Learning from industry leaders: BYD
BYD is a powerful automotive brand that is currently dominating the headlines for its technological innovation and its ambitious plans for global expansion. In this brief article we identify what differentiates BYD and what we can learn from their operations.
The rapid rise of BYD Auto
Founded in 1995, BYD developed a range of traditional Internal Combustion Engine (ICE) vehicles, but by 2020 had transitioned to the production of Electric Vehicles (EVs). Their growth trajectory was rapid, and by the fourth quarter of 2023, BYD had surpassed Tesla to become the world’s top selling battery electric vehicle manufacturer. With ambitious plans to build their presence across the globe, they are now becoming a significant brand in European markets.
The company is also a world leader in the production of their own rechargeable batteries. BYD’s passenger vehicle ‘Blade Battery’ design has been recognised for its outstanding strength and safety, with the long, flat battery design, featuring Cell to Pack (CTP) technology, optimising space utilisation while still allowing a generous range and fast charging.
BYD in Europe
From a single product offering in Norway in 2021, the brand is now growing its dealer network in territories such as the UK, France, Germany and Italy. Despite the penetration of EU markets by Chinese brands becoming a hot political topic, the firm is planning to build vehicles from a new plant in Hungary within the next three years and is also working on a green-lighting a second European factory.
At the FT’s 2024 Future of the Car Conference, BYD’s European MD Michael Shu discussed the firm’s plans and announced that its Seagull model will soon be launched in European markets. This important model will sit at the lower end of the range to further expand an already impressive passenger vehicle portfolio. The Seagull will compete alongside the likes of the Dacia Spring and Citroen e-C3 in a vitally important segment, which is focused on bringing all-electric mobility to a wider range of customers.
Market share ambitions
EV markets offer lower barriers to entry than in traditional ICE vehicle markets. Developing a vehicle around an efficient, established battery powertrain is less complex and that is why new brands can use existing technology and more quickly build a product around it. But while some EV brands have gotten off to a strong start, others, such as Fisker, as well as some Chinese brands, have struggled to establish themselves.
Clearly, a generous amount of marketing spend is also necessary for a new entrant to gain brand recognition at scale, and this is a challenge the BYD is rising to. During the 2024 European football tournament for example, the BYD logo was prominently displayed in both the stadiums and across the continent’s TV screens. And while heritage brands have dominated the EU market for so many years, research has demonstrated that EV buyers are more ‘brand agnostic’, meaning customers are willing to consider other and less well-known brands that can offer them the best mobility solution to suit their lifestyle.
Product differentiation is also key to success. BYD’s messaging is focused on innovation that will appeal to technology-hungry customers, an example being the unusual swivelling touchscreens fitted to EVs, and when it comes to aesthetics, BYD has also turned heads. With unique design touches such as guitar string-style door pockets and wave-shaped dashboards, these features might be controversial but are impactful and gain a great deal of media attention. The company displays an impressive ability to quickly identify exactly what their customer wants, needs and likes and is especially focused on pricing their vehicles at competitive levels that offer value for money.
Manufacturing efficiencies, software capability and sustainability
BYD’s high level of ‘vertical integration’ , including the manufacture and of their own batteries helps them to deliver cost and production efficiencies that have a direct impact on profit margins.
BYD are also successfully producing their own operating system for their software defined vehicles. Their approach has seen them rated in the Top 10 of Gartner's Digital Automaker Index (2024). This ensure BYD can derive maximum benefit from Connectivity features without dependence on a third-party supplier. A partnership with NVIDIA also boosts BYD’s software capability through the NVIDIA DRIVE Orin™ centralised compute platform, which features the highest performance automotive-grade processor on the market.
BYD also understands the importance of clear messaging from a sustainability perspective. The mid-range BYD Dolphin, for example, was one of the first cars to be rigorously tested by Green NCAP in 2024, receiving a five-star rating. Green NCAP is an independent, international organisation focused on assessing the performance of passenger cars around three key areas: tailpipe emissions, real-world energy consumption and Greenhouse Gas emissions, based on a ‘Well-to-Wheel’ approach, which evaluates efficiency and emissions of an energy source by considering the vehicle’s entire lifecycle.
How are emerging brands such as BYD impacting the major players?
Regardless of the potential tariffs that governments might be considering (largely to mitigate what some consider to be BYD’s advantageous cost and pricing structure), it’s clear that BYD is here to stay. With a commitment to building manufacturing plants on European soil, they can only be expected to increase market share over short, medium and longer term horizons.
Ultimately, of course, it is the consumer in control. A customer will only buy or lease a vehicle that suits their budget, meets their needs and reflects their lifestyle. And whilst it seems BYD is able to market the EVs that people want to buy, it is still early days. Established European brands have risen to the challenge through a range of highly capable EVs, which are either already available, or are about to launch.
To remain competitive, European brands will certainly need to understand what a brand such as BYD is delivering in terms of technological and product development. In the short term, however, EVs are still constrained by the almost ‘one-size’ shape and weight of their battery packs, which means vehicle packaging and performance is currently less of a product differentiator in the eyes of the consumer. Instead, customer experience remains a driving force in EV adoption and a core reason why a consumer will prefer one brand over another. Dealers’ teams have a vital role to play. And while OEMs continue to ponder the viability of the Agency direct-to-market model, it is clear that BYD understood from the outset that currently, the importance of a capable franchised dealer model was critical in gaining a foothold in European territories.
People before process
At PHM, we recognise that every brand requires a tailored approach to their needs. Our unwavering passion for people, and understanding that every organisational culture is different, is reflected in the robust partnerships we have forged with global automotive brands. In an industry where change is certain but unpredictable, you can be confident that we can provide the consultative, hands-on advice and support that you need, both now and in the future.
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