In April 2022, BYD announced the official cessation of gasoline vehicle production, becoming the world’s first traditional automaker to fully transition to new energy vehicles. While this decision may appear radical, it is actually an inevitable choice driven by the convergence of technological accumulation, market trends, and strategic foresight.
Technical Confidence: Vertical Integration and Innovation Chain
BYD’s confidence stems primarily from over a decade of strategic technological development. Starting with batteries, the company has progressively built a complete industrial chain covering core components like batteries, motors, and electronic control systems. Its independently developed Blade Battery achieved breakthroughs in safety and energy density, while the DM-i Super Hybrid Technology effectively addressed pain points in the transition from gasoline vehicles to pure electric models. This vertical integration capability enables BYD to maintain stability amid supply chain fluctuations while reducing costs through economies of scale. For instance, in 2021, BYD’s average price for new energy vehicles was 15% lower than comparable brands, yet it still maintained high gross margins.
Market Tailwinds: Dual Drivers of Policy and Demand
China’s “dual carbon” policies have injected strong momentum into the new energy industry, while shifts in consumer demand are equally pivotal. In 2021, China’s new energy vehicle penetration rate surged from 5% to 20%. BYD precisely captured this inflection point, with its Dynasty Series models securing a leading position in the mainstream market segment priced between 100,000 and 200,000 yuan. Data indicates that prior to discontinuing gasoline vehicles, new energy vehicles already accounted for 94% of BYD’s sales, transforming its fuel-based business from a “pillar” into a “burden.”
Strategic Decision: An All-or-Nothing Ecosystem Bet
BYD’s move isn’t isolated but an extension of its long-term ecosystem strategy. By integrating semiconductor and photovoltaic storage businesses, BYD aims to build a closed-loop “energy acquisition-storage-application” system. Discontinuing gasoline vehicles serves both as a brand marketing statement of technological confidence and a complete internal resource restructuring—annual savings from gasoline R&D can now be redirected to cutting-edge fields like autonomous driving.
Notably, BYD’s pioneering spirit is underpinned by risk buffers: its hybrid models retain the legacy of internal combustion engine technology, while varying market acceptance of pure electric vehicles overseas provides flexibility for adjustment. This blend of boldness and pragmatism epitomizes the transformation of China’s traditional manufacturing sector.
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