NewBase 19 April 2024 Energy News issue - 1717 by Khaled Al Awadi.pdf
BYD Auto - The Innovation of the Electronic Vehical Business
1. ISOM 5370
Technology and
Innovation Management
Fall 2013 – Project
BYD Auto
Cliff Cheung
Jason Yeung
Justin Allen
Wonsky Chan
Helen Ching
Joseph Man
Matthew Tam
3. Warren Buffett Invests in BYD
In 2008, Buffett invested
US$230 million to buy BYD
Auto at HK$8 per share.
In the following year, the
price increased to HK$80
per share.
What attracts Buffett?
http://www.marketwatch.com/story/warren-buffett-looks-to-electric-car-in-byd-stake
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5. Technology Based and Innovation Oriented
“The manufacturing of
cars starts with
manufacturing of talents,
then tools, and then cars.”
-- Chuanfu Wang,
Founder and CEO of BYD
“Wang announced that BYD aims to be the
number 1 automaker in China by 2015 and
number 1 in the world by 2025, reflecting
Wang's great ambition for the company.”
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www.wikinvest.com/stock/BYD_Company_(HKG:1211)
7. Business Performance of BYD
BYD Annual Report
2012
Automobile is half of the revenue
http://www.byd.com.cn/views/home/indexe.htm
Battery revenue is ~10%
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http://bydit.com/doce/investor/CorporateReport/AnnualReport/AnnualReport2012/
8. China Policy
• “Circular of the State Council on Printing and Issuing the National
Plan for Fostering Capacities for Innovation During the Twelfth FiveYear Period (《國務院關於印發「十二五」國家自主創新能力建
設規劃的通知》)”
• Government Policy to support & subsidize the industry.
• Direct Government funding for research into hybrid electric
vehicles.
• Subsidies of US$8,800 per alternative energy vehicle
purchased by bus companies, taxi operators and state
agencies.
Catch the Wave!!
9. The BYD Geography
They are building up their
international footprint.
Revenue growth in US, Europe
and India in 2012 vs 2011
xxx
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10. BYD Products
M6 - The first multi-purpose vehicle
Variety
F3DM - the world’s first dual mode electric car
Fuel Vehicles
Hybrid
eCars
eTaxi
eBus
E6 - The world’s first pure EV taxis
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K9 - pure electric bus
11. Good Enough Quality
Acceptable appearance, quality and performance
Specification
Top speed:
Quick Charge
50% capacity in 10 minutes
Range
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100 mph (160 km/h)
122 miles (200 km)
13. Technological & Process Innovations
Technology Innovation
World’s first manufacturer of mass-produced plug-in hybrid vehicles using IronPhosphate rechargeable battery: BYD F3DM.
Proprietary technology = fuel-efficiency gains
Automotive Production Innovation
Labour intensive production rather than capital intensive
Manufacturing process decomposed into simple jobs = high-quality components
Benefit: cost-savings due to large inexpensive Chinese labour pool
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14. Strategic Innovations
Alliances: Partnerships & Contracts = Network Effects
Allow Trial Usage
for Renters
Car rental market
June 2010 BYD Auto signed agreement to sell cars to Budget
Rent a-Car in Bahrain.
Experiment and
Feedback
Airport Transport
BYD supplies Schiphol Airport a new fleet of electric buses to
transfer passengers
Enhances Image
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Reduces
Maintenance
Costs
Improves
Air Quality
15. Strategic Innovations
Alliances: Partnerships & Contracts = Network Effects
Public Transport: Buses
Transport Authorities onboard.
Los Angeles: BYD Supplies fleet of 25 buses as part of Transport Authority’s
Clean Air Bus Project.
Similar ventures across Europe & Americas:
Poland, Finland, Denmark, Spain
Canada, US, Uruguay
Israel
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17. Strategic Innovations
Alliances: Joint Ventures = Network Effects
50:50 JV to make electric buses (K9) for Bulgarian energy company: Bulmineral.
BYD’s first overseas JV.
50:50 JV. BYD Auto and Daimler AG: Shenzhen BYD Daimler New Technology Co.,
Ltd
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18. Strategic Innovations
Certification
Public Transport: European Certification (Promotes same-side positive effects)
Granted Whole Vehicle Type-Approval – European coverage.
Does not require certification from individual member countries.
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19. Platform Characteristics
Product variety - manufacturing and selling of a wide range of their own vehicle lines
Consumers and Public / Private
Transport Corporations
Infrastructure (e.g. charging station)
Costs and revenues on both sides of the platform
Whole product solution
(1) Addresses a new market (luxury cars)
(2) Addresses an existing market (Private consumers)
(3) Addresses a re-segmented market (eTaxi & eBus)
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20. Network Effects
Strong Same-side Network Effects
Easy to provide infrastructure to Airports and Bus / Taxi Depots
Weak Cross-side network effects
Private consumer market is lagging in comparison due to the lack of infrastructure
Catch 22 problem for BYD
Produce EVs or Charging Stations first - Which will trigger the network effect?
High switching costs to change from gasoline vehicles
Infrastructure & Ecosystem are Key
✖
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21. Complementary Services – Evidence of Ecosystem?
BYD Charge Station Mobile Apps
Distance
Availability
https://itunes.apple.com/us/app/byd-charge/id557491810?mt=8
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22. Challenges to Overcome
• Lack of Government Support BUT highly dependent on Government
• Racing to form alliances to lock in partners to beat the competition
• Potentially disruptive innovators: Online Electric Vehicles, hydrogen fuel cell
vehicles, solar power vehicles
• Highly dependent on providing supporting infrastructure – who else will?
Charging stations
Production facilities for global market
Battery and car service centres – Critical for consumer adoption
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24. First and Fast Mover
BYD is among the first to R&D electric vehicles
Move FAST - Already signed agreement with foreign organizations and governments
Have network and connections not only in China but oversea countries
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25. Bridging Early Adopters and Mainstream Segments
BYD has strong incentive to race for scale to win through
Stronger network effects
Higher switching costs
Infrastructure is key to adoption
Locking in ‘marquee’ car manufacturers through JVs is key to network
effects.
Needs to assess consumers (money-side) sensitivity to quality and cost.
http://www.chinaanalysis.com/opinion/2011/04/the-byd-way-of-production-emerging-but-incomplete/
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26. 12-Ways of Innovation
Offerings
Platform
Success Innovation
eBus, eTaxi
EV from Battery and Auto
products
Subsidize and provide charge
stations in HK
EV for green vehicles
Recommendation
eTruck, eVan
Evolve high power eBus to
commercial vehicle
Financial package of Charger for
domestic EV driver
Safety, Battery Weight,
Duration, Speed Charge,
Battery Swap, Battery Cost
Customer
Experience
Value Capture
Success Innovation
Cloud Keys,
Charge Station Apps
Capture Government Subsidies
Recommendation
Alliance with Internet giants
-
Supply Chain
Success Innovation
Recommendation
Success Innovation
Recommendation
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Source parts from all supplier
Battery as own products
R&D with Universities
Crowdsourcing R&D,
C&D
•
China as a stepping stone
for entering the World;
LA plant for US market
Further commercial vehicle
- Innovation being executed currently by BYD;
- Recommend innovation activity to BYD;
Organization
Processes
•
•
Labor Intensive in China
Process Decomposition
Office at different regions
Automate production process in
LA and Europe
Presence
•
Customers
Solutions
-
Networking
•
•
Commercial vehicle,
Selling to Government
Align with government for
building infrastructure
Brand
•
•
•
JV, Denza
Airport eBus
eTaxi
Formular-e
27. Improvement – Safety & Quality
Quality and Safety
Three BYD e6 passengers killed in a taxi
car clashed in May 2012 at Shenzhen.
Safety concerns on electronic vehicles.
http://chinaautoweb.com/2012/05/three-byd-e6-passengers-killed-in-fiery-crash-spurring-ev-safety-concern/
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28. Improvement – Battery Performance
Different geographic needs and concerns
Brussel traffic department STIP declined to
buy BYD electronic bus in Mar2013.
" The electric buses have beautiful
technology , but it's pretty too premature to
say that we will switch on electrical
equipment as the autonomy of the battery is
not sufficient on the Brussels slopes and
cobbles to ride around. “
http://www.brusselnieuws.be/artikel/elektrische-mivb-bussen-niet-voor-morgen
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29. Continuous Innovation
Battery Technology Trends
Cheaper
Smaller & Lighter
Fast Charging
High Power
http://about.bnef.com/markets/energy-smart-technologies/energy-storage/
http://cleantechnica.com/2013/07/08/40-drop-in-ev-battery-prices-from-2010-to-2012/
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http://www.nature.com/nmat/journal/v11/n1/full/nmat3191.html?WT.ec_id=NMAT-201202
30. Continuous Innovation
BYD should try different innovation in
their products and test the acceptance
level of the market.
Self charge e-Bus
Wireless inductive charging
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http://dailycaller.com/2013/09/22/global-lockmaker-seeks-key-to-future-profits-in-the-cloud/
http://www.ibtimes.com/self-charging-bus-korean-electric-buses-use-wireless-technology-charge-while-driving-photos-1376259
http://www.evwireless.net/
http://www.pluglesspower.com/
31. Continuous Innovation
Battery Swapping
Quick but costly
How BYD can acquire and use this
technology?
http://gigaom.com/2013/06/21/what-is-electric-car-battery-swap-tech-and-why-is-it-important/
http://www.smartplanet.com/blog/bulletin/watch-teslas-90-second-electric-vehicle-battery-swap-demonstration/22436
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32. R&D and Crowdsourcing
BYD already joint R&D with
universities in Beijing and Shanghai.
They have their own team.
Crowdsourcing Competition
Technology breakthrough
Recharge Time
Energy Density
Customer experience,
convenience, usability and
comfort
Connect & Development (C&D)
http://www.crowdsourcing.org/navigate-search?q=Electric%20Car
http://dailycrowdsource.com/20-resources/projects/104-crowdsourcing-an-electric-car
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33. Prepare for the Disruptive Innovation
Solar Electric Vehicle
Hydrogen fuel-cell Vehicle
Ethanol powered Vehicle
Nitrogen
Self-charging vehicles
May not be as popular as
electric auto at the
moment
Market is not big enough
Not yet BYD’s business?
Will be good enough one
day and overtake the
market?
Which one shall R&D bet
on?
Crowdsourcing competition
http://www.solarelectricalvehicles.com/
http://edition.cnn.com/2012/11/25/business/eco-hydrogen-fuel-cell-cars/index.html
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34. Subsidise the platform
Subsidise the charging stations and provide charge meters to make them as popular as petrol
stations.
BYD built 37 charge stations in HK when launching eTaxi in 2013.
Park & charge
Car Park and Shopping Mall
Government Street Park-meters
Residential Charging Station Manufacturers
http://www.motortrend.com/roadtests/oneyear/1106_2011_chevrolet_volt_arrival/photo_04.html
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35. Financing Home Charger
Tailored Financial Package
Grow the buyer side – subsidies
the car buyers
"We're making it easier, we're making
it convenient, we're making it part of
the way we live."
http://www.sfgate.com/business/article/Novel-financing-for-electric-car-charging-stations-4837333.php
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36. Marketing and Sports Events
Promote Brand
Participate the Formula E or even sponsor a team
Globally promote brand image
R&D and test high performance e-racing technology’s
adoptability by daily household or commercial usage
http://www.scmp.com/sport/hong-kong/article/1320785/formula-e-electric-motor-racing-coming-hong-kong-streets-after-all
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37. New Market Segment
Commercial Vehicle
E.g Trucks, Vans
Blue ocean of EV
Ride on the eBus technology
http://www.greencarcongress.com/2013/07/byd-20130717.html
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38. Huge Potential Less Competition
Comparing Car and Truck Market
3.3% of truck market is not small.
Less competition than car market
Total Truck Unit Sales: 125 K
Estimation : 125K x 3.3% = 4.1 K
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http://electricdrive.org/index.php?ht=d/sp/i/20952/pid/20952
http://www.goodcarbadcar.net/2013/02/usa-january-2013-midsize-car-sales-figures.html
http://www.goodcarbadcar.net/2012/02/us-minivan-truck-sales-january-2012.html
39. Cost Effectiveness
Manufacturing Plant in California
80% made in US as policy for US bid
More costly if labour intensive the same
way as in China
R&D to automate and improve
process
http://www.chinaanalysis.com/opinion/2011/04/the-byd-way-of-production-emerging-but-incomplete/
http://www.plugincars.com/chinas-byd-opens-electric-bus-production-plant-california-127131.html
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41. Market Growth
Raising Sales in 2012
High competition without dominating
player
Market is growing.
EV grows even faster than HEV
http://articles.latimes.com/2013/jun/26/autos/la-fi-hy-electric-car-growth-20130625/
http://www.greencarreports.com/news/1085724_electric-cars-sell-faster-than-hybrids-did-at-same-point/
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42. The ancestor of Electronic Vehicle
Electric Vehicle in 1904
Not commercialize d due to cost
Not as price competitive as the Ford
fuel vehicle
All depending on
Marketing
Platform
Grow the Demand
It is all about business!
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http://www.denverpost.com/lifestyles/ci_8986085
44. Appendix : Government & Platform
• Cheaper vehicle tax and other monetary incentives for consumers that switch to
hybrid cars
• Support in the form of backing the required infrastructure for charging electric
vehicles
• Boosting appeal by promoting the monetary incentives for consumer adoption
of hybrid electric
• Taxing oil corporations so that petrol prices increase and thus, consumer
demand for hybrid vehicles also increases
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