Market value = Mercedes-Benz + BMW. BYD surpasses Volkswagen and returns to the third place in the world. Which direction is BYD aiming at?

Last Friday, BYD's stock price surged 8%, and its market value exceeded RMB 1 trillion for the first time. Meanwhile, a few days earlier on June 7, BYD returned to the third place in the global automaker market value ranking, second only to Tesla and Toyota.

Why "returned again"? Because last November, BYD's market value rushed to the third place and remained there for about 20 days.

According to data from Markcap (BYD takes the market value of Hong Kong stocks), as of 3 pm on June 13, BYD's market value was US$138.53 billion, which is higher than the market value of Mercedes-Benz and BMW Group combined, and it is the only Chinese company in the top ten. According to the market value of A shares, BYD has now broken through the trillion mark, with a market value of 1015.4 billion yuan, or about US$150.79 billion.

Of course, market value largely only represents investors' expectations for the company's future development, and does not reflect the company's actual scale and revenue. After all, although Tesla, which ranks first, has a market value of US$721.77 billion, nearly 7 times that of Volkswagen Group, its revenue is only about one-fifth of Volkswagen; the domestic new power car company Weilai Automobile once briefly surpassed Volkswagen in January 2021 and ranked third in the world.

However, in terms of market value alone, if Weilai's short-lived glory is just a flash in the pan, then BYD's second place in the world can never be called accidental. What did BYD, regarded as Tesla's biggest competitor, do right?

Pure fuel vehicles were discontinued, and sales data in May hit a new record high

The factors that pushed BYD's market value to exceed one trillion yuan can be said to come from a series of recent good news. Since the beginning of April, after BYD announced the discontinuation of pure fuel vehicles, it has set monthly sales records with nearly 106,000 and 114,900 vehicles in April and May, respectively, and won the global new energy vehicle sales champion for two consecutive months.

From January to May this year, BYD's cumulative sales have reached 512,000 vehicles, a year-on-year increase of 161.85%. If this trend continues, BYD's annual sales in 2022 will easily exceed 1 million vehicles. In fact, at the shareholders' meeting on June 8, BYD Chairman Wang Chuanfu also revealed that the company has more than 500,000 undelivered orders on hand, and the delivery cycle will be about 5-6 months, that is, delivery will be completed within this year. Then, plus the cumulative sales from January to May, if nothing unexpected happens, the foreseeable sales volume for the whole year of 2022 can exceed 1 million vehicles.

Previously, Tesla's car delivery target for fiscal year 2022 was between 1.4 million and 1.5 million vehicles. In fact, the delivery volume in the first three months of this year was 310,000 vehicles, with an average monthly delivery of about 100,000 vehicles, which is similar to BYD. Therefore, BYD's full-year delivery data this year will undoubtedly have the opportunity to launch an impact on Tesla.

In addition, at the shareholders' meeting on June 8, BYD also revealed that the company is currently under great pressure to develop overseas markets, but it has still taken out some scarce resources to promote the global electric vehicle market, and will increase its efforts to expand overseas markets in the future. At present, BYD's overseas market is mainly based on commercial vehicles such as electric buses, and passenger cars are only deployed in a few markets. However, in April, BYD stated that its Tang EV model has been successfully delivered in Norway, and Yuan Plus has also been listed in Australia, starting to take the first step in the large-scale export of passenger cars.

Taking the core self-developed and vertically integrated model, strong risk resistance

In addition to the good news in the automotive market mentioned above, looking at BYD's huge business empire, in addition to the automotive terminal business, from batteries to semiconductors, to automotive parts, energy storage photovoltaics, etc., the company's layout basically covers the entire industrial chain of new energy vehicles. A

recent research report released by JPMorgan Chase pointed out that BYD's battery business is no longer limited to supplying battery products for its brand cars. It has begun to penetrate global OEM manufacturers and sell its batteries to OEM manufacturers in China, including Ford Motor and BYD and Daimler's joint venture Denza Auto. At the same time, BYD's Executive Vice President Lian Yubo recently broke the news that BYD will supply battery products to Tesla. Although Tesla responded later that "it has not heard the news", as early as August last year, there was actually news that BYD had obtained a 10GWh battery order from Tesla and would supply "blade batteries" to Tesla in the second quarter of this year.

According to global power battery installed capacity data, BYD's installed capacity in Q1 2022 was 9.99GWh, second only to CATL, LGES, and Panasonic, ranking fourth in the world. JPMorgan Chase also predicts that BYD's external battery supply will reach 10%-15% in 2022.

As for the scarce battery raw materials, there have been recent reports that BYD is preparing to buy six lithium mines in Africa, with a total lithium carbonate output of 1 million tons, which can cover the company's raw material needs for the next ten years. Previously, in the layout of battery raw materials, BYD has reached cooperation or equity with many mining companies, including Zabuye Lithium, Shengxin Lithium Energy, Salt Lake Shares, etc. On

the other hand, BYD Semiconductor, which is sprinting for the GEM IPO, is a key link in maintaining the stability of BYD's supply chain in the recent chip shortage environment. BYD Semiconductor, founded as early as 2004, has completed the layout of automotive semiconductor products such as automotive MCU, power semiconductors (IGBT, SiC devices, IPM), CMOS image sensors, LED light sources, and pressure sensors in more than ten years of development, and has basically achieved self-sufficiency.

In addition to the battery business, BYD's "Fudi" companies also cover the research and development and manufacturing of almost all core components of new energy vehicles, including Fudi Battery, Fudi Vision, Fudi Technology, Fudi Power, Fudi Mould and other companies. This is called the "marketization 1.0 strategy" by BYD. The parts business is split, allowing motors, batteries, powertrains and other businesses to go out in the form of business units to compete with peers.

This strategy has proven to be successful. The split business has not been hindered in the market because of the automobile-related business owned by BYD Group itself. The final customers even include overseas traditional automobile giants such as Mercedes-Benz and Toyota. From the perspective of the model, BYD seems to be a bit like "Samsung" in the automotive field, and continues to develop in the right direction.

Although it is difficult for a big ship to turn around, as long as the direction is right, a big ship that does not need to turn around is unstoppable.