Introduction: Open-minded and daring to think, act, and persist.

Lishi | Author: Lishi Business Review | Producer

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After the downturn in the internet industry, new energy vehicles have become China's most eye-catching industry in recent years. Among new energy vehicle companies, BYD stands out as the most impressive.

According to the latest sales data for October 2024 released by major automakers, BYD (including Denza, Look up , Equation Auto, and export vehicles) sold 502,657 vehicles, leading the industry by a wide margin. It is expected that BYD will sell over 4 million vehicles in 2024.

However, this is far from BYD's final destination.

Firstly, BYD still maintains strong growth momentum in the new energy vehicle sector. As China's new energy market penetration gradually increases, BYD's sales in the domestic market will continue to rise. Additionally, BYD has enormous potential in the global market. With a neutral estimate, BYD's annual sales are expected to reach 12 million vehicles globally in the future, triple the 4 million vehicles sold this year.

Secondly, BYD is essentially a "green energy" company. New energy vehicles are just the best application scenario for its advanced new energy technologies at this stage. In the future, there are huge possibilities in areas such as power batteries, energy storage, solar photovoltaics, and rail transportation.

Just before 2019, BYD was facing an existential crisis. So, how did BYD safely navigate this crisis and achieve a remarkable turnaround to become the world's largest new energy vehicle company? To find the answer, we need to return to BYD's origins.

Founded in 1994, this year marks BYD's 30th anniversary. Yesterday, BYD held a ceremony at its headquarters in Shenzhen to celebrate this milestone. During the ceremony, BYD's founder, Wang Chuanfu, systematically reviewed BYD's 30-year entrepreneurial history, providing some insight into how BYD became what it is today.

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A systematic review of BYD's 30 years can be broadly divided into four development stages.

The first stage was BYD's startup phase focused on the battery industry.

During this stage, BYD had no resources or background, only the daring spirit of youth. Unable to afford advanced equipment, they dismantled automated assembly lines and replaced them with a manual + fixture model. Unable to purchase raw materials, they mixed electrolytes in the lab using chemical reagents. Eventually, starting from scratch, they manually produced nickel-cadmium batteries, lithium batteries, and developed advanced battery production lines, becoming a leading player in the global battery industry.

The second stage was entering the consumer electronics contract manufacturing industry centered on mobile phones.

Due to cooperation with many top global mobile phone companies in the battery business, BYD not only gained access to high-quality customer resources but also developed world-leading manufacturing capabilities through the rigorous demands of these companies.

As overseas consumer electronics giants increased their outsourcing needs in China, BYD's resources and capabilities provided it with an opportunity to enter the mobile phone contract manufacturing industry. After entering this field, BYD leveraged its outstanding management capabilities to eventually become the second-largest mobile phone contract manufacturer globally, second only to Foxconn.

The third stage was entering the automotive industry.

Since mobile phones involve many precise components, their production is one of the most complex categories among all products. The experience gained in mobile phone contract manufacturing gave BYD the confidence and foundation to venture into other complex product areas.

Entering the 21st century, the automotive industry is recognized as one of the biggest industrial opportunities. Drawing on its experience in mobile phone contract manufacturing, Wang Chuanfu believed that manufacturing cars would not be difficult for BYD. In 2003, BYD entered the automotive business by acquiring Xi'an Qinchuan Automobile Company. Combining BYD's strong battery technology background, Wang Chuanfu invested heavily in power battery research and development for new energy vehicles, positioning pure electric vehicles as BYD's ultimate vision in the automotive field.

However, in 2003, China's pure electric vehicle market was far from mature, so BYD adopted a product strategy combining traditional gasoline, pure electric, and hybrid power types. In 2005, it launched its first gasoline car, Fuleer; in 2008, it released its first hybrid car, F3DM; and in 2010, it introduced its first pure electric vehicle, e6.

During this process, due to the small sales volume of electric vehicles, BYD consistently used profits from batteries, mobile phone contract manufacturing, and gasoline vehicles to support electric vehicle research and development, leading to continuous iterations and upgrades in BYD's electric vehicle technology and products, ultimately achieving overall leadership in the new energy vehicle sector.

The fourth stage was focusing on new energy vehicles.

Tesla's tremendous success in the new energy vehicle sector attracted a flood of traditional automakers and new automotive forces, jointly accelerating the transformation of the global automotive industry into the new energy vehicle era.

The improved product quality on the supply side of new energy vehicles has also led to a surge in consumer demand, fully showcasing BYD's technological and product advantages. Since 2020, BYD's new energy vehicle sales have been on a steady rise.

Especially in the plug-in hybrid field, leveraging its sales volume advantage and strong integrated supply chain, BYD gradually achieved the same pricing as traditional gasoline vehicles of the same level. This prompted BYD to officially announce in 2022 that it would completely phase out gasoline vehicle models and focus solely on new energy vehicles.

Since fully focusing on the new energy vehicle sector, BYD's sales have surged. After surpassing 100,000 monthly sales for the first time in March 2022, it quickly achieved 200,000, 300,000, and 400,000 monthly sales, reaching a record 500,000 sales in October this year.

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After a detailed review of BYD's four development stages, the author believes that BYD offers four critical insights for the Chinese business community.

First, BYD's success in larger fields such as new energy vehicles and mobile phone contract manufacturing is rooted in its industry leadership in the battery sector. This suggests that other companies should focus on excelling in their areas of expertise. When they reach the pinnacle in their primary business, new opportunities will naturally arise, rather than branching out prematurely.

Second, BYD's tremendous success today did not happen overnight but was the result of long-term exploration and multiple strategic iterations. This suggests that companies should actively seek change but avoid being overly ambitious in their strategies, striking a balance between strategic ambition and patience. As BYD's founder, Wang Chuanfu, said at the 30th-anniversary celebration, "Daring to think, act, and persist is what has brought BYD to where it is today."

Third, throughout its business development, BYD has keenly grasped the two most critical factors determining a company's long-term success: quality and cost. It has implemented short- and long-term strategies centered around these factors. The short-term strategy leverages China's labor cost advantage to build a semi-automated model combining manual labor and fixtures. The long-term and fundamental strategy is to achieve leadership in "quality and cost" through core technology breakthroughs.

BYD's practice provides crucial insights for most Chinese companies: rather than seeking quick wins through non-critical factors like appearance and flashy features, companies must focus on the true keys to long-term success. Recognizing that long-term leadership in these critical factors must rely on technological breakthroughs, the earlier a company invests in technology, the sooner it will see results. In contrast, some new automotive forces in the current industry focus more on appearance and flashy features, lacking accumulation in the core factors of quality, cost, and technology.

Lastly, it comes down to the fundamental principle of "people management." Even with the right strategy and tactics, a company cannot succeed without a loyal and capable team to implement them. In the past, public opinion has focused too much on BYD's technological breakthroughs and business achievements, overlooking its excellent practices in "talent development." In fact, BYD places great importance on talent development.

For example, BYD is famous for its "car dismantling culture." In its early stages, BYD recruited students from prestigious universities and spent tens of millions annually to purchase various branded cars for these new graduates to disassemble and study hands-on. All purchased cars were from top brands; Wang Chuanfu believed that studying second-tier brands was meaningless. This culture quickly cultivated a large number of outstanding engineers who became the talent foundation for BYD's future technological transformation.

The aforementioned "car dismantling culture" is just a snapshot of BYD's talent development. Its talent strategy can be summarized by two keywords: " Crowd Strategy " (people sea strategy) and " Human Heart Strategy " (people's heart strategy). " Crowd Strategy " involves overstaffing to increase talent density, while " Human Heart Strategy " creates a "family culture," providing a work and living environment that fully unleashes potential from various dimensions, including spiritual and material aspects, to discourage employees from leaving.

To date, BYD has 11 major research institutes and 110,000 engineers. Among the college students recruited this year, nearly 70% are master's and doctoral students, and nearly 80% are R&D personnel. Additionally, BYD has established a Technical Science Research Institute where a team of engineering experts focuses on mathematics, physics, materials science, and other technical sciences, exploring solutions from fundamental theories. After joining, these technical talents are unconditionally encouraged to pursue various research topics. When presenting projects to Wang Chuanfu, they often discuss them together, allowing them to try first and proceed as long as the direction is correct. This open and inclusive atmosphere keeps BYD's technological innovation thriving.

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Beyond these core insights, BYD has excelled in various functional areas such as R&D, products, supply chains, branding, marketing, and channels, worthy of systematic learning by other companies. However, these practices are, to some extent, the results of the aforementioned core ideas.

Therefore, the author suggests that companies hoping to learn from BYD's successful experience should not mistake the "fruits" for the "causes" of its success. Instead, they should delve deeper into the evolutionary logic and roots of BYD's success behind these surface-level "fruits" to more accurately grasp the core essence of this company.