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BYD is playing a different game

The feature story by Li Chao, noted automotive writer, is interesting reading in understanding the strategy of BYD Automobile.

Powered by a 1.0L engine with 50 kW of power and 90 Nm of torque, the 5-speed A00-Class car has a price tag of ¥36,900-¥46,900 ($5,426-$6,897), much lower than the expected ¥45,800-¥55,800.

In just a few years, BYD, the world’s leading rechargeable battery manufacturer and IT parts and components maker, has created some kind of a sensation in China’s auto market by launching independently designed cars that claim to offer premium equipment and performance at often unbelievable low prices.

As described by a senior sales executive at BYD, over the past three years the company has brought out three car models of different segments that are meant to give its competitors a “hit on the waist, a punch on the chest and a floor sweep kick on the leg.”

BYD was able to sell 100,000 units of the A-Class F3 in less than two years since it was launched. Its B-Class F6 has been launched targeting directly at mid-level sedans and is priced at about half of the price of a Camry or Accord, claiming to offer consumers “the Camry experience for the price of an Excelle.”

The A00-Class F0 is now positioned to clench a significant piece of the mini car market with projected monthly sales of 8,000-10,000 units.

As the world’s only manufacturer of both batteries and cars, BYD is obviously playing a different game compared with both multinational automakers and other local independent manufacturers.

The company has both a dream and a mission: to become a market leader in pure electric vehicles in the future.

BYD has decided to go with plug-in hybrid electric vehicles (PHEVs) as a transitional stage on its road to pure electric cars.

For this purpose, BYD is trying to combine the best of technologies in both traditional IC engine and powertrain development and battery technologies in bringing out its so-called dual mode PHEV. The F3, F6 and F0 will eventually all be converted into a dual mode model powered by batteries and a 1.0L engine.

BYD is playing a different game in terms of cost structure, management model and focus on developing core technologies. The cost for developing car models at BYD, according to senior executives, is only 50 percent of that of multinational automakers. The cost of dies at its own facility in Beijing is only one-third of the industry average.

And then consider its pricing strategy of setting the per-car profit margin for the F0 to below ¥1,000, a first in China. 

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