Case Study
docx
keyboard_arrow_up
School
Boston University *
*We aren’t endorsed by this school
Course
725
Subject
Information Systems
Date
Apr 3, 2024
Type
docx
Pages
8
Uploaded by MasterHeat13811
BYD CASE STUDY
MIS 651: Creating value through operation analysis.
February 10, 2024
Case Study
Of BYD in China
Introduction:
Founded in February 1995, by Wang Chuanfu (17.6%) with other owners being, Lu Xiangyang (13.5%)
Berkshire Hathaway (9.8%) Li Lu (8.2%) Western Capital Group (7.7%) Youngy Investment (5.3%) The
Vanguard Group (2.1%) BlackRock (1.9%) Dimensional Fund Advisors (0.64%) Shanghai Samsung
Semiconductor (0.3%) BYD Company Limited is a high-tech international enterprise dedicated to technological
innovation for a better life. After 27 years of development, the company has grown from 20 employees to
approximately 290,000 with more than 30 industrial parks and more than 40 locations worldwide. Read more
about our fast-growing company. BYD has four industries dedicated to realizing its green dreams of creating a
zero-emission energy ecosystem: automobile, electronics, new energy, and railway. BYD is listed on both the
Shenzhen and Hong Kong stock exchanges in China. BYD is also a pioneer in battery technology. Thanks to our
success in the production of mobile phones and portable batteries, BYD decided to create a complete clean
energy ecosystem that reduces the world's dependence on fossil fuels. BYD is committed to making mobility
solutions without emissions. BYD offers electric cars, electric buses, electric forklifts, and even electric railway
solutions. The company has become the world's leading producer of new energy vehicles (NEV), selling more
than 200,000 cars per month.
BYD Brand:
In recent decades, “with the support of Warren Buffett and other factors”, BYD has focused on mastering
advanced technologies, batteries, electric motors, electronic control systems and semiconductor chips. BYD is
not just another car manufacturer. Based on this significant R&D, the company developed the innovative Blade
Battery. This battery revolutionizes safety, durability, and performance in the electric vehicle industry. The
Blade Battery works in close synergy with BYD's exceptional expertise in electric powertrain technology to
achieve extreme system efficiency and integrated vehicle intelligence. For more than two decades, BYD has
been at the forefront of sustainable innovation. In 2008, BYD presented the world's first mass-produced plug-in
hybrid car, the F3DM, at the Geneva Motor Show. BYD was also the first car OEM in the world to announce
that it will end production of ICE vehicles this year to focus on BEV and PHEV products. BYD is the first and
only company in the world to offer a complete market of new energy vehicle solutions. Michael Shu, General
Manager and CEO of BYD's Europe and International Cooperation Department says: “BYD is coming to
Europe with a full range of new electric cars that meet the high expectations of our customers. We present
vehicles that are reliable, practical, and comfortable, with high-quality equipment as standard. Our automotive
design, technology, service, and dealer partner, BYD, aims to stand out from the crowd and deliver the best
possible experience to European consumers.
Four Main Businesses of BYD (CHINA): Automobile, Electronics, New Energy, Rail Transit
Automobile: Cars: With an independent brand, BYD became the only company in the world to acquire core
technologies for NEVs, such as batteries, motors, electronic controllers, and chips. At present, BYD's NEVs
have formed three main product series of passenger cars, commercial vehicles, and forklifts, covering seven
common fields of transportation, including passenger cars, taxis, buses, coaches, urban logistics, sanitation, and
construction; and four special purpose vehicles including warehouse, ports, airports, and mining.
Electronics: BYD is a leading provider of one-stop electronic manufacturing services (EMS) services and
solutions. BYD Electronic (International) Co., Ltd. was listed on the Hong Kong Stock Exchange in 2007. After
more than two decades of development, it covers four main areas, namely smartphones and laptops, new smart
products, automatic smart systems, and new smart products.
New Energy: BYD is a pioneer in providing a zero-emission energy ecosystem from power generation to
storage and use. Since 2008, BYD's solar energy and energy conservation products have been exported to six
continents, more than 20 countries and more than 90 cities.
Rail Transit: With 100% independent IP and management of the entire industrial chain, BYD offers
comprehensive rail transportation solutions from design, vehicle body and rails to communication systems and
intelligent operation and maintenance. (1)
(BYD Becomes Official Partner and Official E-Mobility Partner of UEFA EURO 2024™) BYD Market Trend (Pre-Post-Covid):
There is perhaps no better example of China's rapid transition to electric mobility than BYD. The automaker has
successfully transitioned from international internal combustion engine vehicles to "new energy vehicles" in
China, i.e. battery electric vehicles and plug-in hybrids. As our chart shows, the company has done this at
breakneck speed, ramping up production of its electric passenger cars at a rate that European or American cars
can only dream of.
As of 2018, BYD has increased sales of its (partly) electric passenger cars from just over 200,000 cars a year to
over 3 million in 2023, while phasing out its last gasoline car. assembly in March 2022. Given this deletion, it is
even more remarkable that BYD overtook Volkswagen as China's best-selling car brand last year.
In August 2023, BYD celebrated the production of five million new energy vehicles. After it took the company
13 years to build one million vehicles, it took just 18 months to build the next two million plug-in electric
vehicles and less than a year to build the last two million to reach that milestone. By the end of 2023, BYD has
sold more than 6 million plug-in electric cars, and this year's cumulative sales are expected to reach 10 million.
(2) (Infographic
: BYD's Rapid Pivot to Electric Cars) by Felix Richter
EV Market Trend in China Post-Covid
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Carmakers are accelerating localization efforts to drive consumer demand by launching region- and market-fit
EV models and enhancing the overall EV user experience by developing charging infrastructure and intelligent
services ecosystem to support smarter mobility. The general weak cost-effectiveness and subsidy reductions are
two significant challenges that carmakers must address to gain stronger growth momentum. With the
government prioritizing sustainable economic development and expanding vehicle consumption, Canalys
forecasts light vehicle sales in Greater China to grow 1% to 22.7 million units in 2024. EVs are projected to
reach 9.1 million units, taking up 40% of total sales. Drops in battery cost will further drive BEV sales in the
compact and subcompact vehicle market. PHEVs will continue gaining market share in the next two to three
years due to their cost-effectiveness and stronger adaptability. (3)
EV Market Trend Post-Covid
The latest Canalys research predicts sales of global electric vehicles (EVs) to grow 29% and reach 13.7 million
units, equating to a penetration rate of 17.1% in 2023. Greater China remains the largest EV market, shipping
7.6 million units with 55.5% market share. Europe, with a shipment of 3.2 million units and North America with
a shipment of 1.8 million units will round up the top three markets in 2023. Canalys forecasts the global EV
market will grow by 27.1% in 2024, hitting 17.5 million units. (3) (Global EV market forecasted to reach 17.5
million units with solid growth of 27% in 2024) BYD VS TESLA: BYD vs. Tesla: TSLA, king of new electric cars is struggling amid
weak revenue and harsh climate.
Tesla (TSLA) and BYD (BYDDF) are the #039 largest electric car manufacturers in the world and are
increasingly becoming direct competitors in China and much of the world. A lot of attention is being paid to
electric car startups like Nio (NIO), Li Auto (LI), Xpeng (XPEV), Rivian (RIVN) and Lucid (LCID). However,
Tesla and BYD are different. In 2022, sales of Chinese electric vehicles and vehicles from battery giant BYD
accelerated faster than those of Tesla. In terms of fully battery electric vehicles (BEV), BYD has reached the
crown in the last quarter of 2023. Foreign sales are a key growth and margin area for BYD, which recently
announced its arrival in Indonesia and plans to set up a factory there. Tesla shares had a strong 2023 but peaked
in July. Shares fell below key levels in early 2024 after Tesla cut prices in China and Europe and other negative
news. BYD shares have fallen sharply in recent months due to a price war. It's a seasonally slow year for electric
car sales in China, and competition from BYD, Tesla and everyone else is tough. BYD VS TESLA Sales:
Tesla shipped 484,507 electric cars in the fourth quarter, beating analysts' consensus of 480,463, according to a
consensus compiled by Tesla. Full-year shipments totalled 1.81 million, narrowly beating the company's target
of 1.8 million. Meanwhile, BYD reported record December sales of 341,043 electric cars, including plug-in hybrids, on
January 1
ST
Fourth quarter sales rose to 942,779 and total annual sales were 3,012,906, surpassing
BYDand#039's three million targets. Foreign sales were a bright spot, rising to a new record. The high-end
Fangchengbao Bao 5 SUV and the high-end Yangwang U8 did well. BYD is the largest car manufacturer in
China #039. It was the world's 10th largest automaker in the first half of 2023. (6) (Tesla Vs. BYD: TSLA, New
EV King Struggle Amid Weak Earnings, Tough Climate) by ED CARSON
SWOT:
Strengths: Weakness:
1. High energy capacity battery:
2. No emissions
3. Autonomous driving
4. Connected car
5. Strong Market Position: 6. Strategic Partnerships: 7. Diverse Product Portfolio
1. Long-term durability
2. Lack of experience
3. Lack of public awareness
4. Limited international presence:
5. Technological disruption:
1. Global Market:
2. Innovative Technologies:
3. Support from The Government:
4. Partnerships:
1. Cost of battery:
2. Competition:
3. Government Policy Changes:
4. Trade Barriers:
Opportunities:
Threats: Strengths:
1. High energy capacity battery
: When compared to other companies and competitors BYD company has a
battery that is more advanced, less expensive, and more effective for its electric cars. “It’s powered by BYD's
ultra-safe Blade Battery, promising a maximum pure electric range of 458km under NEDC conditions. Its
superior aerodynamic design reduces the drag coefficient to an impressive 0.29Cd, and it can accelerate from 0
to 100km in 7.3 seconds” (1)
2. No Emission:
While almost all other electric cars emit some pollution, the BYD electric car doesn’t emit any
emissions. That’s especially important in cities where pollution is a serious problem.
3. Autonomous driving:
The BYD electric car is a Level 5 autonomous vehicle. That means that you don’t
have to drive it. You can just sit back, relax, and let the car do the work for you.
4. Connected car:
The BYD electric car will be connected to the internet and transmit data regarding its
condition. That means you can monitor the car’s health remotely and even get a diagnosis. (4)
5. Strong Market Position: BYD being listed among the global top 10 of car sales for the first time. In the
Chinese market, BYD retained its position as the best-selling car brand and manufacturer. (1)
Weakness:
1. Long-term durability:
The BYD electric car is the first all-electric vehicle that’s specially designed for city
driving. However, the car is still a converted gas-powered car. That means it may not be as durable as a new car
designed from scratch.
2. Lack of experience:
While BYD has been making electric cars for a long time, it’s still a new player in the
car market. That means while the company has a lot of advantages over other makers, it also lacks experience in
the car market.
3. Lack of public awareness:
The biggest advantage of the BYD electric car over other electric cars on the
market is that it’s specially designed for city driving. However, most people don’t know anything about it. (4) (4
Reasons Why You Should Give the BYD Electric Car a Try BY ASHWIN CHAUBEY) 4. Limited international presence:
Outside of the Chinese market BYD company has a limited presence. Since
2021 the company has expanded their operations into overseas markets in Europe, Southeast Asia, Oceania and
South America.
5. Technological disruption: BYD has to keep up with the market and technological advancements of other
companies and their innovation as that could affect their current market situation if they fail to comply with the
trends.
Opportunities:
1. Global Market:
The world has turned its heads towards the rise of EV cars, BYD not being known and
pretty new to the foreign market they have an opportunity to expand their business operations into international
trends and capitalize on the opportunity.
2. Innovative Technologies:
BYD has a price advantage when compared with other car manufacturers and with
the continued interest in R and D and other technological developments the company has an advantage of
staying ahead of its competitors.
3. Support from The Government:
With the involvement of the Government and their support for EV cars it
would give a better opportunity for BYD to expand their business into other domestic and international markets
alike.
4. Partnerships:
With investment from Warren Buffet, Berkshire Hathaway, and partnerships with companies
like Motorola and Apple the business has an opportunity to get financial stability and penetrate new markets. Threats:
1. Cost of battery:
With the expansion of EV cars and Lithium batteries the materials used for them can be a
hindrance for BYD’s production capabilities.
2. Competition:
With the rising demand for Tesla and other companies such as Volkswagen and General
Motors, BYD has intense competition outside of the Chinese Market which would pose an actual threat to the
company.
3. Government Policy Changes:
Changes in policies can affect the production and selling of the product as per
the new US law the use of Chinese batteries in cars sold in the United States is banned and any subsidies are
being cut. Changes in policies like these could impact the company's foreign market.
4. Trade Barriers:
Disputes with other countries could highly impact the brand’s reputation and its presence in
the overseas market as most of the countries are changing their material imports to other countries post-COVID.
PEST Analysis
Political Factors: Economic Factors:
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
1. Business compliance
2. Political Risk/Stability
3. Patent Rights
4. Trade Laws
1. Economy Growth:
2. Consumer Income:
3.Fluctuation in Cost of
Material:
4. Changes in Currency:
5. Funding of Capital:
1. Environmentally Friendly:
2. Demography Trends:
3. Consumer Evaluation:
4. Societal Factors:
1. Battery Technology:
2. Supply Chain Management:
3. EV Infrastructure:
4.Technological
Advancements:
5. Data Security: Social Factors: Technological Factors:
Business Strategy:
1. Market Dominance and Expansion:
Creating new demand in markets where the company BYD is not well-
known by using their brand recognition in existing markets mainly in China by leveraging their previous
reputation in the quality of their products and innovation in their EV cars to capture the opportunity in existing
and expanding markets.
2. Product Portfolio:
Expanding their product portfolio further than EV cars with the supply of complementary
products compatible with the cars such as solar, storage and delving into more car model types such as B-class
pure electric SUVs, Song L concept cars and the BYD Chaser 07. Implementing this strategy would give
options and make the consumer not depend on one single product and capitalize on the rising demand for
sustainable transportation.
3. Leadership in Innovation and Technology:
Having a sophisticated approach to investing in more research
about consumer needs and new developments in technology, batteries, electric vehicle design and connected
vehicle technology would help BYD position itself as a leader in Smart Mobility.
4. Corporate social responsibility (CSR):
Corporate social responsibility (CSR) is a self-regulating business
model that helps a company be socially accountable to itself, its stakeholders, and the public. (5) Integrating
these initiatives into their business strategies and keeping up with their current commitments to social
responsibilities and projects such as community development, providing opportunities to veterans, and second-
chance employees and rectifying errors in manufacturing employment. Operations Strategy:
1. lean production:
Lean Production is a production type focused on eliminating waste, increasing operational
efficiency and process of production in the supply chain, production flexibility and reducing the process of start
to end of making a product to adapt rapidly to volatile market demands.
2. Vertical Integration:
Taking responsibility for ownership in key stages in its supply chain and not depending
on other companies for product parts and using its components for its product for most of the making process
like battery manufacturing, assembly of the vehicle and its integrated software into the cars. This increases the
chances of a clear supply chain control, and it is cost-effective compared to other strategies.
3. Quality assurance (QA):
Concentrating on quality management and making sure to provide high standards
in quality and trust. And with a continued initiative to improve business processes by reducing errors and
increasing quality and efficiency with the integration of “Six Sigma” to achieve near-perfect quality to provide
ultimate consumer satisfaction. 4. Renewable Practices:
Integration of renewable resources in the supply chain and product lifecycle such as
solar energy, wind, the heat of the earth, and tidal power to improve the company brand image and to minimize
impact on the environment.
Supply Chain Strategy:
1. Vendor management and Collaboration:
Maintaining a strategic collaboration with the vendors to make
sure of trustworthy and efficient supply chain management. Having a long-term relationship with collaboration,
trust, and Supplier relation management (SRM) is always a plus and beneficial to a smooth supply chain process
and branching out with other potential vendors to reduce any risks and increase efficiency. 2. Risk Control:
Identifying any supply chain risks like natural disasters, trade risks and availability of natural
resources for production. To minimize this, they have to create an alternative resource strategy without any
impact on the supply chain process and keep up with the time-to-time delivery of the materials.
3. Clarity and Traceability:
With the increase in clarity and traceability of supply chain management through
the blockchain process, real-time tracking and IOT devices such as sensors, actuators, appliances, or machines
can help with transmitting data online/internet. This would help BYD keep track of materials flow and other
supply chain risks throughout the process.
Conclusion: In conclusion, BYD company is an emerging force in the EV cars market industry, operated by its various
innovations, powerful position in the market, and calculated collaboration with its vendors. Despite having little
international market presence outside of China and support from the government, the company’s concentration
on high-capacity batteries, renewable transportation, and automatic driving technology forces them to shine in
their field of industry. By using their innovative technology, and support from the government BYD can use
those opportunities in the global market to gain further growth and expansion in the market.
With the rising
demand for EV cars and the world changing towards electric transportation, BYD’s concentration and
innovation towards new technologies and renewability keep it on the right path heading for a forging new future
in transportation.
Citations: . (1)
(BYD Becomes Official Partner and Official E-Mobility Partner of UEFA EURO 2024™)
(https://www.byd.com/eu/news-list/BYD_Becomes_Official_Partner_and_Official_E-
Mobility_Partner_of_UEFA_EURO_2024.html )
(2) (Infographic
: BYD's Rapid Pivot to Electric Cars) ( https://www.statista.com/chart/30754/byd-passenger-car-
sales/ ) by Felix Richter
(3) (Global EV market forecasted to reach 17.5 million units with solid growth of 27% in 2024) (
https://www.canalys.com/newsroom/global-ev-market-2024 )
(4) (4 Reasons Why You Should Give the BYD Electric Car a Try BY ASHWIN CHAUBEY)
(https://gomechanic.in/blog/byd-electric-car-india/)
(5) (Corporate Social Responsibility (CSR) Explained With Examples By JASON FERNANDO) (
https://www.investopedia.com/terms/c/corp-social-responsibility.asp) (6) (Tesla Vs. BYD: TSLA, New EV King Struggle Amid Weak Earnings, Tough Climate) (
https://www.investors.com/news/tesla-vs-byd-2024-tsla-stock-ev-rivals/) by ED CARSON