In November, the automotive industry witnessed a significant milestone with BYD celebrating its 30th anniversary and reportedly rolling out its 10 millionth electric vehicle (EV). This achievement is not just a mark of longevity but symbolizes BYD's dominance in the fast-evolving field of new energy vehiclesThe company's sales figures reveal a staggering growth, with approximately 506,800 units sold that month alone, a remarkable year-on-year increase of 67.87%.

BYD, often regarded as the king of China's EV market, owes its success to a pivotal decision made four years ago by its founder, Wang Chuanfu, who declared a shift away from gasoline cars to prioritize electric vehicles exclusivelyThis foresight allowed BYD to establish a competitive edge, investing in 'three electric' technologies—batteries, motors, and electronic control systems—far ahead of its competitors

By integrating its supply chain and creating a robust operational framework, BYD has achieved significant cost reductions while bolstering its influence within the industry.

The resultant effect of this strategic direction has ignited a price war among automotive manufacturersMost companies, especially newer entrants in the electric vehicle landscape, lack the comprehensive supply chain abilities that BYD possessesThe necessity to lower prices to survive has become paramount for these firms, often leading them to operate at a loss while scrambling to keep pace with BYD's aggressive pricing tactics.

This downward pressure on vehicle pricing has expanded BYD's market shareAs they reduce the average selling price of their vehicles, BYD's revenues and profits have seen impressive growth, exemplified by their continuous profit rise, as reflected in their financial reports for the first half of the year

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Conversely, many of its rivals faced significant difficulties; the vast majority of automotive companies are reporting lossesExperts predict that over 80% of China's independent auto brands may face closure or significant downsizing soon.

The reverberations of this price disruption extend beyond automakers to parts suppliers, who are feeling the heat as wellUnder BYD's overwhelming market influence, these suppliers find themselves in a precarious position, struggling to voice their concernsReports have surfaced on social media from companies claiming to be BYD suppliers, indicating issues such as extended payment terms, recruitment of technical personnel from suppliers, and leveraging supply chain financing for additional advantages.

The intricacies of this dynamic supply chain reveal a startling reality about the accompanying debt accompanying BYD’s expansive growth

According to BYD's 2024 semi-annual report, the company holds a staggering 535.6 billion yuan in liabilities, translating to a debt ratio of approximately 77.47%. This figure represents more than just bank loans; it encompasses obligations to parts suppliers and debts incurred from land acquisitions and equipment purchases necessitated by their capacity expansion and growing sales.

As of September 30, 2024, BYD's accounts payable reached 240.5 billion yuan, a figure that includes 237.5 billion yuan in trade payablesThis indicates a trend over the past three years where BYD's receivables have consistently risenComparisons drawn from Bloomberg's analysis of payment cycles among prominent EV manufacturers reveal that BYD typically takes close to 300 days to settle its invoices, starkly contrasting with Tesla's average of about 100 days.

This shift in financial responsibility has inadvertently pushed the risks of BYD's price wars onto its competitors

This context deepens our understanding of why, as Wang Chuanfu celebrates three decades of entrepreneurship, some suppliers are stepping forward to oppose further price reductions.

In contrast to the broader landscape, not all suppliers are pliant or lack ambitionSome suppliers, seeing a burgeoning opportunity for profitability, have begun to resist BYD's attempts at negotiations, especially in critical areas such as electric control and sensor technologyThe situation reveals that within the company’s ecosystem, certain suppliers have recognized BYD's vulnerabilities, especially in segments where it stands on less stable ground.

To illustrate the battle unfolding in the EV industry, notable company launches from competitors underscore an increasing inclination towards advanced driving technologyFor instance, the launch of the 2025 BYD Seal underscores a move towards more competitively priced, high-tech vehicles

Meanwhile, the emergence of Xiaopeng Motors' new model claims a leading edge in the domain of advanced autonomous driving within a similar price bracket.

As competitors like Huawei and Xiaopeng solidify their positions, BYD's lag in high-end intelligence and advanced driving functionality could result in significant losses in market shareWang Chuanfu's initial skepticism about the viability of autonomous driving has faced reality checks, as competitive pressures compel a reevaluation of corporate strategyThe transitions in product lines are becoming apparent, with increasing investments aimed at overcoming technological barriers in autonomous driving.

BYD's internal strategies to invigorate its R&D efforts are indicative of the industry's rapidly evolving landscapeAs Wang Chuanfu acknowledges the necessity of comprehensive electrification and intelligent mobility, it raises questions about the company’s resilience in maintaining its leading position amid an influx of low-to-mid-tier vehicles that now feature advanced automation capabilities.

BYD's ambitious endeavors are further complicated by their recent partnerships with technology enterprises such as Nvidia and Huawei, seeking to strengthen its autonomous driving portfolio and establish a robust foundational technology

The company's explorations into cutting-edge AI technologies expose the challenges that lie ahead—not just in financial terms, but in restructuring operational models to adapt to increasingly competitive environments.

In moving forward, it is crucial for BYD to pay closer attention to its relationship with suppliersUnlike established giants like Toyota, which foster stable partnerships built on shared risks and rewards, BYD's approach of leveraging its dominance may not sustain supplier loyaltyAs the dynamics evolve, sustaining collaborative relationships could empower innovations that benefit both suppliers and manufacturers alike.

In conclusion, while BYD has emerged as a powerful player in the electric vehicle arena, the path ahead is fraught with challengesAs the technology landscape continues to shift and the competitive terrain grows more crowded, the company must adapt rapidly to maintain its prominence