Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
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BYD “Build your Dreams” Group 10 Valentina Iacuitto Xiao Ya Zhou Roberto Toscano Wen shuo Hua Chun Zuo Rodolfo
description
Business Strategy groupwork presentation on BYD (Build Your Dreams), Automotive sector, China.
Transcript of Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
BYD“Build your Dreams”
Group 10Valentina Iacuitto
Xiao Ya ZhouRoberto ToscanoWen shuo Hua
Chun ZuoRodolfo GuarinoVito Margiotta
1. BYD - Company Overview2. PEST Analysis3. Industry Analysis4. Market Analysis5. Competitors Analysis6. Company Analysis7. Conclusions8. Recommendations
PEST
“Chinaʼs Government is supporting electric-car
technology more than any other country on earth”
Kevin Wale, head of GM China group
PESTPolitical
• January – February 2009: the Chinese government approves the "Adjustment and Vitalization Plan for Auto Industry”
• June 2010: Green Car Subsidy Trials starts in five pilot cities. Subsidies of up to 60,000 RMB ($8,784) for purchasers of pure electric vehicles and plug-in hybrids
• 2010: According to the local government, Shenzhen will have 24,000 electric vehicles and 12,750 charging stations by 2012
PESTPolitical
Government investment in electric car industry
(billions of dollars)
17
5
In the next 10 years, Chinese government will grant 100bn RMB to support new energy cars
China
USA
PESTEconomical
2005 2006 2007 2008 20090
2
4
6
8
10
12
14
16
5.97.34
8.98 9.67
13.64
Total China Vehicle Sales 2005-2009, in Million Units
Sales
23%
• 2009: 13.7 million motor vehicles manufactured in China, surpassing Japan as the largest automobile manufacturer in the world
PESTEconomical
• 2010: China's share of the global electric vehicle market will grow from 2.7% this year to 35% by 2020
• China: 19% world population but less than 1% of world oil reserves2009
• 2010: China invests $34.6 billion in wind, solar, and other green energy products
CHINA – CARS PER 1000 INHABITANTS:
40
USA – CARS PER 1000 INHABITANTS:
675
PESTSocial
• The average age of Chinese car buyers is 35 compared with 50 in the U.S. and Europe
• According to a recent survey, 60% of Chinese respondents show a strong interest for electric vehicles
• Electric mileage and reliability of new energy are main concerns for buyers of NEVs
• 98% of urban Chinese are concerned with climate change, among which 69% are willing to change their living habits
PESTTechnological
• Main technologies: hybrid, electric, fuel-cell • Worldwide increases in the price of petroleum caused
automakers to release hybrids (e.g. Toyota’s Prius), now a core segment of the automotive’s future
• The future of battery electric vehicles depends primarily on cost and availability of batteries with high energy densities, power density, and long life
• The rare element dysprosium is required to fabricate many advanced electric motors and battery systems
PESTTechnological
Residential7% Commercial
3%
Transporta-tion55%
Industrial35%
Global Daily Oil Consumption Breakdown (by application, 2007)
ResidentialCommercialTransportationIndustrial
Total Consumption = 85 million barrel / Day
“I think everyone is going to be surprised at how fast this is going to unfold. In ten years China will
be a 100% electric vehicle market”
Shai Agassi, founder and Ceo of Betterplace.
INDUSTRYANALYSIS
2005 2010 20200
100
200
300
400
500
600
700
800
900
24 45128
675
840 870
Per capita car ownership2005-2020(exp)
(owners/1000persons)
ChinaUSA
TRENDS
1980 1990 2000 2009 2015 2020-30
20
70
120
170
220
2 615
64
140
217
Number of Vehicles on Road1980-2020, in Million Units
Fore
cast Fo
reca
st
TRENDS
TRENDS
• In the next decade, powertrain is available and accepted as alternative energies
• Among them, electricity driven powertrain is the most significant trend
• By 2050, EV and Hybrid EV will account, according to International Energy Agency, for almost 50% of the total market
TRENDS
By 2020, it is expected 25% of new cars could be EV around the world, and China EV market could reach 6 million
2008 20200
1000
2000
3000
4000
5000
6000
7000
1
5600
300
Chinese EV Market Growth (2008 vs 2020 forecast,
in thousands units)
Hybrid EV
Electric EV
5.900
28,1%
0,2%
% Chinese EV/Global EV
2008 20200
5000
10000
15000
20000
25000
1000
20000
Global EV Market Growth (2008 vs 2020 forecast,
in thousands units)
Hybrid EV
Electric EV
O,9%
24,7%
% Global EV/Vehicle
21.000
570
TRENDS
SUPPLIERS
THREAT OF ENTRY
BUYERS
SUBSTITUTES
COMPLEMENTS
INDUSTRY RIVALRY
PORTERANALYSIS
• Capital requirement• Government and legal barriers
• Economies of scale• Absolute cost advantage• Product differentiation
• Access to distribution channel• Retaliation
NEW ENTRANTS
Power battery suppliers• Price sensitivity• Bargaining power
Electric motor suppliers• Price sensitivity• Bargaining power
SUPPLIERS
Dealers• Price sensitivity• Bargaining power
Private customers• Price sensitivity• Bargaining power
Government Fleet buyers
BUYERS
Substitutes-short distance• Gasoline cars• Electric bicycles• Motorcycles• public transportation• Traditional taxi
Substitutes: long distance• Train SUBSTITUTES
INDUSTRY RIVALRY
VW
Toyota
GM
Hyundai
Honda
Nissan
Chery
FAW
Geely
BYD
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Chinese market share
20092008
COMPLEMENTS
SUPPLIERS
LowRelativepower
THREAT OF ENTRY
BUYERS
SUBSTITUTES
COMPLEMENTS
LowThreat of
entry
HighRelevance
High price sensitivity&
High bargainingpowerHigh
threat
INDUSTRY RIVALRY
Highrivalry
FierceCompetition
MARKET
HORIZONTAL
SEGMENTATION
Competitor Analysis
V
O
L
K
S
W
T O Y O T A
G
N
B
DC H E R Y
G
E
E
L
TOYOTA
V
O
L
K
S
W
T O Y O T A
G
N
B
D
Hybrid world leader: 7 hybrids models, 2 million hybrids vehicles sold so far, bestselling model (Prius)
Strategy
Objectives
Strengths
Weaknesses
Predictions
A hybrid version for every model in the early 2020s - “Sustainable mobility”, products with sustainability at the core
The most significant sales volume (2 million hybris vehicles sold so far) - First mover in the hybrid market with a 15-year R&D program
Focus on hybrid - Lack of strong relationship with Chinese government
More effort on R&D - Hyper competition on a price base – Stronger presence in China (e.g. FAW joint venture)
Toyota
V
O
L
K
S
W
T O Y O T A
G
N
B
D
VOLKSWAGEN
C H E R Y
Volkswagen focuses on efficiency in terms of fuel consumption and co2 emissions (e.g. BlueMotion)Strategy
Objectives
Strengths
Weaknesses
Predictions
By 2018 electric cars comprise 3-5% of its fleet - at least one model on the market by 2012
Strong presence in China, market-share leader (16%) – R&D and know-how on engine efficiency
VW doesn’t offer any model with core NEV technologies - Lack of strong relationship with Chinese government
Focus on NEV for differentiation - Hyper competition on a price base – Stronger presence in China (e.g. FAW joint venture)
Volkswagen
V
O
L
K
S
W
T O Y O T A
C H E R YG
N
G
E
E
LB
D
CHERY
Chery offers 5 electric models (A5BSG, A5ISG, A3ISG, QQEV, M1EV) – Partnership in swap infrastructure with Betterplace
Strategy
Objectives
Strengths
Weaknesses
Predictions
“Safer, More Energy Saving and More Environmental-Friendly” – Find solution to the lack of infrastructure
Largest independent manufacturer - access to foreign advanced technology – best industry quality certification – worldwide presence (USA)
Focus on EV, still not on Plug in cars or Hybrid – lack of relations with Chinese government compared to other domestic manufacturers
Focus on other sustainable technologies - Hyper competition on a price base – Further collaboration with foreigners -
Chery
V
O
L
K
S
W
T O Y O T A
G
N
B
D
GEELY
C H E R Y
G
E
E
L
Geely/Volvo
2 electric models in the Chinese market - In March 2010, currently developing plug-in, all electric models (e.g. C30 DRIVe)
Strategy
Objectives
Strengths
Weaknesses
Predictions
Focus on developing cars that are entirely free of emissions – exploit Volvo’s IP assets
Access to Volvo’s know-how - world presence – Goldman Sachs’ $330m investment – EV and hybrids models
Small domestic market share – will Volvo be a profitable investment?
Leverage Volvo’s brand awareness - Hyper competition on a price base – Expand world presence of production and distribution
COMPANY ANALYSIS
“If I had a car like that in high school, I would have had a lot of dates with girls.”
Warren Buffet
RESOURCES
Tangible
CAPABILITIES
Intangible Human
Financial
RESOURCES
Tangible
CAPABILITIES
Intangible Human
• Plants and Equipment - Xi’an, Shenzen: 500,000 units/year Bejing : car and battery moulds
• Laboratories
• Proving Grounds
Physical
• Zhabuye Salt lake Lithium mine
RESOURCES
Tangible
CAPABILITIES
Intangible Human
• Technology and Patents– BYD ET Power Technology– BYD Dual Mode – Softwares
• Culture• Reputation and Brand - Warren Buffet - Brand awareness
% of surveyed people that recognize the brand as an EV’s producer
RESOURCES
Tangible
CAPABILITIES
Intangible Human
• From 20 employees (1995) to more than 160,000 employees (2009).
• 10,000 engineers graduated from the company’s training programs and 7,000 graduated from the best Chinese schools.
• Engineers’ salary : 600$/700$ per month > roughly 10 times lower than that of an American’s one.
RESOURCES CAPABILITIES
RESOURCES CAPABILITIES
• Focus on young graduates• BYD’s welfare system
RESOURCES CAPABILITIES
• Reverse Engineering• Offensive and defensive actions on the intellectual property rights
RESOURCES CAPABILITIES
• High level of vertical integration
RESOURCES CAPABILITIES
• Revolutionary labor intensive approach
RESOURCES CAPABILITIES
• Subsidies for advertising• Low entry cost for BYD’s dealers
COMPETITIVE ADVANTAGE
Financial assessment of BYD’s competitive advantage
- Reverse engineering- Economies of learning
- Easy access to China’s Lithium biggest mine
- Process Innovation- Non unionized and low cost
labor force- Location advantage
- Culture- Brand awareness- Electric mileage- Easiness of use
- Vertical integration
DRIVERS OF UNIQUENESSCOST DRIVERS
Sustainableresources
Sustainablecapabilities
Competitive advantage
Competitive advantage
Sustainablecapabilities
Competitive advantage
CONCLUSIONS
“It was fantastic, I am amazed by the
quality of the vehicle”.
Bill Gates
BLUE OCEAN
Price Design & Accessories
Security standard
After-sales
Env. impact
ElectricMileage
Easinessof use
BYD
TOYOTA
CHERY
High
Low
3 FUNDAMENTAL ELEMENTS OF A BLUE OCEAN STRATEGY
•Focus
•Divergence
•Compelling tagline
3 FUNDAMENTAL ELEMENTS OF A BLUE OCEAN STRATEGY
•Focus: emphasis on environmental respect,
electric mileage and easiness of use
•Divergence: BYD’s value curve stands apart from
domestic & foreign competitors
•Compelling tagline: “Build Your Dreams”
RECOMMENDATIONS
Buffet asked Wang how BYD would sustain its lead.
“We will never, never rest” Wang replied.
HYBRID
VOLKSWAGEN
INFRASTRUCTURE
Q&A..
Thank You!
Q&A..
Thank You!
