oil price High price of competitors Foreign markets demand projected to rise Opportunities
- 19. Options3
- 20. Main Issue & Options BYD is already investing massively in R&D but is still not technologically catching up with the main actors of the industry. Currently driven by cost- leadership and middle-end products. 1- Global: • A.I. (Driverless cars) • Drones, ebikes, motobikes, (planes?) • Customizable cars (options); • High-end electric cars (sport cars, concept cars, prototypes) Brand image and reputation;
- 21. Main Issue & Options In order to realize further development, BYD should adopt suitable strategic positions to take advantage of the environmental-protection opportunity and use it as a leverage to explore and capture new potential markets. Segmentation & targeting: Ex: Develop feminine car models Research shows a higher popularity of eco-friendly product among female consumers. 2- China: Mini Cooper
- 22. Main Issue & Options 2- China: Penetrate 3rd-tier cities through cooperating with local governments Similar development model than in 1st and 2d tier cities previously • Develop infrastructures (charging stations); • Develop electric public transportation; • Develop municipal vehicles (waste collection, cleaning trucks) • Work with taxi companies; Indirect local advertising
- 23. Main Issue & Options 3- Overseas: Multidomestic strategy vs Global strategy Adopt different international strategies in developing and developed countries. Western countries: A- Taylored cars (high-end); B- Local assembly (brand image, prices, avoid arbitrage); C- Packages for individuals to reach energetical independance; Developing countries: A- Develop public transportation; B- Importation vs local production (aka sales);
- 24. Options Analysis and discussion : Ansoff Matrix
- 25. Request complete report ?
Notes de l'éditeur
- Created in 1995 for battery production, fast growth, bought a chinese caremaker in 2003 that was near bankrupcy and was initially doing fuel powered cars until its first hybrid (2008) and first pure EV in 2010 (JV with daimler)
- A share : Traded on Sh stock exchange in RMB H shares: traded on HK SE in HKD The holding has full control over the auto business
- In terms of revenues, BYD’s main source of income is related to its vehicle activity for more 50% in 2017 (including other vehicles as buses and trucks) with 87% of its global revenues coming from Mainland China. (BYD annual report).
- Synergies : BYD auto division is an internal customer of IT and Battery Buisness units, Very important dimension given to synergies centralized research (also synergy)
- Very important dimension given to synergies 7 conventional : private vehicles, electric taxis, electric buses, electric coaches, logistics vehicles, construction vehicles and waste management vehicles 4 specialized: warehouse, ports, airports (forklifts) and mining operations.
- Electric vehicles sales evolution in China, rising fast: +50% in 2017 compared to 2016
- Figure 1: Market shares of the main Chinese manufacturers in China. BYD is first with 16,5% followed by BAIC, Foreign companies are sharing 28,9% market shares (Tesla, BMW, Renault..) Figure 2: Strategic alliances. BYD has a partnership with DAIMLER to develop high-end electric cars. Foreign companies are usually always adopting JV to penetrate chinese market,
- The electric vehicles sales by cities and provinces. Sales are concentrated in developped cities (tier 1)
- Batteries price is the main driver of the electric cars costs nowadays. But it is decreasing fast with technological improvements and economies of scale,
- Main opportunities: the low development of EV in 2d/3d tier cities, Also no infrastructures yet (charging stations) Main strenghs: cost leadership allow good positioning in term of price/quality compared to competitors. BYD offers financing solution to customers (businesses and individual) to help them buy cars, Main weaknesses : low brand image for customers (low costs cars compared to foreign cars as Tesla), Also no well defined segmentation: still few models availables
- The sales in China are expecting to stabilize around 2035 when foreign markets are expected to grow fast (China is driving the sales today but foreign markets are a future opportunity)
- Opportunities: Foreign brands Evs are still very expensive but the demand may follow if prices falls. Threats: foreign markets are also applying protectionism for car industry (high employement and strategic sector) Managing foreign organizations (cultural differences, visions, norms) is challenging, Strengths: BYD can provide a full set of solution (solar panels on the roof + electric car + dock (charging) station,,,) This can be appreciated in western countries (people have individual homes) to achieve energetic independance, Weaknesses: BYD is still unknown for individuals in western countries, The fact that it is « made in China » is a weakness. The company currently use a global international strategy (everywhere the same products are sold) which is maybe not the best solution see options