BYD’s new energy vehicle market is losing its advantages and may be marginalized

On May 28, BYD Co., Ltd. announced that it would increase investment of RMB 400 million in its joint venture brand, Denza New Energy. At the same time, Daimler, as another shareholder, also increased investment of RMB 400 million in Denza New Energy. This is also the second time that BYD and Daimler, as shareholders, have increased investment to "transfuse blood" to Denza.

Although both shareholders are still increasing their capital, the current status of the development of BYD New Energy is not optimistic. Public data shows that the sales volume of BYD New Energy in the first four months of this year was only in the three digits, which is much lower than the sales volume of most new energy models on sale.

Both shareholders increased their capital in Tengshi several times

The announcement shows that according to the business development needs of Denza New Energy, BYD Auto Industry Co., Ltd., a subsidiary of BYD, increased its capital by RMB 400 million in Denza New Energy. In addition, Daimler Greater China Investment Co., Ltd. (Daimler for short), another shareholder of Denza New Energy, also increased its capital by RMB 400 million in Denza New Energy.

Earlier, some media mentioned that the capital increase was because "Denza was short of funds and urgently needed a transfusion from both shareholders". The announcement explained that the 800 million yuan of capital increase from BYD and Daimler shareholders to Denza New Energy was mainly used to promote the sustainable development of Denza's new energy vehicle business, further expand the sales and service network, strengthen cooperation with Mercedes-Benz's core strategic dealer group, enter multiple Mercedes-Benz stores in more cities, and cover the sales and service network in first-tier cities and most provincial capitals across the country, thereby increasing the sales of the newly launched Denza 500.

In fact, this is not the first time that BYD and Daimler have provided capital injections to Denza New Energy. In the eight years since its establishment, the two companies increased their capital in Denza New Energy by RMB 450 million, RMB 150 million, RMB 280 million, and RMB 500 million in 2012, 2013, 2014, and 2017, respectively.

The last time the two shareholders increased their capital by 500 million yuan, it was mainly used for the operating capital of BYD Tang New Energy to alleviate the impact of the extended subsidy repayment period caused by the adjustment of the national new energy vehicle subsidy policy on the operating capital of BYD Tang New Energy. It also stated that the capital increase funds will be used to further expand the sales and service network, enhance the brand awareness of BYD Tang New Energy, launch facelifts, expand sales, and strive to achieve profitability as soon as possible.

In this regard, the Beijing News reporter called the relevant person in charge of BYD's public relations department, but failed to get in touch.

Product sales continue to be sluggish

The Beijing News reporter noticed that the two recent capital increases mentioned that the funds would be mainly used to further expand the sales and service network and increase sales. However, the sales of Denza have always been unsatisfactory.

Denza, which is positioned as a high-end electric car brand, launched its first pure electric model, the Denza 300, in 2014. Its starting price of 369,000 yuan is indeed enough to buy a high-end car. In this regard, Hu Xiaoqing, vice president of sales and marketing of Shenzhen Denza New Energy Automobile Co., Ltd., also said in an interview with the media that the landing price of Denza products after subsidies is around 300,000 yuan, which is not cheap. In addition, consumers are becoming more and more sensitive to prices, which is indeed a more severe challenge for new energy vehicle companies.

In fact, after the launch of the BYD 300 in September 2014, it was successively launched in Shanghai, Beijing, and Shenzhen, and selected some Mercedes-Benz dealers for sales. At that time, the new energy vehicle market was still in its early stages, and the product ultimately failed to gain market share. In February 2017, the BYD 400 was officially launched and also chose to enter 13 Mercedes-Benz dealers in Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin, Hangzhou and other places for sales and after-sales. Today, the new energy industry has entered a period of rapid development, and BYD New Energy seems to have failed to take advantage of the trend to "take off".

Data shows that in 2015, the retail sales of Denza were only 2,888 units. The situation was even worse in 2016, with actual sales of 2,287 units, a year-on-year decline of 21%, and only 38% of the sales target of 6,000 units. In 2017, sales increased compared with the previous two years, reaching more than 4,700 units. In the first four months of this year, the sales of the Denza brand were only in the three digits, and the total sales since its launch have only exceeded 10,000 units.

Brands may be marginalized

As early as 2012, at the launch of the Denza brand, BYD Auto Chairman Wang Chuanfu said: "BYD provides battery and drive technology, Mercedes-Benz has vehicle technology, BYD can learn from Daimler's experience and car-making philosophy, and Daimler can gain vitality from BYD." From this, it can be seen that the starting line of Denza New Energy is not low. But in fact, whether in terms of brand or sales, Denza New Energy is on the edge of the market.

On the one hand, BYD has been enriching its "new energy dynasty". So far, BYD has launched a number of new energy models such as Qin, Tang, Song, and Yuan. On the other hand, Daimler is also accelerating its layout in the new energy field.

Last July, Daimler and BAIC Group signed a new framework agreement. The two parties will jointly invest RMB 5 billion to build a pure electric vehicle production base and a power battery factory in Beijing Benz to produce pure electric vehicles of the Mercedes-Benz brand. This is also the first power battery factory outside of Germany in Daimler's global production network. In March this year, Daimler has completed the acquisition of BAIC New Energy's shares, with a shareholding ratio of 3.93%. Further promote cooperation in the field of new energy.

In summary, both BYD and Daimler have been working tirelessly on product upgrades and are actively developing new energy vehicles. However, the development of Denza has not been clear enough.

Although the shareholders' capital increase is intended to further reduce the asset-liability ratio and improve the market performance of the new car, the Denza 500, some industry insiders pointed out that after the launch of the Denza, the shareholders have not put in any effort, resulting in the Denza, which was originally ahead at the starting line, being overtaken by many new energy brands. In addition, the market positioning of the Denza New Energy is not clear enough. If consumers are sensitive to price, they can choose a cheaper new energy vehicle. If they consider the brand, they may prefer a luxury car with more mature products. This may be the reason why the Denza has never been able to open up the market.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.