The skyrocketing price of battery raw materials has become the last push for BYD to ban combustion?

Not long ago, BYD announced that it would completely stop production of all its fuel vehicles, successfully becoming the first traditional car company to completely stop the production of fuel vehicles. This choice does not seem to be a wise choice now that the prices of batteries and raw materials are increasing wildly. Why does BYD want to flow up?

It's not going upstream, it's just a matter of course.

From 2021, BYD's new energy models have entered an explosive period. It sold 600,000 units in 2021 and 180,000 units in January-February 2022. And most of them are consumers' active choice, rather than online car-hailing or taxi. There are both policy support and technological breakthroughs.

With the support of policies, the industry chain of new energy vehicles has matured, and the growth rate of users and intended users is extremely fast. The market has also changed from a single fuel-based to a situation where multiple options such as fuel, hybrid, plug-in hybrid, range extension, and pure electricity coexist. In 2021, BYD will use a number of DM-i plug-in hybrid models to erode the fuel vehicle market. In just one year, BYD has quickly switched from a brand that relies on the volume of fuel vehicles to a brand that only relies on the volume of new energy vehicles. This has allowed BYD to completely get rid of its dependence on fuel vehicles, so it can't wait for the charging piles to be rolled out. It is necessary to take away the DM-i plug-in hybrid, which is not expensive and does not rely on charging piles, to accelerate the crowding out of the mid-priced fuel vehicle market.

In terms of technology, if the success of the DM-i hybrid technology makes BYD prosperous in the hybrid field. Then the price of lithium, nickel and cobalt, the raw materials of batteries, has skyrocketed, which has become the last straw to crush the fuel car. BYD has been focusing on lithium iron phosphate batteries, and the increase in nickel and cobalt far exceeds that of lithium, which makes lithium iron phosphate batteries more cost-effective than ternary lithium batteries. BYD has been focusing on lithium iron phosphate batteries for many years, and has therefore become a front-row enterprise in the battery field. Blade batteries have become the most cost-effective batteries at present. BYD can not only buy cars, but even sell batteries, which further reduces the importance of fuel vehicles within BYD.

Stop the production of fuel vehicles in order to shout to the government?

BYD's announcement to stop the production of fuel vehicles is not only because of its own needs, but also to some extent to meet the policy and continue to seek policy support. As the first traditional car company to stop producing fuel vehicles, BYD has shown a policy-compliant attitude. Combined with the speech of the representative of BYD at the 100-person meeting of electric vehicles at the end of March, he hopes to focus on the two legs of pure electric and plug-in hybrid. as a means of transition. It is requested to take action to control and avoid the price increase of raw materials, which will cause BYD's pure electric and plug-in hybrid to be forced to increase prices and lose this incremental opportunity. There is a kind of appearance of taking advantage of "cutting off the production line of fuel vehicles" to make a statement to the government and ask for help to continue the subsidy policy.

Summary

For BYD, stopping the production of fuel vehicles is no longer a choice, but an inevitable result. In terms of production capacity, the hot sales of DM-i models have overwhelmed BYD's production line, and it has become the norm to wait several months for many models to arrive after they are ordered. From this point of view, cutting off the old fuel vehicle business also meets the needs of resource optimization. From the market point of view, focusing on EV pure electric and DM plug-in hybrid vehicle business is also in line with policy and market demand, and it is convenient to accelerate the market capture. Either way, it's a good choice. The title of "the first traditional car company to stop producing fuel vehicles" can also strengthen BYD's brand image to a certain extent. This choice can be said to kill three birds with one stone.