After shouting the slogan of the same price for petrol and electric vehicles, although major automakers have criticized this endless price war, BYD, the instigator, has gained more sales and consumer support through price competition. After price competition has become a regular operation for BYD, BYD has turned its attention to auto insurance.

On May 6th this year, BYD's auto insurance business was approved by the National Financial Regulatory Administration; on May 15th, BYD Insurance issued its first insurance policy; in mid-June, BYD Insurance opened an independent insurance application portal, with open regions including Anhui, Jiangxi, Shandong, Guangdong, and other seven provinces; car owners can independently complete the insurance application process, both new and used cars can be insured, and there are no restrictions on brand models, but currently only supports non-operating private cars with less than 10 seats.

As BYD auto insurance has just been launched, many consumers have doubts about BYD auto insurance prices and services. Recently, "AutoTalk" also conducted a survey on issues such as BYD auto insurance prices and insurance types that consumers are concerned about. Multiple new energy car owners said that BYD Insurance quotes are generally cheaper than other insurance companies by 500 to 1,000 yuan.

Cheaper than traditional insurance

BYD Insurance's official website shows that BYD Insurance's business scope includes seven main categories, namely vehicle insurance, liability insurance, cargo insurance, accidental injury insurance, health insurance, household property insurance, and enterprise property insurance.

Regarding BYD auto insurance prices, we learned from sales staff at a BYD 4S store in Hefei that BYD auto insurance is a few hundred yuan cheaper than traditional insurance. Taking the Qin L mid-range model as an example, choosing BYD auto insurance is about 800 yuan cheaper than other insurance. At the same time, there are no mandatory requirements in the store, and consumers are free to choose, but currently, many users in the store choose BYD auto insurance.

Some users also said that their new energy vehicle's insurance quote from a certain insurance company was 4,800 yuan, but BYD's quote was only 3,500 yuan. Many car owners who have recently renewed their insurance with other insurance companies said they wanted to cancel their insurance and buy BYD auto insurance.

Regarding BYD Property Insurance's relatively affordable new energy auto insurance premium quotes, industry insiders said that thanks to BYD's status as a new energy vehicle manufacturer, it has a deeper understanding of the vehicle's structure, performance, and risk points, enabling more precise pricing. At the same time, BYD Property Insurance has further compressed premium space by optimizing processes and reducing costs. BYD's entry into the insurance industry is equivalent to direct sales for consumers, eliminating traditional insurance intermediary commissions, resulting in lower prices and better service.

Another advantage of BYD is that it controls its own parts and channels. Currently, all provinces where BYD auto insurance is available for purchase, including Anhui, Jiangxi, Shandong, Henan, Hunan, Guangdong, and Shaanxi, have BYD factories. All parts can be supplied by the original factory, ensuring both price and quality. At this pace, the next batch of provinces to open should be Jiangsu, which has a factory in Changzhou, and Hubei, which has a factory in Xiangyang.

However, some consumers have concerns about BYD auto insurance with more price advantages. Some consumers said that they are unsure about the execution of new car companies' new business, such as the speed of claims settlement and service, and are reluctant to take risks. They prefer to choose large insurance companies to insure their vehicles.

Insurance industry professionals said that operating auto insurance covers various aspects such as sales, underwriting, and claims settlement, requiring a large number of underwriting and claims service outlets and a 24-hour standby service team for accident investigations. Compared with traditional auto insurance companies such as Ping An Insurance and China Pacific Insurance, BYD Insurance is still in its infancy in terms of the number of outlets, response speed, and handling experience. Consumers still need to make careful choices.

BYD's combination punch

"The claims ratio of new energy auto insurance in the entire industry is about 10 percentage points higher than that of gasoline-powered vehicles." Yu Ze, President of PICC Property and Casualty Insurance, said at the 2023 Annual Performance Press Conference of PICC. Data shows that in 2022, the overall premium scale of new energy vehicles was about 65 billion yuan, and the average premium for new energy auto insurance was 4,139 yuan, which was 81% higher than the average premium for gasoline-powered vehicles.

On one hand, new energy car owners complain about the high cost of auto insurance, while on the other hand, insurance companies are shouting losses.

The high premium growth of new energy auto insurance has not brought high profits, and even underwriting losses are quite common. High claims ratios and high accident rates have become key factors and constraints for many users purchasing new energy vehicles.

Therefore, BYD's entry into auto insurance is also intended to form a combination punch with price competition, further reducing the purchase threshold for new energy vehicles, and thus achieving a virtuous cycle of increasing BYD's sales.

"BYD's entry into the new energy vehicle insurance industry will leverage its accumulated expertise in technology, sales, and users to empower the new energy vehicle insurance industry in terms of cost savings and scientific claims settlement," Wang Chuanfu once said.

At the same time, according to Shenwan Hongyuan Securities' research report, it is expected that by 2025, the domestic new energy auto insurance premium scale will reach 154.3 billion yuan, accounting for approximately 15.7% of the total auto insurance premium. By 2030, the new energy auto insurance premium scale will reach 1.3 trillion yuan, accounting for approximately 31.3% of the total auto insurance premium.

To seize this emerging market of new energy auto insurance, mainstream domestic and foreign new energy automakers have successively tried their hand at the insurance industry. Before BYD's entry, Tesla, NIO, and Xpeng Motors have all made layouts.

Judging from BYD auto insurance, it has a huge dealer and after-sales network, with factories spread across the country, a large user base, and high sales. Although it is a newcomer to auto insurance, entering the auto insurance market at this stage still has more advantages than disadvantages. On the one hand, it can bring considerable income to BYD; on the other hand, doing well in auto insurance business can also enhance user stickiness and further increase sales.

According to BYD's June 2024 production and sales report, BYD sold 341,658 new energy vehicles in June, up 35% year-on-year from 253,046 in the same period last year. Cumulative sales for the year reached 1,612,983 vehicles, up 28.46% year-on-year from 1,255,637 vehicles in the same period last year. Among them, BYD auto insurance has also contributed to a certain extent.

In the future, as BYD's auto insurance business becomes more mature and more provinces are opened, BYD's sales are expected to see a significant increase. Of course, new things are often two-sided. If BYD auto insurance fails to meet user expectations in terms of follow-up service in the future, it may also have a negative impact on the BYD brand. Therefore, whether BYD auto insurance business will bring brand enhancement effects still has a long way to go.