Citi has provided an update on BYD (SZ:002594)'s business outlook and operational strategies after meeting the company's management, indicating that the EV maker is set to challenge its 2025 sales target of 5 to 6 million units.
Management at BYD expects overseas sales to double year-over-year, contributing significantly to this ambitious goal.
BYD's inventory levels are currently slightly above one month's supply, which is a marked improvement from the 2.0 to 2.5 months' worth of inventory recorded at the end of 2023 and into early 2024.
This healthier inventory position suggests improved operational efficiency and readiness to meet market demand.
Despite the growing number of competitors launching new energy vehicle (NEV) models to rival BYD, the company's management remains confident in their ability to increase sales volumes by capturing market share from traditional internal combustion engine (ICE) vehicles.
Additionally, BYD plans to shift focus towards higher-end brands and products by 2025.
In terms of production capacity, BYD's management reports that the current monthly vehicle production capacity stands at approximately 540,000 units, which equates to an annual capacity of 6.5 million units at maximum output.
On the battery production front, the annual capacity was around 300 gigawatt-hours (GWh) as of early 2024, capable of supporting the production of 7.5 million vehicles, assuming an average battery size of 40 kilowatt-hours (kWh) per vehicle.
Regarding overseas production, BYD has started operations at its Thailand factory in July 2024, with monthly production expected to ramp up to 4,000 units by November 2024. This factory is designed to have an annual capacity of 150,000 units.
The company also has plans to expand its international manufacturing footprint with a factory in Brazil, which is expected to begin production in the third quarter of 2025 with a capacity of 150,000 units annually.
Moreover, a Hungary factory is slated to start production in 2026 with an annual capacity ranging from 150,000 to 300,000 units.
BYD has also been offering cash discounts on selected models in December 2024, as observed during industry checks. This move is seen as a strategy to maintain market share without officially announcing a cut in the manufacturer's suggested retail price (MSRP).
In the area of advanced driver assistance systems (ADAS), BYD's management intends to maintain the cost of ADAS hardware at 10% of the car's price, which will make these features more affordable to customers.
For its lower-tier brands, BYD plans to equip vehicles with an in-house developed ADAS solution, ensuring that safety and technology features are accessible across its product range.
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