In recent years, the Chinese electric vehicle market has witnessed the meteoric rise of BYD Company Limited (Build Your Dreams), which has become the most influential player in the industryNot long ago, Tesla's entrance into the Chinese market spurred growth and competition among local car makersHowever, as we step into 2023, BYD has emerged as the formidable contender, setting the benchmark for both joint ventures and independent brandsRegardless of the players involved, everyone seems to be keeping a close eye on BYD.

While many electric vehicle manufacturers struggled with profitability in 2023, BYD not only started reaping profits but did so at a remarkable scaleThe company has managed to navigate the turbulent waters of a competitive market that is still adjusting to the removal of government subsidies for new energy vehicles.

On the evening of March 26, BYD released its financial report for 2023, revealing significant milestonesThe company recorded revenue of approximately 602.32 billion yuan, marking a year-on-year increase of 42.04%. Furthermore, its net profit attributable to shareholders reached about 30.04 billion yuan, a staggering 80.72% growth compared to the previous year.

What is worth noting is that 2023 marks the first year without subsidies in the new energy vehicle sector, leading to aggressive pricing battles among various manufacturersSome firms faced dire consequences and had to retreat from the market altogetherConversely, BYD has confidently embraced the evolving landscape without the looming anxiety of survival.

BYD's ambitions extend far beyond the borders of ChinaHaving conquered the domestic market, the question arises: What are the next steps for BYD on the global stage?

Founded in 1995, BYD has diversified its operations beyond electric vehiclesThe company engages in multiple sectors, including mobile phone components and assembly, secondary rechargeable batteries, solar energy solutions, and urban rail transit systems.

In the financial report, BYD highlighted its electric vehicle segment as the backbone of its business

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In 2023, this division recorded revenue of approximately 483.45 billion yuan, a year-on-year increase of 48.9%. The mobile phone components and assembly business followed, contributing around 118.58 billion yuan, up 20.0%. Cumulatively, these two segments accounted for over 80% of BYD's total revenue.

The surge in BYD's electric vehicle sales in the last year can be attributed to robust domestic and international market performanceAccording to the financial results, BYD sold roughly 3.02 million vehicles in 2023, reflecting a 67.8% increase from the previous yearOf this figure, overseas sales soared to about 252,000 units, a staggering year-on-year growth of 457.7%.

At home, BYD strategically established a multi-brand structure consisting of BYD, Tengshi, Yangwang, and Fangchengbao, catering to a wide range of consumer preferences from family cars to luxury modelsThe notion that having more choices leads to a stronger competitive edge has proven true for BYD, as its multi-brand strategy has begun to yield promising results.

Last year, BYD also initiated the "Oil-Electricity Price Equalization" strategy, rolling out several champion models that significantly boosted its competitiveness across various segments, including B-class sedans and SUVsThe Ocean Series, featuring models like the Dolphin and Seal champion edition, further expanded BYD's offeringsNotably, the Dolphin, aimed at consumers looking for budget-friendly options below 100,000 yuan, became the best-selling model in the A00 segment shortly after its launch.

In the case of Tengshi, the brand launched the luxury SUV Tengshi N7 in July based on its existing D9 modelHowever, initial sales did not meet expectations, and Tengshi primarily relied on D9 to achieve a total of 127,000 units sold last year.

Meanwhile, Fangchengbao debuted in August, introducing its first model, a super hybrid SUV known as the Leopard 5, which officially entered the market in November

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While its contributions to BYD's overall sales were minor, the introduction of Fangchengbao as a unique brand indicates a positive startAdditionally, the high-end brand Yangwang released its first vehicle, the Yangwang U8, in September, achieving a cumulative delivery of 2,001 units within three months.

Beyond the domestic market, BYD has made significant strides in expanding its presence internationallyAccording to the financial report, BYD's electric vehicles have penetrated over 50 countries and regions, including Japan, Germany, Australia, Brazil, and the UAEModels such as the Han EV, Tang EV, Yuan PLUS, Dolphin, and Seal have made their way into foreign markets.

To facilitate this global expansion, BYD has also invested in maritime shipping capabilitiesThe company has recently commissioned its first car-carrying cargo ship, marking a substantial investment in logisticsOver the next two years, an additional seven roll-on/roll-off ships are expected to enter serviceBYD also plans to build overseas factories; its first manufacturing base outside of China began construction in Thailand in March last year, and it announced plans for another facility in Hungary.

During the investor communication meeting regarding the 2023 financial report, BYD expressed its optimism towards the international market, projecting overseas sales to reach approximately 250,000 units for 2023. The company aims to double this number to 500,000 units in the following year and achieve a target of 1 million units by the end of 2024, indicating enormous growth potential in the coming years.

In an increasingly competitive electric vehicle market, BYD has solidified its status as the undisputed leader in ChinaAccording to data from the China Passenger Car Association, BYD's retail sales for the year are estimated to be around 2.706 million units, accounting for a 35% market shareComparatively, Tesla sold approximately 604,000 units in China, which means BYD outranked Tesla by over two million vehicles, making it the only company in the new energy vehicle sector to surpass one million units in sales.

An interesting perspective circulating within the industry suggests that the essence of competition in the electric vehicle sector lies in which manufacturer can first cross the one million sales threshold

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This figure serves as a clear indicator of scale advantage, allowing the leading company to launch aggressive strategies against its competitors.

Wang Chuanfu, chairman and president of BYD Group, has echoed similar sentimentsHe noted that having undergone 70 years of development, the Chinese automotive industry is currently navigating a phase of structural adjustmentHe believes that increased concentration of the industry is an inevitable stage, and that firms need to rapidly establish scale effects and brand advantages.

Indeed, BYD is embodying this perspective through its strategic initiativesLast year, BYD capitalized on its scale and supply chain advantages to promote the "Electric and Oil Price Parity" slogan, which created pressure on competitors with equivalent fuel vehiclesThis year, the company has introduced an "Electric Cheaper than Oil" campaign, enhancing its lineup while lowering pricesA case in point is the BYD Qin, which has undergone two renewals within just two years, resulting in a significant price drop of approximately 70,000 yuan, a feat difficult for smaller, cost-constrained manufacturers to replicate.

Through initiatives like "Electric and Oil Price Parity" and "Electric Cheaper than Oil," BYD acts as a disruptor, leveraging its scale and supply chain strengths to shake up the marketThis ultimately encourages rival firms to enhance efficiency while inspiring consumers to adopt electric vehicles.

By harnessing its advantages, BYD's gross profit margin has also shown signs of improvementWang Chuanfu indicated during the financial report communication session that as the price war intensifies, BYD anticipates a decline in profit margin per vehicle but aims to maintain overall profitability through expanded scale.

In 2023, BYD's automotive and related products achieved a gross profit margin of 23.02%, up 2.63% from the previous year

This figure surpasses the 21.5% gross margin boasted by its luxury competitor, Li AutoFurthermore, BYD's strategies surrounding multi-brand diversification, international expansion, and premium branding are expected to contribute positively to its profit margins.

In a bid to fortify its leadership position, BYD has poured substantial resources into technological research and developmentNotably, the company increased its R&D spending, reporting a total of approximately 39.918 billion yuan in 2023, a staggering 97.39% growth from 2022. The workforce dedicated to research and development surged from nearly 70,000 in 2022 to 103,000 in 2023.

Technologically, BYD has developed various cutting-edge solutions, including Blade Batteries, the DM Hybrid Platform, the Astral Architecture, the "Eye of God" advanced driving assistance system, the E4 Platform, and Cloud Control SystemsIn May of this year, BYD is set to unveil its fifth-generation DM Hybrid technology, promising a fuel consumption reduction to just 2.9 liters per 100 kilometers and an impressive range of 2,000 kilometers on a full charge.

While rivals like Huawei and NIO have ventured into high-level autonomous driving technologies, BYD is taking a more measured approachWang Chuanfu has noted that claiming to achieve full autonomous driving is misleading; true intelligence encompasses comprehensive vehicle systems.

In terms of smart technologies, Wang Chuanfu announced during the financial report meeting that BYD plans to launch a series of models equipped with urban Navigation on Automatic (NOA) within the 200,000-yuan price range in the second half of this yearThis includes solutions from suppliers as well as BYD's proprietary offeringsLeveraging its scale, BYD aims to procure high-quality resources at competitive prices from global suppliers like Texas Instruments, Huawei, Nvidia, and Horizon RoboticsThe company has also assembled a dedicated smart driving team exceeding 4,000 members, with significant investments in chip technologies, algorithms, and perception capabilities, which will progressively manifest in upcoming models.

What’s your take on BYD's journey and strategies? Please feel free to share your thoughts in the comments below.

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