About the speed increase of BYD split power battery

It can be expected that the 2017 profit decline is only the beginning. For new energy car companies such as BYD, the transition period before the double points system has not had a greater effect, the days will be difficult.

On the evening of March 27, BYD announced its annual report for 2017. The next day, the market reacted to the decline and BYD's share price fell 8.34 %.

BYD's revenue did not fall compared to 2016, but it increased 2.36 % year-on-year. The contrast was net profit, down 19.51 %. In other words, the overall business performance of BYD has not changed significantly, but it has made less money.

"BYD's sales of the most profitable new energy car business in the past year have increased significantly, so revenue from new energy vehicles has also increased. Profits have fallen more steeply as subsidies have receded. "A senior executive of a new energy vehicle supporting company close to BYD told the 21st Century Economic Report reporter on April 1.

Before 2016, the state subsidized a large amount of new energy vehicles. The bicycle profit of new energy vehicles was much higher than that of traditional fuel vehicles, especially pure electric buses. When the subsidy was highest, the average bus subsidy was hundreds of thousands of yuan. Subsidies have not only accelerated the growth of the new-energy car market, but have also created a number of companies with bright net profits, such as Yutong and BYD.

State subsidies for new energy vehicles were as high as 70 billion yuan in 2016, most of which went to new energy buses, according to the data. In 2017, subsidies fell sharply, and the biggest impact was on bus companies. In addition to BYD, the net profit of Zhongtong passenger cars fell as much as 78 % last year.

Support policy "break period"

According to the BYD annual report, BYD achieved operating income of 105.9 billion yuan in 2017, an increase of 2.36 % over the previous year, and realized net profit belonging to shareholders of listed companies of 4.066 billion yuan, a year-on-year decrease of 19.51 %.

In terms of business structure, BYD's auto business, mobile phone components and assembly business, secondary rechargeable batteries and photovoltaic business accounted for 53.46 %, 38.21 % and 8.28 % of the group's total revenue, respectively.

Among them, the total revenue of the automotive and related products business, which accounted for more than half of the total, was about 56.624 billion yuan, a decrease of 0.68 % year-on-year. The overall situation did not fluctuate significantly, and the automotive business remained stable in terms of revenue.

The decline in overall profits in 2017 is in stark contrast to the significant growth in 2016. In 2016, BYD's overall operating income was 103.5 billion yuan and net profit was 5.05 billion yuan, an increase of 78.94 % year-on-year. The total revenue of the automotive business in 2016 was about 57,010 billion yuan, a year-on-year increase of 40.23 %.

From the financial report, it can be seen that the revenue of mobile phone components and assembly business is about 404.73 billion yuan, an increase of 3.53 % year-on-year; The revenue of the secondary rechargeable battery and photovoltaic business was approximately 8.767 billion yuan, an increase of 19.37 % over the same period of last year.

"The component and assembly business has performed better this year and will continue for some time to come. Later last year, BYD President Wang Chuanfu said in an interview. Obviously, the reason for the large change in profits is mainly due to the profit of the car business, especially the bicycle of the new energy vehicles.

Data show that the subsidy per pure electric bus fell by 135,000 yuan in 2017 compared with 2016.

“Subsidies are reduced and net profit is reduced. In 2017, state subsidies fell sharply. This is the case for the entire new energy vehicle industry, where profits have fallen sharply. New energy car companies have the greatest impact, and then top-down will affect spare parts such as batteries and motors. The impact of the company."

BYD is the world's largest vehicle sales company with 110,000 new energy vehicles, an increase of more than 15 % year-on-year, and revenue of about 39.060 billion yuan, an increase of 12.83 % year-on-year, accounting for 36.88 % of the group's income.

With the expansion of the market size of new energy vehicles, the impact of subsidies is still increasing. BYD's earnings forecast for the first quarter of 2018 in the financial report showed that the company's net profit from January to March in 2018 was expected to be 50 million yuan -150 million yuan, a year-on-year decline of 91.75 % -75.24 %.

Subsidies have been revised this year and further reduced. According to the Circular issued by the Ministry of Finance and other four ministries and commissions on the adjustment and improvement of financial subsidies for the promotion and application of new energy vehicles, During the transitional period(2.12-6 .11 in 2018), the new energy passenger vehicles and new energy passenger cars on the list were subsidized 0.7 times the corresponding standard according to the "Circular of the Development and Reform Commission of the Ministry of Science and Technology of the Ministry of Finance on Adjusting the Policies of Financial Subsidies for the Promotion and Application of New Energy Vehicles". New energy trucks and dedicated vehicles are subsidized 0.4 times, and fuel cell vehicle subsidy standards remain unchanged.

The New deal on subsidies for new energy vehicles, to be implemented in June, features "higher technical standards and lower financial subsidies". The 2018 subsidy policy no longer regards mileage as the only consideration for new energy vehicle subsidies. The price of bicycle subsidies will be determined by mileage, battery energy density coefficient, and energy consumption adjustment coefficient. The impact on new energy vehicles and markets is likely to expand further.

It can be expected that the 2017 profit decline is only the beginning. For new energy car companies such as BYD, the transition period before the double points system has not had a greater effect, the days will be difficult.

However, the real spring of new energy vehicles will be after the effect of the double points system. New energy car companies will profit by selling points to other traditional car companies. The benefits to new energy vehicles are twofold: 1. Selling new energy vehicles can obtain additional profits; 2. Traditional car companies have to pay extra costs to sell fuel trucks and force the entire market to transform.

Another BYD with the same market value?

In BYD's business section, there is no separate division of the power battery business. In the annual report, BYD divided its business into four major sectors: automotive business, mobile phone components and assembly business, secondary rechargeable cells and photovoltaic business.

However, BYD's power battery's strategic position is far higher than other sectors and is its core strategic product. In 2016, BYD's power battery shipped 7.35 GWH, ranking first in the power battery market.

An important reason for its division into the auto business sector is that BYD power batteries have not been sold before, that is, BYD's power cells are only supplied vertically to BYD's new energy vehicles.

The reason for this business model is that Wang Chuanfu is confident in BYD's power battery technology and process. Wang Chuanfu believes that the core technology of new energy vehicles is power batteries, and BYD's power battery technology and technology are also far ahead. In order to ensure the leading position of new energy vehicles in the market, Wang Chuanfu closed the passage of power battery exports.

Before and after 2015, the domestic power battery supply was tight, and many car companies had orders for new energy vehicles, but they could not buy good batteries. "We have looked for BYD and want to buy their batteries, but they have not sold them to us," said a senior domestic automaker.

This strategy gave BYD a competitive advantage at the time. BYD not only did not lack batteries, but also had better than average quality power cells on new energy vehicles. In 2015 and 2016, under the premise that BYD's traditional car business is unstable, profits have grown significantly, mainly due to the layout of new energy vehicles.

But in the second half of last year, Wang Chuanfu began to change this strategy and proposed an open power battery business. There are two reasons for Wang Chuanfu to make this decision: 1. The subsidy for new energy vehicles has fallen sharply, and BYD is facing profit pressure. BYD's power battery technology and technology are still leading. Wang Chuanfu actually puts a “gold mine” without mining. 2. The power battery market has undergone great changes. The power battery companies such as Ningde era began to attack wildly. Wang Chuanfu felt the pressure.

In 2017, CATL (Ningde era) shipped 10.4 GWH, anti-BYD, became the first battery carrier to ship power cell market. Wang Chuanfu's power battery closure strategy has gained an advantage for the layout of the entire vehicle, but what he did not think was that it also gave the Ningde era an opportunity.

"In the second half of last year, Wang Chuanfu began to adjust the internal organizational structure of BYD, the purpose is to split the power battery. But so far, when is the split, how to split, there is no clear information." A person close to Wang Chuanfu said.

The launch of the IPO process in the Ningde era, with a valuation of 130 billion yuan, is a revelation for BYD and Wang Chuanfu. BYD's power cell business is already comparable to the Ningde era. In addition, there are traditional cars, new energy vehicles, cloud rails, machine parts and assembly businesses, secondary rechargeable cells and photovoltaic businesses, but the current market value is similar to that of Ningde. As of April 2, the total market value of BYD was approximately 152.3 billion yuan.

BYD as a whole is undervalued because of the market's assessment based on the characteristics of its traditional car companies. In recent years, new energy vehicles have been a hot spot in the market, and the valuation system and expectations have undergone major changes. Therefore, Wang Chuanfu had earlier proposed that the quality of the business sector should be independent.

"There is indeed a plan to split up. The internal organizational structure adjustment, in order to give quality business sufficient development space, decision-making power and management rights, to mobilize the enthusiasm of the team, better respond to market changes. "BYD insiders said.

The decision to sell power batteries abroad and split the listing may create a sector with a market value equivalent to BYD. This is the most direct and effective way for Wang Chuanfu and BYD to spend the new energy vehicle support policy.

The page contains the contents of the machine translation.