Wang Chuanfu Reviews BYD's 30-Year Entrepreneurship History: From Handmade Battery Production Lines to the Great Burst of Sales and Technology | Frontline
Text | Li Anqi
Editor | Li Qin
In 2003, on the eve of BYD's acquisition of Xi'an Qinchuan Automobile. Many investors called Wang Chuanfu. A Hong Kong fund manager said impolitely that if BYD insisted on acquiring Qinchuan Automobile, he would sell all BYD's stocks the next day.
However, Wang Chuanfu was very determined, "I will focus on the automotive industry for the rest of my life, and it will be the new energy vehicle industry."
On November 18, 2024, on the 30th anniversary of BYD's establishment, Wang Chuanfu reviewed the decision to enter the automotive industry at the anniversary conference. He did not think this was a gamble.
Although in the previous 10 years, BYD started from the battery field. Under simple conditions, it manually built production lines and manufactured battery materials in a way of manual + fixture, gradually expanding the scale, and gaining recognition from global customers such as Motorola, Nokia, and Siemens.
Wang Chuanfu believes that after making batteries the world leader, BYD should find a larger industry related to batteries - the automotive industry. He is convinced that new energy vehicles have a great future.
However, more than 20 years ago, BYD had no experience in the automotive industry. "We haven't even made fuel vehicles, let alone new energy vehicles," Wang Chuanfu said.
So BYD chose to walk on two legs: One leg is to make fuel vehicles to learn how to make cars first; the other is to simultaneously start the development of electric vehicles to reserve technology in advance.
Just like the challenges faced by the current new car-making forces, BYD has experienced many difficulties at that time: The first car was made without car-making experience, so they bought the best-selling cars on the market and disassembled them over and over. Finally, BYD's first mass-produced plug-in hybrid vehicle F3 won the sales champion in the Chinese sedan market in 2009.
BYD also followed up with a strong momentum. In 2008, it planned three major green dreams: photovoltaic power generation, energy storage power stations, and new energy vehicles. These three green dreams are still remarkable even today, and they are even part of Tesla's grand blueprint.
When the performance was advancing by leaps and bounds, BYD also set a goal of 800,000 annual sales in 2008. However, the new energy market was not really activated in 2008. BYD faced a market decline, followed by 10 years of "lukewarm" sales, with annual sales mostly maintained at around 400,000 to 500,000 units.
Wang Chuanfu even regarded 2019 as the "darkest moment". In 2019, BYD sold 461,400 vehicles, and the net profit was only 1.6 billion.
"But we invested more than 8 billion in R & D. Many shareholders think we are wasting money, not recognizing the situation, and want to intervene in the company's management. They even want to replace the senior management team and hire external professionals to manage the company."
Wang Chuanfu firmly believes that although outsiders think BYD is stagnant and has made no progress, the company knows internally that this is a decade of growth. It is also in these 10 years that BYD has reserved plug-in hybrid technology, promoted pure electric buses, and improved the appearance design.
After the epidemic period, BYD ushered in a period of technological explosion. In 2020, it launched the Blade Battery; in 2021, it launched DMI Super Hybrid and e-platform 3.0; after 2023, it launched Yi Si Fang, Tian Shen Zhi Yan, Yun Nian, Xuan Ji Architecture, the Fifth Generation DM, Yi San Fang and other technologies one after another.
"The continuous accumulation and development of technology over more than a decade has allowed BYD to usher in a turning point in the market." BYD's sales have also rapidly expanded from 30,000 - 40,000 units per month to hundreds of thousands of units. In October this year, BYD's sales even exceeded 500,000 units, setting a new record.
Wang Chuanfu is very emotional: "In the era of fuel vehicles, we disassembled foreign cars to learn their car-making technology. In the era of new energy vehicles, it is the opposite. Foreigners are disassembling Chinese brand cars to find the secret of the rapid rise of China's new energy vehicles."
But he is also clearly aware that in this era, any lead is not absolute. We must see our own shortcomings, be in awe of the rapid changes in the market, insist on technological innovation, and remain open.
The following is the full text of BYD Chairman Wang Chuanfu's speech, with slight edits:
I am Wang Chuanfu from BYD. I am very happy to be here with you today to celebrate the 30th anniversary of BYD and the offline of 10 million new energy vehicles.
Thirty years ago, I was still at the General Research Institute for Nonferrous Metals in Beijing. In 1993, I was sent to Shenzhen to be the general manager of a battery company. When I came to Shenzhen from Beijing, it was like stepping into a new world. Many friends around me were working on projects, and everyone was daring to venture and try, and be the first. I was very inspired. I also wanted to achieve something here. If I hadn't come to Shenzhen, I wouldn't have had the idea of starting a business, and there wouldn't be today's BYD.
In the 1990s, having a brick phone was a very stylish thing. The brick phone itself came with a nickel battery, and generally, one or two more batteries were needed for replacement. I personally judged that the demand for nickel batteries would be very large in the future. At that time, few people in China were making nickel batteries, and most of them were imported from Japan. If we could make them, there would be a very good entrepreneurial opportunity. However, it required a lot of courage to give up the iron rice bowl and start a business in the sea at that time. Many of my relatives and friends around me did not understand and came to persuade me, saying that I had no resources, no background, and it was too risky to resign and start a business. I thought it would be okay. There was no risk, and I was sure I could make it.
Thirty years ago today, on November 18, 1994, I led a small team of 20 people and started working. Don't laugh at us. At that time, we didn't even have a business license, and it wasn't until the beginning of 1995 that we got it.
So our real entrepreneurial time was 1994. At that time, the people who started businesses in Shenzhen at the same time were here. Time is money, and efficiency is life. The spirit of daring to venture and try in the Shenzhen Special Economic Zone inspired us and all the entrepreneurs in Shenzhen.
At that time, the simplest and most efficient way to make nickel batteries was to buy advanced automated production lines and production equipment from Japan. But after all, we were just starting a business, and we didn't have much money in our pockets and couldn't afford it. We wanted to get a loan from the bank, but we didn't have much assets for collateral, and we couldn't get a loan. There was no way but to find a way ourselves. If there were no conditions, we would create conditions to do it.
We conducted in-depth research, decomposed the automated production line into individual processes that could be completed manually, and completed them in a manual + fixture mode. Many production equipment were basically made by ourselves. In this way, we finally built the first nickel battery production line. The investment of the entire production line was only one-fourth to one-fifth of that of Japanese enterprises, but the products made were similar to those of Japanese enterprises. We won with millet and rifles against aircraft and cannons, and made the sales of nickel batteries the number one in the world.
Soon, we ushered in the mobile phone era. Lithium-ion batteries are lighter, have a longer lifespan, and a better experience than nickel batteries. In mobile phones, lithium-ion batteries have replaced nickel batteries and become a new blue ocean.
At that time, the technical threshold of lithium-ion batteries was very high, and China had not achieved industrialization, and there was a technical gap. Where there is a technical gap, there are BYD engineers constantly breaking through. My first task for the R & D team was to make a lithium-ion battery with voltage within three months. The engineers were very competitive. If they couldn't buy raw materials, they used chemical reagents to prepare the electrolyte by themselves. Without experimental equipment, they used a spray gun to spray carbon powder onto the copper foil to make the electrode sheet. Step by step, we finally developed the first lithium-ion battery with voltage, achieving from scratch.
After that, we began to study how to achieve mass production. From the slurry mixer, the winding machine, the injection machine, the laser welding machine, almost all the most important production equipment of the entire production line was made by ourselves. We created the world's first manual lithium-ion battery production line, filling the technical gap.
BYD became the first enterprise in China to mass-produce lithium-ion batteries, but the quality of the lithium-ion batteries produced in this way was not very stable. There were problems here and there, and we solved them somehow, but in fact, we didn't really understand the mechanism. We were determined to thoroughly understand the technology before giving up.
We established the Central Research Department and recruited a group of master's and doctoral students. My requirement for them was to thoroughly understand the underlying mechanism of lithium-ion batteries, understand the technology from the root, and find the root cause of the problem.
We also bought a large amount of R & D equipment. I remember that we bought one of the most expensive ones, an X-ray photoelectron spectrometer, which cost almost 3.7 million RMB, more than our entire start-up capital. We were the first non-state-owned enterprise in the country to purchase this equipment, and no one inside knew how to use it. For this reason, we specially invited a professor from Tsinghua University to teach us how to use it.
Later, when we encountered product problems again, we would ask the engineers if they had found the root cause. In this way, we solved a series of problems such as the self-discharge of the battery, the cycle life, and the performance of the electrolyte. The products became more and more stable, and for the first time, we received recognition from international giants such as Motorola. In just a few years, our share of lithium-ion batteries entered the forefront of the global market.
Looking back, our mastery of lithium-ion batteries also laid the groundwork for later installing lithium-ion batteries in cars. We tasted the sweetness of engaging in technology, paid more attention to technological innovation, became stronger and stronger in ability, and accumulated more and more technical reserves.
When the electronic wave arrived, we smoothly entered the electronic industry, conducting our own R & D, design, and manufacturing of components, developing from an OEM of components to a product solution provider. After Motorola, we won orders from top manufacturers such as Nokia and Siemens.
The rapid growth of the entrepreneurial experience proves that our approach of allowing engineers to freely engage in technology is correct. Some people say that we spend so much money on R & D and equipment is burning money, but I think that daring to invest in R & D is saving money.
Now looking back, I jumped out of the stable life track to start a business. BYD has grown from a small factory to a listed company. It is precisely with the spirit of daring to think and act that we have achieved a breakthrough from 0 to 1 and have unlimited possibilities.
When we made batteries the world leader, I began to think about a longer-term future and started to look for a larger industry related to batteries. At that time, cars were just beginning to enter ordinary people's homes. I thought that China has a population of more than a billion, and the future car market size must be very large.
However, China is a country with more coal and less oil. After the development of the car market, oil can only be imported, and the national energy security is a big problem. Also, at that time, the roads were full of foreign cars, and almost no domestic cars could be seen. In terms of the three major parts of fuel vehicles, especially the engine technology, Chinese cars lagged behind foreign countries for decades. It would be very difficult to catch up if we followed foreign brands to make fuel vehicles. Therefore, I concluded that bypassing fuel vehicles and developing new energy is the only way out for the development of China's automotive industry.
In fact, I started to try to install batteries in cars very early. I remember that in 1996, the Guangdong Provincial Government formed an electric vehicle coordination group. Because we were famous for making electronics, we were invited to join. In 1997, I installed lithium batteries in an experimental vehicle. In 2002, we installed lithium-ion batteries in the experimental vehicle. The more we studied, the more convinced I was that new energy vehicles definitely had a great future.
In 2003, we completed the acquisition of Xi'an Qinchuan Automobile and got the admission ticket to enter the automotive industry. As soon as the news of the acquisition was announced, my phone was blown up by investors. They told me that you don't even have a driver's license and know nothing about cars, but you dare to make cars. You are dragging us to the casino by doing this.
I remember it very clearly. I was communicating with many investors all day and didn't even have time to eat. When I finally got back to the hotel and managed to catch my breath, I just ordered a bowl of noodles. Before I could even pick up the chopsticks, the phone rang again. It was a call from a fund manager in Hong Kong. He said impolitely that if you don't give up the acquisition, I will sell all your stocks tomorrow. But whether he was persuading me or scaring me, I had already made up my mind. I will focus on the automotive industry for the rest of my life, and it will be the new energy vehicle industry.
In retrospect, the reason why I could be so determined at that time was essentially because when we made strategic decisions, we first analyzed the technology. Technology can make us see more clearly and farther. In fact, this decision is very "daring", but it is not blindly "daring", nor is it "gambling". Instead, we decided to start after seeing the direction clearly.
When we started making cars, we found that making cars is really not easy. We are new to the automotive industry. We haven't even made fuel vehicles, let alone new energy vehicles. So we chose to walk on two legs. One leg is to make fuel vehicles to learn how to make cars first and figure out the ins and outs. The other is to simultaneously start the development of electric vehicles to reserve technology in advance.
In January 2004, we finally made the first real vehicle, with the internal code name 316. Before the launch, we invited a group of dealers for on-site evaluation. As a result, they thought this car had no chance. My heart sank to the bottom. We had invested several hundred million yuan in molds. If we stopped, the money would be wasted. If we continued, we would lose even more.
I struggled for a whole night and made a very difficult decision: to cancel 316. We had no experience in making cars ourselves, and we couldn't make cars behind closed doors. We had to learn from excellent car companies with an open mind.
We bought more than a dozen best-selling cars on the market at one go and asked everyone to disassemble the cars to study and learn how the popular cars on the market were made. At first, everyone dared not disassemble the cars. I chose a Mercedes-Benz, took a key, circled the car, and scratched it hard with the key to make everyone feel at ease to disassemble. We disassembled and reassembled them repeatedly. If there was something we didn't understand, we would hold an on-site meeting directly until we understood everything. After more than a year, we finally made it.
The first mass-produced F3 was launched, and 100,000 units were sold in 14 months. It won the sales champion in the Chinese sedan market in 2009. This was the first time for a Chinese brand. Now that I think about it, I am really very grateful to our first batch of car owners. Without F3, there would be no today's BYD.
At that time, I was thinking that the gasoline used in fuel vehicles is basically from petroleum, and it will be used up one day, and it will also cause a lot of air pollution and the greenhouse effect problem. If it is overused, it is overdrawing the future of mankind. What is a better energy solution? Our answer is that the sun is the purest and inexhaustible energy source.
Obtaining energy from the sun is friendly to the environment and future generations. However, solar energy is affected by day and night and is not stable. How to make this intermittent energy more stable? As battery manufacturers, we naturally thought of making it into a battery energy storage power station to store the electricity generated by solar energy in the battery to achieve peak shaving and valley filling, balance the power grid, and reduce energy waste. Finally, in the application of energy, we need to use new energy vehicles to replace fuel vehicles to reduce the use and pollution of fossil energy.
In 2008, we proposed three major green dreams, from the acquisition, storage to application of energy, to create a complete green link with solar energy storage power stations or electric vehicles. As an entrepreneur, we cannot only pursue commercial success but also think about how to bring more value to this society