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On May 30, Li Qian, secretary of the board of directors of BYD, answered the question of why BYD cut fuel vehicles during a financial visit to CCTV. It says it cuts fuel cars in part because BYD, as the global leader in new energy vehicles, should concentrate on developing electric vehicles to lead the industry to a new level. On the other hand: it is true that BYD electric cars are completely in short supply and insufficient production capacity, so it is necessary to free up the production capacity of fuel vehicles for electric vehicles, so cutting fuel vehicles should be a very important strategic decision for the company. and it is of great help to the company in the short, medium and long term.

On April 3 this year, BYD suddenly announced that it would stop the production of fuel vehicles. According to the needs of the company's strategic development, the company has stopped the production of fuel vehicles since March 2022, it said in a note. In the future, in the automotive sector, the company will focus on pure electric and plug-in hybrid vehicles. At the same time, the company will continue to produce and supply fuel auto parts to provide existing fuel car customers with continuous service and after-sales protection, as well as the supply of spare parts throughout the life cycle to ensure worry-free operation. The news also attracted the attention of the industry. However, BYD's decision to withdraw from the fuel car market has long been on the Internet.

As early as June 2021, a summary of BYD's internal communication meeting was published on the Internet. The picture revealed: "will all the company's fuel cars be completely replaced and discontinued by DMI and DMP in the future?" "Internal sales of fuel vehicles are expected to be about 150000 this year, and plans for future fuel vehicles have been stopped and fully replaced as soon as next year (as long as DMI can produce 80, 000 vehicles per month and ship 40, 000 units per month)," BYD said. However, BYD then responded to the matter: "there is no such plan at present, there is demand from the market and consumers, and there is demand from partner dealers."

On the issue of insufficient production capacity, from a product point of view, BYD's newly launched Qin PLUS DM-i, Song PLUS DM-i, Tang DM-i and other DM-i super hybrid models are very popular in the market, but due to capacity constraints, there has always been a situation that demand exceeds supply, and there are still a lot of user messages urging delivery under BYD's official Weibo account. In addition, according to earlier disclosure by BYD, the cumulative outstanding orders of BYD has reached 400000 vehicles, and the data is still increasing month by month. From a number of complaint platforms, it is not difficult to see that many owners of BYD Qin PLUS DM-i, dolphins and other models complain about not being able to mention cars on the platform. For BYD, how to solve the problem of insufficient production capacity has also become a top priority. It does seem to be a very important strategic decision to supply limited chips and spare parts to hot-selling new energy vehicle products.

According to relevant data, BYD was established in 1995. It has three business segments: automobile business, mobile phone components and assembly business, rechargeable battery and photovoltaic business. According to BYD's financial results for 2021, the three sectors accounted for about 52%, 40% and 8% of the company's total revenue, respectively, of which the revenue from cars, automobile-related products and other products business was 112.489 billion yuan, up 33.93% from the same period last year. Judging from the data, the automotive business segment is the main source of revenue for BYD, while the revenue growth is mainly due to the increase in sales of new energy vehicles. According to relevant data, BYD sold 740100 cars in 2021, an increase of 73.34 percent over the same period last year, of which 593700 new energy passenger vehicles were sold, an increase of 231.6 percent over the same period last year. In addition, according to the retail sales list of the passenger car market in April, only BYD among the top 15 car companies achieved year-on-year growth, with a number of car companies falling more than 40%.

For its 2022 sales target, BYD plans to meet its sales target of 1.2 million vehicles this year, saying it will hit its annual sales target of 2 million vehicles if the supply chain improves. According to the latest data, BYD sold a total of 392371 vehicles from January to April 2022, an increase of 387.94 percent over the same period last year, including 390212 new energy passenger vehicles, an increase of 397.63 percent over the same period last year. If the supply of production capacity is guaranteed, BYD's sales target of 1.2 million vehicles should not be a problem.

Under the trend of globalization, the transformation from fuel vehicles to new energy vehicles has become an inevitable trend. BYD stopped production of fuel vehicles does represent the inevitable trend of the transformation of the automotive industry, on behalf of the product has entered a new period of development, such a transformation is in line with BYD's consistent strategic thinking and historical accumulation. However, in the current environment, shortage of chips, shortage of battery raw materials, rising raw materials and other reasons will also put some pressure on BYD to produce new energy vehicles.

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