BYD business strategy consists of the following three pillars: 1. Cost leadership. Cost efficiency compared to its main competitor, Tesla is one of the key competitive advantages for BYD. Cost leadership has been a crucial component of BYD’s success, helping them establish themselves as a competitive contender in the EV market. BYD is able to maintain cost leadership business strategy in the global marketplace due to a number of factors such as lower cost of human resources in China, the extensive support by Chinese government to EV makers and an extensive vertical integration. Competitive pricing makes BYD’s EVs accessible to a wider range of consumers, particularly in cost-sensitive markets. This can drive market share gains and boost overall sales. Moreover, efficient cost management helps BYD maintain healthy profit margins even with lower prices, enhancing financial stability and fuelling further investments. 2. Extensive vertical integration. The electric automaker produces the majority of its spare parts in-house. For example, for BYD Dolphin only tyres and windows are delivered by suppliers and all other components are produced by the company itself. Vertical integration to such an extent allows the EV behemoth to maintain its cost leadership business strategy along with reducing the dependence on external vendors for spare parts. Moreover, controlling critical components minimizes dependence on external suppliers, mitigating risks of disruptions and shortages. Vertical integration also creates unique capabilities and intellectual property, setting BYD apart from competitors and bolstering brand differentiation. 3. Accelerated pace of new model development. While it takes about four years for an average automaker to develop a new car from scratch to design, for BYD it takes only 18 months. The electric automaker has adapted an accelerated pace of new model development to reflect changes in customer tastes and preferences as a cornerstone of its business…A Brief Overview of BYD Business Strategy
Friday, February 16, 2024
Research Methodology
BYD business strategy consists of the following three pillars: 1. Cost leadership. Cost efficiency compared to its main competitor, Tesla is one of the key competitive advantages for BYD. Cost leadership has been a crucial component of BYD’s success, helping them establish themselves as a competitive contender in the EV market. BYD is able to maintain cost leadership business strategy in the global marketplace due to a number of factors such as lower cost of human resources in China, the extensive support by Chinese government to EV makers and an extensive vertical integration. Competitive pricing makes BYD’s EVs accessible to a wider range of consumers, particularly in cost-sensitive markets. This can drive market share gains and boost overall sales. Moreover, efficient cost management helps BYD maintain healthy profit margins even with lower prices, enhancing financial stability and fuelling further investments. 2. Extensive vertical integration. The electric automaker produces the majority of its spare parts in-house. For example, for BYD Dolphin only tyres and windows are delivered by suppliers and all other components are produced by the company itself. Vertical integration to such an extent allows the EV behemoth to maintain its cost leadership business strategy along with reducing the dependence on external vendors for spare parts. Moreover, controlling critical components minimizes dependence on external suppliers, mitigating risks of disruptions and shortages. Vertical integration also creates unique capabilities and intellectual property, setting BYD apart from competitors and bolstering brand differentiation. 3. Accelerated pace of new model development. While it takes about four years for an average automaker to develop a new car from scratch to design, for BYD it takes only 18 months. The electric automaker has adapted an accelerated pace of new model development to reflect changes in customer tastes and preferences as a cornerstone of its business…
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