Strengthening Smart Driving: Is BYD Complete?

In the bustling landscape of the global automotive market, 2024 has become a notable year for BYDSurpassing a staggering sales figure of over 4.27 million units, the company has triumphed not just in terms of volumes in China’s automotive realm but also globally in the new energy vehicle (NEV) sectorThis impressive feat is underscored by a remarkable overseas sales growth of 71.9%, reaching a total of 417,204 unitsBYD’s capabilities in manufacturing and innovation emphasize its formidable presence on the global stage.

Despite its triumph in sales, BYD's strides in the intelligent driving sector have recently been perceived as insufficiently pronounced, often regarded as a shortcomingWhile numerous automakers unveil advanced autonomous features like Navigation On Autopilot (NOA) or advanced parking technologies, BYD appeared to be in a preparatory phase, silently ramping up its innovationsThis dichotomy begs the question: Can they bridge the gap and compete vigorously in the realm of intelligent driving?

Electric vehicles represent only the first half of the journey toward new energy solutions; intelligent driving embodies the latter halfThe absence of sophisticated intelligent driving capabilities significantly diminishes the essence of NEVs, reducing them to mere electric platforms devoid of their potential.

BYD’s momentous entry into this competitive realm crystallized during its Intelligent Driving unveiling on February 10. The introduction of the "Eye of the God" high-level driving system was nothing short of spectacular

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In response, competitors saw a sharp decline in their stock prices as they realized the profound implications of BYD’s advancements in intelligent technology.

With the enhancement of intelligent driving features, is BYD finally emerging as a fully realized contender in the automotive sphere?

A New Era of Intelligent Driving for All

The market’s inclination towards intelligent driving stems from the inherent value proposition of this advanced technologyWhile traditional car sales serve as the main revenue stream, intelligent driving features present additional monetization avenues, thereby allowing companies to diversify their offerings and revenue strategiesThese high-tech services can be segmented and charged independently, making an alluring proposition for both consumers and corporations.

However, BYD has taken a different route, opting not to cater to the conventional business models that capitalize on these lucrative featuresInstead, the company is integrating smart driving capabilities into all their vehicles as standard, thus consciously shifting from a model that segments advanced features as luxury options to one where they are inherent components of every model.

Beginning in 2025, every model in BYD’s lineup will include “Eye of the God” high-end intelligent driving technology, from luxury vehicles to entry-level models priced around ¥69,800. This decision guarantees accessibility to advanced driving aids, including self-parking and NOA capabilities, without any extra fees.

BYD has substantially refreshed its intelligent driving solution, the “Eye of the God,” segmenting it into three tiers:

The “Eye of the God A” (with a golden suffix, specifically DiPilot 600): This version features three Lidar units and two OrinX chips with a computational power of 508 TOPS, exclusively available in the luxury Yangwang series;

The “Eye of the God B” (with a red suffix, specifically DiPilot 300): Incorporating one to two Lidar units and a single OrinX chip with 254 TOPS, it supports urban NOA functionalities and is featured in Tengshi and BYD's primary brands;

The “Eye of the God C” (with a blue suffix, specifically DiPilot 100): This variant forgoes Lidar, relying on a purely visual technique comprising five mm-wave radars and twelve cameras with an Orin N/J6 chip, providing 84/128 TOPS, exclusively supporting highway NOA functionalities.

In a media frenzy, Wang Chuanfu's dismissal of fully autonomous driving as nonsense alarmed observers in 2023, painting BYD as lacking momentum in intelligent driving

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This perception wasn’t entirely incorrect; Wang, an engineer by trade, has always emphasized technology and its gradual evolution over ostentatious claimsAs he noted, the technological maturity must precede any public release.

But BYD hasn’t been idle; it has continuously invested in intelligent driving capabilities, maintaining a low-key yet concerted effort in honing its nexus of technologiesLong before the latest iteration, BYD introduced the DiPilot intelligent driving assistance system, pioneering enhancements in existing L2-level autonomous driving capabilitiesAs development progressed, BYD launched the more sophisticated “Eye of the God” system in July 2023, showcasing cutting-edge sensors, robust computing frameworks, and intelligent algorithms, culminating in formidable perception, decision-making, and execution abilities.

Wang Chuanfu emphasized the company’s early strategic emphasis on intelligent technology, indicating that misconceptions lingered concerning its commitmentHe pointed out that BYD is inherently a tech company that has adhered to a philosophy of doing more while saying less, developing technologies quietly until they can exceed expectations upon release.

On December 24, 2024, BYD will officially launch its city navigation capabilities without maps for the “Eye of the God” system across the nation, signifying a leap forward in their self-driving technologies.

In January 2024, BYD introduced its overarching intelligent strategy, linking its electric and smart initiatives across various sectors

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This strategic framework produced several innovative functionalities, including Cloud Chariot predicting maneuvers, simplified parking solutions, and stabilization controls for high-speed blowoutsAt the February 10 unveiling, BYD also announced full integration of the DeepSeek system into its cloud-based structure.

The enhancements in BYD's leadership capabilities now promise intelligent driving functionalities that can surpass 1,000 kilometers, with Advanced Emergency Braking (AEB) capabilities allowing for stable stopping at speeds of up to 100 km/h and a commendable customer parking success rate of 99%.

In practical terms, multiple models have already equipped BYD vehicles with the intelligent driving systemThis includes vehicles such as the Tengshi N7 and Yangwang U8, which have exhibited commendable performance in standardized scenarios.

Nonetheless, an ongoing industry-wide challenge remains: intelligent driving features have primarily been relegated to high-end vehicle options, often incurring additional costs of thousands of yuan.

Now, BYD is pushing forth an ambitious initiative, aiming for intelligent driving to become an inherent standard across all offerings, which is a significant leap forward in the industryThis paradigm shift aspires to democratize intelligent driving technology, ensuring it is no longer a luxury feature reserved for high-end models, but rather an accessible standard for all consumers, even without increased costs associated with these advancements.

In this new AI era, competitiveness in the intelligent realm of new energy vehicles is at a heightened pace

If previous perceptions have placed BYD lagging in intelligent driving capabilities, this initiative heralds a pivotal shift in consumer mentality which could have substantial implications in forthcoming competitions.

Numerous customers initially opted for BYD solely for its cost-effectiveness, but with a changing perception that BYD offers both quality and affordability, customer loyalty towards the brand could significantly strengthen.

BYD is redefining the industry's standards, revolutionizing how it operates and reshaping its future.

In 2024, BYD ignited a new “price war” with its Qin PLUS Honor Edition starting at ¥79,800. Fast forward to 2025, with the intelligent driving revolution and its democratization, BYD is poised to elevate the industry’s competitiveness yet again, setting the stage for an accelerated phase-out of less innovative models.

The Competitive Landscape of BYD

BYD's business portfolio primarily encompasses electric vehicles, smartphone components and assembly, secondary chargeable batteries, and photovoltaic sectors, with a progressive thrust toward urban rail transit.

Electric vehicle operations account for over 80% of BYD's revenue and more than 90% of its gross profit, emphasizing the automobile sector's critical role

Its diverse offerings include brands like BYD, Tengshi, Fangcheng Leopard, and Yangwang, with models covering everything from sedans to SUVs and pickup trucks, indicating a broad pricing spectrum ranging from tens of thousands to millions of yuanThis extensive range enhances its adaptability to various consumer preferences and market demands.

Despite intelligent driving not being BYD's flagship technology, the company's philosophy of “technology as king, innovation at the core” truly resonates within its operationsThe firm maintains an extensive patent portfolio, accumulating over 48,000 filed and more than 30,000 authorized patentsNotable advancements include blade batteries, the DM-i super hybrid system, and a suite of intelligent features, all considered top-tier innovations in the automotive industry.

Research indicating that roughly 75% of the components in the BYD Seal model are self-developed underscores the brand's commitment to self-sufficiency within its core supply chain.

BYD’s core three-electric system is entirely developed in-house, placing it in a unique position among its competitors concerning supply chain autonomyInvestments in upstream lithium resources and midstream component manufacturing are performance-enhanced through subsidiaries providing control over critical elements like batteries, motors, and electronic control systems, solidifying BYD's standing in the power sector.

The integration of operations reaches new heights; given BYD's scale, the cost advantages are difficult for rivals to replicate.

Intelligent driving is now no longer considered a disadvantage as BYD's hardware and software capabilities have matured significantly

This transition is notable: BYD is establishing a supercomputer center with an intelligent driving R&D team exceeding 5,000, including a focused core algorithm team of over 1,000 individualsWith robust sales, BYD can now train its intelligent driving solutions extensively, achieving a remarkable training mileage of 72 million kilometers daily.

The realization of BYD’s capabilities leads to a cycle of self-improvement; with its technological prowess and manufacturing capacity at the forefront, as intelligent driving components transition toward in-house production, operational costs are expected to decrease furtherThe democratization of intelligent driving will not impose excessive strain on BYD's operations, yet will escalate demands on production output and capabilities.

Simultaneously, abroad, BYD operates with advantages in logistics, having 4 roll-on/roll-off vessels currently operational and expects to launch an additional four by 2025 as its production extends into new factories located in Uzbekistan, Thailand, Brazil, and Hungary.

Moving forward, BYD appears well-positioned to amplify its footprint within global markets, hinting toward a potential upward adjustment in projected growth rates.

Profitability prospects may also be more optimistic compared to growth metrics.

In the first half of 2024, BYD’s average selling price, gross profit per vehicle, and net profit attributable to shareholders were ¥142,000, ¥34,000, and ¥9,000 respectively

Despite a decline in unit pricing since 2022, overarching profitability has remained relatively stable due to the benefits of scalabilityThe integration of intelligent driving technology and its cost-effectiveness alongside rising total gross profits through expanded production capabilities will likely result in a favorable influence overall.

Simultaneously, BYD sustained significant investment pressures, recording a historic high in capital expenditure at ¥122.09 billion in 2023 and a dedicated R&D outlay of ¥39.575 billionAs this peak level of expenditure begins to stabilize, BYD could potentially unlock further profitability and enhance cash flow in the coming years.

In Conclusion

The market has often perceived BYD’s intelligent driving features as a liability, relegating the brand mainly within the confines of traditional automobile manufacturingIn contrast, Tesla’s image as a cutting-edge technology company reflects a valuation heavily influenced by anticipated advancements in technologies like autonomous driving and robotics.

The valuation discrepancy between BYD and Tesla can largely be attributed to differences in overarching aspirationsIn the third quarter of 2024, BYD's revenue outpaced Tesla’s for the first time in a single quarter, achieving significant sales advantagesWith naturally expanding its capabilities in intelligent driving, will BYD pave the way for broader future ambitions?