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1、Insights on Purchase Decision Price&BYD Competitiveness(2025)TengYi Research Institute（Yiche Research Institute）Time for BYD to Launcha High-End Price WarAuthorsDirector/Chief AIndustry AIndustry ALijun ZhouYing GaoBenya ShiVisual DQiang ZhangDuring the ICE Vehicle era,in order to attract and entice

2、 potential customers to make a purchase,OEMs and dealers often offered discounts to various degrees in the areas of trade-in,loan,insurance,optional packages and giveaways in addition to price.In recent years,carmakers that accelerated rollout of EVs also incorporated owner benefits and points to he

3、lp drive sales and increase customer stickiness.To stimulate consumption,various levels of government have also introduced preferential policies such as purchase tax reduction or exemption,scrap subsidies and trade-in subsidies;This report defines desire for price as buyer preference on broad discou

4、nt factors including MSRP,trade-in,loan,insurance,optional packages,giveaways,benefits,points and government subsidies;This report is mainly based on online research from TYRI(formerly YRI)with over 50,000 data samples in the first three quarters of 2024,and also references TengYi Big Data and TYRI(

5、YRI)offline research data.Desire for price:buyer preference on broad discount factors such as MSRP,trade-in,loan,insurance,optional packages,giveaways,benefits,points and government subsidiesDefinition of Desire for PriceMSRPOtherDesire forPriceOptional Packages/GiveawaysLoan/InsuranceBenefits/Point

6、sTrade-inSubsidyOver the past two decades or so,price had always remained as the top purchase factor among Chinese car buyers,with desire for price remaining relatively high in 2024 at 66.56%.Chinese carmakers had always played the price war card as a core breakthrough tactic to proactively challeng

7、e foreign carmakers dominant position in China.But it wasnt until 2021-2024 when BYD launched three rounds of life or death price wars that Chinese carmakers had truly achieved a breakthrough.BYDs global sales skyrocketed from merely 400,000 units in 2020 to more than 4 million units in 2024,growing

8、 10X and achieving growth unseen in the last 100 years of the global auto industry.Hand in hand,BYD and other Chinese carmakers like Geely,Chery,Changan and Great Wall Motor rapidly disrupted the traditional landscape of Chinas car market dominated by foreign carmakers:market share of Chinese carmak

9、ers nearly doubled from 33%in 2020 to 60%in 2024;The rapid rise of BYD can be mainly attributed to those three rounds of price wars centered more on technical content:the 2021 Kickoff(BYD did not have a uniform name for this price war，so well just call it“kickoff”),the 2023 Champion and the 2024 Hon

10、or,as well as its vertical integration model independent from the mainstream supply base model dominated by international supplier giants;Over the last four years or so,the massive price wars launched by Chinese carmakers including BYD based on vertical integration and domestic supply chain optimiza

11、tion effectively addressed Chinese car buyersstrong desire for price.If that desire remains strong going forward,proactively launching price wars remains a core tactic for carmakers and their battle for Chinese customers.An automotive supply base dominated by global supplier giants has long been a m

12、ature business model in the auto industry,the more scale of economy a carmaker has,the more leverage it has over suppliers when it comes to cost.Global mainstream carmakers and suppliers have tacitly maintained their corporate interests in China and invisibly suppressed smaller carmakers including C

13、hinese carmakers that have tried in earnest to integrate themselves into this mature supply base model in the hopes of becoming bigger and stronger.Luckily,two carmakers finally broke through successfully over the last five years:Tesla and BYD.The former rapidly reconfigured the traditional supply b

14、ase model into a new one based on electrification and smartification,while the latter rapidly strengthened its vertically integrated supply system through vertical integration and life or death price wars.Whether its the differentiated approach from Tesla or the life or death tactic from BYD,the cor

15、e reason why both were able to broke through the traditional mainstream supply mold was they both benefited from the Chinese supply chain;The desire for price from Chinese car buyers in 2024 reached 66.56%,providing fertile soil for BYDs breakthrough growth over the last four years through massive p

16、rice cutsSource:TYRI(YRI)StylingSafetyEnergyConsump-tionOtherPrice66.56%BrandQualityPre-Purchase Desire for Price in Chinas PV Market 2024BYD Global and China Sales 2016-2024(10,000 units)0100200300400500201620172018201920202021202220232024E2021 Kickoff Edition2023 Champion Edition2024 Honor Edition

17、(No uniform name for BYD price warin 2021,well just call it“kickoff”）ChinaGlobalFrom an income perspective,blue collar buyers have the highestdesire for price,hence BYD launched the price war on economybland models like the Qin and Song in 2021The desire for price varies widely depending on segment.

18、From an income perspective,the desire for price from blue collar buyers in 2024 topped 70%,much higher than that from middle-class and wealthy buyers;This strong desire for price from blue collar buyers created an opportunity of a lifetime for BYD to initiate a price war in 2021:on March 8,the Qin P

19、LUS DM-i hit the market at post-subsidy prices of RMB105,800-145,800,immediately becoming a core challenger to popular compact cars such as the Lavida,Sagitar and Sylphy;on March 25,the Song PLUS DM-i launched at post-subsidy prices of RMB146,800-169,800,immediately becoming a core challenger to com

20、petitors such as the Haval H6 and Changan CS75;on April 7,the Qin PLUS EV was launched at post-subsidy prices of RMB129,800-166,800,immediately becoming the vehicle of choice in the ride-hailing market and shattering the stronghold of traditional ICE vehicles like the Corolla,Levin and SylphyIn just

21、 one short month,BYD launched three critical models that soon attracted many blue collar buyers with strong desire for price through its outstanding comprehensive cost advantage(lifetime total cost of ownership including MSRP,maintenance and repair and residual value),resulting in its rapid rise.In

22、2023,more than 90%of Qin NEV buyers were blue collar buyers,while that of Qin PLUS,Song Pro and Destroyer 05 all neared 90%,and that of the Song PLUS topped 60%.BYD became the new leader in the blue collar car market seemingly overnight,garnering 12.37%of market share in a segment of nearly 12 milli

23、on units,surpassing VW and Toyota for the first time;Following these multiple rounds of life or death price wars,BYD forced competitors like VW,Nissan,Honda,Buick,Hyundai and Kia on the same path.The foundation of a price war is the product,many competitors that have been thrusted into the price war

24、 remain largely ICE vehicles with lack of energy saving capabilities,and hence their market performance continues to deteriorate.Pre-Purchase Desirefor Price bySocial Status 2024Blue Collar Buyer Penetrationof Select BYD MainstreamModels 2023BYD Global&ChinaSales 2016-2024(10,000 units)0%10%20%30%40

25、%50%60%70%80%Blue CollarMiddle-ClassWealthy0%50%100%Qin NEVQin PLUS NEVSong Pro NEVDestroyer 05Song PLUS NEV0100200300400500201620172018201920202021202220232024E2021 Kickoff Edition2023 Champion Edition2024 Honor Edition(No uniform name for BYD price warin 2021,well just call it“kickoff”）ChinaGlobal

26、March 8,2021:Qin PLUS DM-i launchesat post-subsidy prices of RMB105,800-145,800March 25,2021:Song PLUS DM-i launches atpost-subsidy prices of RMB146,800-169,800April 7,2021:Qin PLUS EV launches atpost-subsidy prices of RMB129,800-166,800Source:TYRI(YRI)Blue collar:annual household income RMB500KFrom

27、 a use case perspective,desire for price from mobilityenabling was stronger,hence BYD kept launching pricepromotions in its mobility enabling lineup including Dolphin,Seagull and Yuan PLUS in 2021-2023Among the four mainstream use cases for cars of mobility enabling,work commute,pick up/drop off kid

28、s and road trip,mobility enabling has the strongest desire for price,at over 71%in 2024,similar to that for refined&stylish products which are primarily used for mobility enabling;From 2021 to 2023,small EVs like the Seagull,Dolphin and Yuan PLUS not only helped BYD rapidly attract huge swaths of pr

29、ice sensitive mobility enabling users,they also completely disrupted the traditional dominance of ICE vehicle models like the Polo,Fit,Vezel and XR-V in the mobility enabling segment.This in theory offers valuable reference for foreign carmakers like VW,Nissan and Toyota on how they can effectively

30、tackle the EV market.The key though is whether these traditional models have the right response for BYDs small EV offensive.This characteristic created a new opportunity for BYD to launch several price wars centered on mobility enabling EVs such as the Dolphin,Yuan PLUS and Seagull in 2021-2023:on A

31、ugust 29,2021,the Dolphin launched to market at a post-subsidy price range of RMB93,800-121,800,immediately suppressing the momentum of the ORA Good Cat;on February 19,2022,the Yuan PLUS launched at post-subsidy prices of RMB131,800-159,800,immediately disrupting the stronghold of the Honda Vezel an

32、d XR-V in the entry SUV segment;on April 26,2023,the Seagull was launched at an MSRP range of RMB73,800-89,800,immediately filling the mobility enabling blank between the Wuling Hongguang MINIEV and the Dophin;Source:TYRI(YRI)Desire for Priceby Use Case 2024Top 5 Purchase Factors forRefined&Stylish

33、Models 20240%50%100%PriceSafetyBrandQualityReputation62%64%66%68%70%72%Mobility EnablingWork CommutePick Up/Drop Off KidsRoad TripBYD Global&ChinaSales 2016-2024(10,000 units)0100200300400500201620172018201920202021202220232024E2021 Kickoff Edition2023 Champion Edition2024 Honor Edition(No uniform n

34、ame for BYD price warin 2021,well just call it“kickoff”）ChinaGlobalMarch 8,2021:Qin PLUS DM-i launchesat post-subsidy prices of RMB105,800-145,800March 25,2021:Song PLUS DM-i launches atpost-subsidy prices of RMB146,800-169,800April 7,2021:Qin PLUS EV launches atpost-subsidy prices of RMB129,800-166

35、,800August 29,2021:Dolphin launches at post-subsidyprices of RMB93,800-121,800February 19,2022:Yuan PLUS launches atpost-subsidy prices of RMB131,800-159,800April 26,2023:Seagull launches at MSRPRMB73,800-89,800In 2024,BYD solidified its leadership positions in the bluecollar and mobility enabling m

36、arkets where desire for priceis strong,it will try to do the same in the high-end market in 2025In the first half of 2021,BYD launched a price war based on the fact that blue collar users had strong desire for price and a new product offensive in Qin PLUS and Song PLUS primarily targeted at blue col

37、lar users,thereby rapidly breaking through the blue collar car market dominated by ICE vehicles.From the second half of 2021 to 2023,BYD launched a price war based on the fact that the mobility enabling market had strong desire for price and a new product offensive in Dolphin,Seagull and Yuan PLUS p

38、rimarily targeted at mobility enabling users,rapidly creating a new blue ocean.In 2024,not only has BYD launched a slew of new models targeted at blue collar buyers and the mobility enabling use case such as the Yuan UP,Qin L,Seal 06,Song L DM-i and Sealion 05 DM-i,it has extended the price war buil

39、t on the“Honor”offensive and launched upgraded technologies such as DM-i 5.0 and e Platform 3.0,proactively solidifying its leadership positions in the blue collar and mobility enabling markets,thereby pushing full year sales past 4 million units;In 2025,many high-end BYD products such as the Xia/Oc

40、ean XX,Tang L/Ocean XX,Denza N9,and Fang Cheng Bao 8 will hit the market.If these products still cannot effectively rival similar products from Li Auto and AITO after the Denza D9,BYD will confront severe challenges in the high-end car market,the harm of which will be even greater than one inflicted

41、 on the sports BEV products.Masked under this triumphant growth in 2023-2024 though,is plenty of growing pains:market performance of a slew of sports BEVs launched such as the Denza N7,Seal EV,Song L EV,Sealion 07 EV and Seal 06 GT has been mediocre;New ModelsBYDSolidifiesLeadershipin 2024NewTechnol

42、ogyDM-i 5.0e Platform 3.0Price War(Honor)(Qin L/Seal 06/Song L/Sealion 05/Yuan UP,etc.)Source:TYRI(YRI)X-axis=vehicle length(mm),Y-axis=main price point(RMB10K)BYD Core Product Footprint 2024(including models to be launched)Top 20 Brands in High Penetration ofPre-Purchase Desire for Price 202460%65%

43、70%75%80%05101520253035404535003700390041004300450047004900510053005500Tang LXiaBao 8Denza N9Ocean Mid to Large MPVOcean Mid to Large SUVTangHanQin PLUSDestroyer 05Qin LYuan UPYuan PLUSSong ProSong PLUSSong L EVSong L DM-iFrigate 07DolphinSealion 07 EVSealion 05 DM-iSeagullSeal 06 GTSeal 06SealDenza

44、 D9Bao 5Denza N7Denza Z9Denza Z9 GTMobility EnablingHigh-EndBlue CollarWulingChevroletDongfeng ForthingJETTAVenuciaKiaMGCheryChanganGeelyDongfeng AeolusHyundaiGAC AIONBEIJINGRoeweNissanVWBuickHavalBestuneStarting in 2026,a huge number of existing BYD owners will be tradingin their vehicles or purcha

45、se new ones,and lots of entry models willflock to the used car market,the year 2025 is really the only year BYDhas to achieve a breakthrough in the high-end car marketRather than models like the Qin PLUS and Song PLUS,what really took down the Lavida,Sylphy and Haval H6 three models that have long l

46、ed the sales rankings in China,may have actually been their own used versions.Because purely playing the bang for the buck tactic without major improvement in product competitiveness,new cars will always lose to used cars,especially considering the huge owner base of the Lavida,Sylphy and Haval H6.B

47、YD shouldnt rest on its laurels because soon itll face the same challenge.A huge number of vehicles that were sold in 2021-2024 during the growth spurt should flock to the used car market in 2026.If products like the Qin PLUS and Song PLUS by are not upgraded significantly enough by then,then the im

48、pact from its own used cars will be as severe and significant as how fast new car sales grew;Besides this challenge pertaining to used vehicles,BYD also faces a critical issue of how to retain existing customers that joined the brand as a result of the explosive growth over the past four years.From

49、the lists of top 10 desired trade-in/additional purchase models from owners of the Qin PLUS,Song PLUS and Tang NEV,though some models like the Tang,Han and Dolphin played crucial roles of meeting existing owners trade-in/additional purchase needs,existing BYD owners have very strong desire to upgrad

50、e to high-end products from competing brands like the Li Auto L series,AITO M series and TANK,and the more high-end the customers are,the more likely they will opt for a different brand;Be it prevention of the challenges created by used vehicles or proactively retaining existing custom-ers,BYD reall

51、y has just one year in 2025 to sort it out.Luckily,BYD is launching a slew of high-end products at the turn of the year including the Xia/Ocean XX,Tang L/Ocean XX,Denza N9 and Fang Cheng Bao 8.These products are very conducive to BYD retaining existing customers and create new a new blue ocean.The o

52、nly thing that remains is execution,especially how they will be priced.BYD Domestic Sales2016-2024(10,000 units)Top 10 DesiredTrade-in/AdditionalPurchase Models for Qin PLUS 2024Top 10 DesiredTrade-in/AdditionalPurchase Modelsfor Song PLUS 2024Top 10 DesiredTrade-in/AdditionalPurchase Modelsfor Tang

53、 NEV 20243-Year/5-Year Residual ofSelect BYD Models010020030040050060020162018202020222024E2026E2028E2030E0%20%40%60%80%Qin PLUSDestroyer 05Song PLUSSong ProDolphinYuan PLUSTangHan5-Year Residual3-Year Residual0%5%10%0%10%20%TangDolphinHanSong PLUSModel YLi Auto L7Xiaomi SU7Denza D9Model 3Bao 50%5%1

54、0%Denza D9TangDolphinTANK 500HanAITO M7Li Auto L9Bao 5Yuan PLUSTANK 700Source:TYRI(YRI)TangHanSong PLUSXiaomi SU7Xingyue LAITO M7Song ProDenza D9BMW 3 SeriesLi Auto L6From 2025 to 2026,key competitors like Geely,Great Wall Motor andChery will all launch high-end model offensives with competitivepric

55、ing and undoubtedly impact BYDs new high-end offensiveGeely,Great Wall Motor,Chery and Changan have always been key BYD rivals,and have historically bettered BYD in sales,but now that BYD has become the“king of the hill,”they are looking to fight back.Although model series like the Geely Galaxy,Grea

56、t Wall Motor Xiaolong and Changan Qiyuan over the course of the second half of 2023 to the first half of 2024 did not effectively counter BYDs leadership position,the Geely Galaxy E5 and Xingyuan small EVs in the second half of 2024 quickly became popular and seem to impact BYDs comparable models.Th

57、e Starship 7 launching toward yearend is expected to take on multiple BYD models such as the Song Pro and Sealion 05;in 2025,the high-end car market will become a key battleground for BYD and its main competitors;Over the past 2-3 years,BYDs main competitors have launched multiple high-end products

58、such as the Lanshan,Gaoshan,LYNK&CO 09,Trumpchi M8,EXEED Lanyue,Hongqi HS7 and TANK 500,with some quickly hitting blockbuster status.Toward the end of 2024,the VOYAH Dreamer created a huge challenge for BYDs high-end star model,the Denza D9.Even though sales of the Bao 5 have topped TANK sales,TANK

59、still maintains an overall advantage,and the Yang Wang U8 seems a bit lonely at the top.From 2025 to 2026,these competing brands will bring additional new high-end products that will be bigger and more energy saving such as the WEY large SUV,EXEED large SUV,EXEED large MPV,Shanhai T5,Fulwin T11,LYNK

60、&CO large SUV and Geely large SUV.Rest assured that these high-end products will compete on price.If BYD remains blindly confident of its new high-end products,not only will core competitors impact BYDs new high-end offensive,but they will also poach away BYD customers it worked so hard to accumulat

61、e over the past four years.BYD runs the risk of doing everything in vain.Source:TYRI(YRI)X-axis=Vehicle length(mm),Y-axis=main price point(RMB10K)End-User Sales of Select Key BYD Competitors 2023-2024(units)High-End Model Footprint of BYD and Select Competitors 2025-202601020304050604500470049005100

62、53005500XiaTANK 300TANK 700LanshanLYNK&CO Large SUVShanhai T5Shanhai T2Shanhai L9Fulwin T11EXEED LanyueSTERRA ETSTERRA Large MPVTrumpchi E8Hongqi HQ9 PHEVRoewe iMAX NEVe008EXEED Large SUVTangGaoshanTang LBao 8Denza N9Ocean Mid to Large MPVOcean Mid to Large SUVDenza D9TANK 400TANK 500WEY Large SUVGe

63、ely Large SUVLYNK&CO 08LYNK&CO 09Trumpchi MPVTrumpchi M8Trumpchi ES9Hongqi HS7Hongqi HS7 PHEVBao 5Mainstream Chinese Brand High-EndProduct Defense LineBYD Defense Line05000100001500020000250003000035000202301202303202305202307202309202311202401202403202405202407202409Haval Macho SeriesWEYTANKEXEEDJE

64、TOUR Shanhai SeriesChery Fulwin SeriesChery Fulwin SeriesLYNK&COChangan QiyuanTrumpchi MPVToyota HEVs will flock to the high-end market in 2025 and VWenergy-saving vehicles will do the same in 2026,therefore BYD muststrengthen its pragmatic high-end strategyFrom 2025 to 2026,in addition to core comp

65、etitors like Geely and Great Wall Motor that will endanger BYDs new high-end offensive,foreign carmakers like Toyota and VW that had long been the envy of BYD but fell behind in recent years will also proactively address the high-end car market;Over the past few years,the share of sales contributed

66、by midsize and larger vehicles at Toyota and VW has been rising,and will exceed 40%for both brands in 2024.From 2025 to 2026,the battle for the high-end car market will undeniably be a strategic priority at Toyota and VW.Right now,BYD psycho-logically is pretty confident of its competition with Toyo

67、ta and VW,but we worry that this might lead to cockiness and complacency.Though Toyota sales in China continue to fall in 2024,through measures such as optimization of resource allocation and large vehicle pricing,sales focus quickly shifted from low value-add entry level products led by the Corolla

68、 and Levin toward high value-add products led by the Sienna and Granvia.As of the end of 2024,sales of the Sienna and Granvia have reached a monthly level of about 10,000 units,on par with BYDs high-end star Denza D9.In 2025,if Toyota further shifts resources toward high-end energy-saving products a

69、nd optimize commercial policies and pricing of large vehicles,monthly sales of the Sienna and Granvia could approach 20,000 unis,not only impacting the Denza D9 but also hamper new high-end products from BYD such as the Xia and Tang L.Once the NEV purchase tax exemption expires at the end of 2027,th

70、e advantages of Toyota high-end energy-saving vehicles like the Sienna and Granvia will be further enlarged.If by then Toyota launches more new vehicles like the Sienna and New Prado and further elongated versions of existing vehicles like the Highlander,Crown Kluger,Venza and Harrier,its going to p

71、ose a serious challenge for BYDs high-end vehicles;Besides Toyota,VW also has the potential to suddenly impact BYDs high-end strategy.In 2026 both SAIC VW and FAW-VW plan to launch energy-saving products like PHEVs as well as large energy-saving vehicles.Even if the technical specs of these upcoming

72、 energy-saving vehicles do not match those of BYDs DM-i 5.0,as long as they are priced right,they still have the potential to be very popular:first,transaction pricing of VWs large ICE vehicles like the Teramont,Talagon,Tavendor and Viloran has already fallen into the RMB200,000 range,significantly

73、lower than that of BYDs compara-ble Denza D9.Even if future VW energy-saving vehicles are more expensive than their ICE vehicle counterparts,and possibly priced at RMB40,000-50,000 higher back to MSRP levels,they could still impact BYD;second,core selling points like large space and mature design in

74、 the high-end car market dominated by boomers have traditionally been areas where VW has had the upper hand,as long as it accelerates efforts to improve energy consumption capabilities of its vehicles,those superior selling points will only be magnified;third,over the last decade or so VW has accumu

75、lated more than 20 million customers in China,and existing owners of vehicles like the Lavida,Sagitar,Magotan and Passat which account for the majority of those 20 million vehicles are the primary forces behind the purchase intent of large energy-saving vehicles.The only thing missing for VWs battle

76、 for the high-end car market is really large energy-saving vehicles.In 2025,VWs sales in China will likely continue to fall significantly,its life or death for VW in 2026 and it is going to bet on large energy-saving vehicles.It must channel BYDs death-defying determination exhibited in early 2021;S

77、ource:TYRI(YRI)X-axis=Vehicle length(mm),Y-axis=main price point(RMB10K)High-End Footprint of BYDVW and Toyota 2025-2026Share of Toyota End-User Salesin China by Vehicle Size 2016-2024Share of VW End-User Sales inChina by Vehicle Size 2016-2024TangLXiaBao 8Denza N9Ocean Mid to Large MPVOcean Mid to

78、Large SUVDenza D9Tiguan LTeramontTeramont XViloranTalagonTavendorTiguan L PHEVTeramont PHEVTeramont X PHEVViloran PHEVTalagon PHEVTavendor PHEVSiennaGranviaHighlanderCrown KlugerTangPradoBao 50102030405060450047004900510053005500VW,Toyota High-End Defense LineBYD Defense Line0%20%40%60%80%100%201620

79、172019202120232018202020222024ELargeMid to LargeMidsizeCompactSmallMicroLargeMid to LargeMidsizeCompactSmallMicro0%20%40%60%80%100%201620172019202120232018202020222024ELi Auto and AITO have climbed to the top of the high-end car market in 2024,BYD must understand that in 2025 itll still be in a“0 to

80、 1”phase in its battle for the high-end car market and must suppress anyambitions of Li Auto and AITO to move into the sub-RMB200,000 segmentIn 2025,even if core competitors like Geely,Chery and Great Wall Motor pose challenges to BYDs high-end strategy,BYD is still psychologically a step ahead beca

81、use of its current momentum as well as deep understanding among these competitors.Even if foreign mainstream carmakers like VW and Toyota could impact BYDs high-end strategy,joint ventures are usually slow to make adjustments and upgrades,as long as BYD has a proactive response,impact will be minima

82、l.The biggest wildcard for BYDs high-end strategy comes from emerging high-end brands like Li Auto and AITO:First,from 2023 to 2024,Li Auto and AITO have ascended to the top of Chinas high-end car market,with the former expected to achieve sales of more than 500,000 units in 2024 and the latter more

83、 than 400,000 units.BYDs Denza,Yang Wang and Fang Cheng Bao combined will only sell less than 200,000 vehicles in 2024,quite a bit behind.Adding Tesla to the mix,the Tesla Li Auto AITO“TLA”combo could completely disrupt the traditional landscape of Chinas high-end car market dominated by ABB(Audi,Me

84、rcedes and BMW)in 2025;second,Li Auto and AITO both became profitable in 2023-2024,but BYDs Yang Wang and Fang Cheng Bao are still in the red;third,the logic behind AITOs“far far ahead”and Li Autos“TV+fridge+big sofa”marketing slogans may not be easily imitated by BYD,and Denza still lacks a unique

85、DNA;fourth,AITO and Li Auto have brand vibes and corporate efficiency that are on par with BYD,especially in the areas of user and innovative awareness,where they might even be ahead of BYD AITO and Li Auto have grasped the consumption psych of select quality customers,an area where BYD is weaker.Ec

86、onomies of scale and price war are the biggest advantages of BYD in its battle with Li Auto and AITO;In 2025,Li Auto might further optimize pricing scheme of the L series possibly bringing prices into the sub-RMB300,000 range making them more competitive,which will directly compete with a slew of BY

87、D high-end products like the Xia/Ocean XX,Tang L/Ocean XX and Denza N9.AITO will also launch the new M8,which has a much improved styling and architecture compared to the existing M7 and M9.As long as pricing is on par with comparable Li Auto products,itll likely sell very well and pose a challenge

88、to BYDs new high-end products.AITOs macho products are probably also on their way,something that Fang Cheng Bao needs to watch closely;There are also hidden challenges.If Li Auto and AITO are able to suppress BYDs high-end offensive in 2025,that will give tremendous leeway for the two brands to brin

89、g out products priced in the RMB200,000 range such as the M5 and L6,and BYD could be in trouble.Similarly,other emerging high-end brands like ZEEKR,Xpeng,AVATR and VOYAH that are actively shifting their product focus toward energy-saving vehicles could also target BYD and move into the RMB200,000 se

90、gment.This is shaping up to be a full on battle between BYD and Li Auto and AITO,therefore BYD must understand that itll still be in a 0 to 1 phase in its new high-end strategic journey,not a 1 to 10 phase.Its got to have that same life or death determination and courage that it had in early 2021 an

91、d fight for the top in the high-end car market with a price war utilizing the huge advantage in economies of scale it currently still has.Source:TYRI(YRI)X-axis=Vehicle length(mm),Y-axis=main price point(RMB10K)Competitive Landscape of BYD and Emerging High-End Brands 2024End-User Sales of Li Auto a

92、ndAITO 2019-2024(10,000 units)Net Profit of Li Auto and SERES(AITO)2019-2024(RMB100 million)Tang LXiaBao 8Denza N9Ocean Mid to Large MPVOcean Mid to Large SUVDenza D9Li L6Li L7Li L8Li L9MEGAAITO M7AITO M8AITO M9Xpeng G9Xpeng G9 HybridXpeng X9DreamerZEEKR 009ZEEKR 009 HybridZEEKR 7XLeapMotor C16AVATR

93、 07TangBao 50102030405060450047004900510053005500BYD Defense LineEmerging High-End Brand Defense Line0102030405060201920202021202220232024EAITOLi AutoSERESLi Auto(30)(10)1003050702022Q12022Q32023Q12023Q32024Q12024Q3BYDs high-end play has had limited effectiveness in 2023-2024and faces big challenges

94、 in 2025,it must have a“return to roots”mentality in its new high-end offensiveTo prevent the potential risk of losing massive customers accumulated since 2021 over the next couple of years,BYD proactively expanded its presence in the high-end car market in 2023-2024 by launching three high-end bran

95、ds:Denza,Fang Cheng Bao and Yang Wang.The first batch of high-end products like the Denza D9,Fang Cheng Bao 5 and Yang Wang U8 were quite eye-catching initially and sales took off,but are now facing challenges as sales stall.As of the end of 2024,besides the Bao 5,both the Denza D9 and Yang Wang U8

96、are showing alarming signs of weakness.Starting off well might not necessarily be a good thing as it might make the team impetuous and adjustment more difficult.Compared to the quick adjustment Li Auto made in response to the MEGA launch disaster in the first half of 2024,BYD has moved much too slow

97、;In early 2023,the high-end journey of BYD and most of its competitors began on roughly the same starting line.But as of the end of 2024,Li Auto and AITO have become leaders of that initiative,the Sienna and Granvia MPV tag team has stole the thunder from BYDs core high-end product,the Denza D9,whil

98、e other brands like VOYAH and AVATR continue to make rapid improvement and upgrades All of these brands have plans to strengthen their high-end footprint in 2025;With this new round of high-end offensive coming from multiple brands,we remind BYD again not to be cocky in its new high-end offensive.Do

99、nt launch a RMB1 million vehicle for the sake of launching one.Even if models like the Land Rover sells for RMB1 million forever,that doesnt necessarily mean that its the right price,because Chinas high-end car market has long been in a situation where prices remain superficially high.In order to re

100、ally disrupt the high-end car market,BYD must reshape its pricing mechanism,offer customers reasonable prices and give competitors a new benchmark to follow and reference.Offering customers more reasonable and affordable high-end prices is a strategic shortcut for BYD to quickly capturing the“consum

101、ption mindset”of high-end users,and only BYD can do it.This requires BYD to have a“return to roots”mindset and put itself back in those difficult“life or death”months of 2020,and have that all-in courage displayed in early 2021.Start from 0 to 1,rather than dwelling on the 4-million-unit-sales achie

102、vement and think its going from 1 to 10.End-User Sales of Select BYD High-End Models 2023-Jan-Oct 2024(units)End-User Sales of Denza,Fang Cheng BaoYang Wang and Select Competitors 2023-Jan-Oct 2024(units)020004000600080001000012000202301202303202305202307202309202311202401202403202405202407202409Den

103、za D9Denza N7Denza N8Denza Z9 GTBao 5Bao 8Yang Wang U8Yang Wang U90100002000030000400005000060000202301202303202305202307202309202311202401202403202405202407202409DenzaYang WangFang Cheng BaoLi AutoAITOVOYAHSienna+Granvia+TANKTANKStarting from August 2024,Bao 5 sales improved after prices werecut,re

104、flecting the need for BYD to actively optimize its new round ofhigh-end offensive especially pricing mechanismIn response to this“start high end low”dillema in its high-end offensive,BYD finally made some moves in the second half of 2024 such as opening up more network and adjusted pricing of select

105、 models.On July 29,the MSRP of Fang Cheng Bao dropped from RMB289,800-352,800 to RMB239,800-302,800.This blunt RMB50,000 price cut immediately pulled sales back up:end-user sales improved to 4,513 units in August,5,493 units in September,5,679 units in October and topping 6,000 units toward yearend,

106、surpassing sales of core competitors such as the TANK 300,TANK400 and TANK 500 and catapulting to a leadership position in the off-road&macho segment;The Bao 5 that was mired in quality issues involving“wrench gate”and engine hood quickly improved sales after this price cut,which shows that at the e

107、nd of the day,price is king.The Bao 5 is positioned between the TANK 300 and TANK400 and therefore should have been priced in between the prices of those two competitors from the very beginning.The adjusted pricing of the Bao 5 only proves that its the normal pricing after all.In order to further dr

108、ive sales,BYD must improve cost and price the model even lower;The quick rebound of the Bao 5 at the end of 2024 is a good warmup to BYDs efforts to optimize pricing tactic of its new round of high-end products in 2025.The pricing mechanism of several of its new high-end models toward the end of 202

109、4 like the Fang Cheng Bao 8,Denza Z9 GT and Denza Z9 shows BYDs determination to reshape its high-end car market pricing mechanism remains elusive.Source:TYRI(YRI)X-axis=Vehicle length(mm),Y-axis=main price point(RMB10K)Fang Cheng Bao 5 and Core Competitors Landscape November 2024End-User Sales of F

110、ang Cheng Bao 5 and SelectCore Competitors 2023-Jan-Oct 2024(units)05101520253035404550450046004700480049005000510052005300Bao 5TANK 700TANK 500TANK 400TANK 300July 29,2024:Fang Cheng Bao 5 MSRP reduced by RMB50,000 from RMB289,800-352,800 to RMB239,800-302,800020004000600080001000012000140002023012

111、02303202305202307202309202311202401202403202405202407202409Bao5TANK300TANK400TANK500In the second half of 2024,discounts at BBA topped RMB100,000 pervehicle,reflecting the superficial nature of pricing in Chinashigh-end car market,time for BYD to disrupt pricing againOur advice to carmakers should n

112、ot focus only on challenges,but also opportunities;Though companies led by Tesla,Li Auto and AITO continue to impact the traditional landscape of Chinas high-end car market dominated by BBA,the German premium trio will still maintain annual sales in China of about 700,000 units each despite difficul

113、t market conditions,or more than 2 million units combined.Considering some of the actions that have been taken by their dealers in the second half of 2024,it is likely that more will take action to leave the BBA network,at minimum a quarter and perhaps as high as a third of the dealers may do so.BBA

114、 sales in China could very much take another big hit in 2025,and the market share that have ben coughed up by BBA will certainly be gobbled up by Li Auto and AITO if not BYD.If BYDs high-end strategy could rapidly replace one of the BBA in 2025,it would represent a major breakthrough;In the second h

115、alf of 2024,Audi,Mercedes and BMW have offered discounts of more than RMB100,000 per vehicle at the point of sale,this clearly shows that the traditional pricing mechanism in Chinas high-end car market is too high,and its even more extreme for Porsche and Land Rover.But despite of these massive disc

116、ounts,BBA sales have not improved.Instead,a huge number of dealers are pulling out.This again shows that there are huge issues with existing BBA products like 34C and 56E that are mainly ICE vehicles,they cannot satisfy the desires of quality Chinese consumers.This does not bode well for BBA sales i

117、n 2025;BBA have the scale,but lack product competitiveness,which creates a huge opportunity for BYDs new round of high-end offensive in 2025.But only those that are prepared can capitalize on this opportunity.Many dealers that have pulled out from BBA have instead turned to brands like AITO and Xiao

118、mi.Competitive Landscape of BYD and Select Mainstream High-End Brands 2024End-User Sales of Audi,Mercedes and BMWin China 2016-2024(10,000 units)Tang LBao 8Denza N9Ocean Mid to Large MPVOcean Mid to Large SUVDenza D9XiaAudi A4LAudi A6LAudi Q5Audi Q7Mercedes C-ClassMercedes E-ClassMercedes GLCBMW 3 S

119、eriesBMW 5 SeriesBMW X3Lexus ESLexus RXLexus NXVolvo XC60Volvo S90Volvo S60Volvo XC90Cadillac CT5Cadillac XT5NautilusCorsairLincoln ZAviatorTangBao 50102030405060450046004700480049005000510052005300Traditional High-End Brand(e.g.BBA)Defense LineBYD Defense Line010203040506070809020162017201820192020

120、2021202220232024EAudiBMWMercedesSource:TYRI(YRI)X-axis=Vehicle length(mm),Y-axis=main price point(RMB10K)From 2025 to 2030,middle-class buyers will flock to the high-endcar market and popularize high-end cars,this creates an environment for BYD to offer high-end products with more bang for the buckI

121、n 2025,as long as the price is right,BBA will give up a huge chunk of the market that could be gobbled up by BYDs new round of high-end offensive,the rigorously developing middle-class car market will create even more opportunities for BYD;The share of middle-class buyers in Chinas passenger vehicle

122、 market exceeded 40%in 2023 and will further increase to almost 50%in 2024.The middle-class car market will continue to dominate Chinas car market in the next few years.Middle-class buyers love high-end brands:in 2023 more than a third of middle-class buyers opted for high-end brands,and nearly 44%o

123、f them intended to buy high-end brands.As the middle-class car market continues to expand,more middle-class buyers will flock to the high-end car market;Middle-class families will not only help to enlarge the high-end car market,but they will also help nurture more pragmatic consumption in that mark

124、et,creating better opportunities for high-end brands and models that have better bang for the buck.In 2024,though the desire for price from middle-class buyers was lower than that from blue collar buyers,it was still nearly 64%.Desire for price for many high-end brands or luxury brands like NIO,Land

125、 Rover and Porsche was more than 50%;If bang for the buck becomes a bigger factor in the high-end car market and if BYDs core selling point is bang for the buck,then its the perfect match between the two.Unlike AITO and Li Auto,a high-end strategy focused on good bang for the buck will be more condu

126、cive for BYD to reshape the pricing mechanism in the high-end car market,and allow it to capture more consumption mindset and reorient a differentiated high-end strategic path.Share of Middle-Class Car Market in Chinas PV Market 2014-20300%10%20%30%40%50%60%70%2014201620182022202020242026E2030E2028E

127、Source:TYRI(YRI)Share of Middle-Class Market byBrand Positioning Purchased vs.Pre-Purchase 2023Pre-Purchase Desirefor Price bySocial Status 2024Top 20 Mainstream Brands in Lowest Penetration ofPre-Purchase Desire for Price 20240%10%20%30%40%50%60%High-EndVolumeEntryPurchasedPre-Purchase0%10%20%30%40

128、%50%60%70%80%Blue CollarMiddle-ClassWealthy50.03%51.60%53.21%54.09%55.48%56.29%57.58%57.75%57.92%58.11%58.33%59.13%59.43%59.73%59.86%60.22%60.33%60.49%60.79%61.32%0%20%40%60%80%NIOLand RoverTANKPorscheMercedesAVATRBMWTeslaDenzaLi AutoFang Cheng BaoAITOZEEKRLYNK&COVOYAHWEYLincolnCadillacEXEEDXiaomiGi

129、ven that there is a new high-end offensive and wave of middle-classbuyers with strong desire for price,BYD should launch a high-end pricewar in 2025 to reshape the pricing mechanism in the high-end car marketand reorient the consumption mindset of high-end customersIn 2021,thanks to the Qin PLUS and

130、 Song PLUS as well as through price discounts,BYD was able to quickly attract blue collar buyers by satisfying their desire for price.It was able to do the same in the mobility enabling segment with the Dolphin,Seagull and Yuan PLUS,and sales took off.In 2024,BYD actively strengthened its leadership

131、 positions in these two segments with strong desire for price through a combination of new vehicles,new technologies and price promotions.As a result,sales for the year will top 4 million units;From the end of 2024 to 2025,BYD will launch a new round of a huge high-end offensive through models like

132、the Xia/Ocean XX,Tang L/Ocean XX,Denza N9 and Fang Cheng Bao 8.Effectively winning Chinas high-end car market will be a new issue:in 2025,major competitors like Geely,Great Wall Motor,Chery and Changan all will launch offensives in the high-end car market centered on being price competitive,which wi

133、ll impact BYDs own new high-end offensive;Toyota HEVs will flock to the high-end car market in 2025 while VWs energy-saving vehicles will also make a return to the high-end car market in 2026,forcing BYD to strengthen its high-end strategy pragmatically;in 2024 Li Auto and AITO have already risen to

134、 the top of the high-end car market,BYD must therefore prevent any inten-tions of the two to move down to the sub-RMB200,000 price range;There are challenges but there are also opportunities:BBA have the scale but lack the products,giving BYD ample opportunity to take advantage;middle-class buyers a

135、re increasingly flocking to the high-end car market and have strong desire for price,creating new opportunities for BYD to carve out a pragmatic high-end strategic path building on its own comparative advantage,and this path also represents a differentiated one compared to emerging high-end brands l

136、ike Li Auto and AITO;In the sub-RMB200,000 segment,BYD has completed its 0 to 1 phase and can begin the next phase of 1 to 10,the key is how it can nurture the market.But in the RMB200,000 and above segment,BYD remains in the 0 to 1 phase,one that is still about survival.BYD must have a“return to it

137、s roots”mentality for its high-end strategy,put itself in that life or death environment back in 2020 and have that all-in courage it exhibited in early 2021.Start from 0 to 1,instead of dreaming a 1 to 10 dream because youve reached the 4-million-unit plateau.We suggest BYD,with the help of its new

138、 round of high-end offensive and by actively addressing the strong desire for price from middle-class buyers,launch a high-end price war to reshape the pricing mechanism in the high-end car market and reorient the consumption mindset of high-end customers;Overall,there are more opportunities than ch

139、allenges for BYDs new round of high-end offensive in 2025.The quick rebound in sales of the Bao 5 after prices were adjusted in August 2024 is a good reference for BYD as it optimizes the pricing mechanism for its new round of high-end strategy;In 2026,a huge number of BYDs existing owners are likel

140、y to trade-in their existing vehicles for new ones or purchase additional ones,while many entry level cars will flock to the used car market.There-fore,2025 is really the only year for BYD to achieve a breakthrough in the high-end car market.And since BYDs high-end play wasnt all that successful in

141、2023-2024,the urgency to achieve that breakthrough in 2025 is even pressing.High-End Footprint of BYD and Competitors 2025Tang LBao 8Denza D9Ocean Mid to Large MPVOcean Mid to Large SUVDenza N9TANK 400TANK 500WEY Large SUVGeely Large SUVLYNK&CO Large SUVLYNK&CO 08LYNK&CO 09Trumpchi E9Trumpchi M8Trum

142、pchi ES9Hongqi HS7Hongqi HS7 PHEVBao 5EXEED Large SUVXiaTANK 300TANK 700LanshanGaoshanShanhai T5Shanhai T2Shanhai L9Fulwin T11EXEED LanyueSTERRA ETTrumpchi E8Hongqi HQ9 PHEVRoewe iMAX NEVe008Tiguan LTeramontTeramont XViloranTalagonTavendorLi L6Li L7Li L8Li L9MEGAAITO M7AITO M8AITO M9Xpeng G9Xpeng G9

143、 HybridXpeng X9DreamerZEEKR 009ZEEKR 009 HybridZEEKR 7XLeapMotor C16AVATR 07Audi A4LAudi A6LAudi Q5Audi Q7Mercedes C-ClassMercedes E-ClassMercedes GLCBMW 3 SeriesBMW 5 SeriesBMW X3Lexus ESLexus RXLexus NXVolvo XC60Volvo S90Volvo S60Volvo XC90Cadillac CT5Cadillac XT5NautilusCorsairLincoln ZAviatorSie

144、nnaGranviaHighlanderCrown KlugerTangSTERRA Large MPV010203040506045004600470048004900500051005200530054005500BYD Defense LineSource:TYRI(YRI)X-axis=Vehicle length(mm),Y-axis=main price point(RMB10K)This report is produced by TengYi Research Institute(Yiche ResearchInstitute).All text,pictures and ta

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147、,we mainlyhelp empower customers like OEMs and dealers;TYRI(YRI)prides itself on its rich data and the ability to speak the facts basedon these data;Everyone has different views,therefore we welcome comments and feedback onour own views.Lets agree to disagree.TYRI(YRI)positioning:non-commercial digi

148、tal car market think tankTYRI(YRI)mission:help Yiche customers better understand Chinascar marketCommunications(Media,etc.)Extract（Survey/Consulting/Association/Investment Banking）Target Audience（OEM/Dealer/Investment）Traffic,Leads,Conversion,TransactionAd,Membership,Collection,ActivityReceive Basic

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151、RI)Entities likeconsulting firmsarestrengtheningdata miningcapabilities andindustryauthority,andimprovingindustrycredibility andcustomerinfluence,likethe McKinseyQuarterlyValue：Guidancefor the massmedia:realize long-term interaction;Cooperationforcommercial extraction:facilitate long-termcollaborati

152、on;Trust for customers:build long-termcooperationTraits:CommunicationsConsciousness,ExtractionCapability,Audience BaseAuto Industry Dialogue Tour Insights Clear as Blazing FireCore Topic:Creating a SegmentationSpecific EcosystemTime:December 2024-April 2025Target:primarily Yiche customersincluding O

153、EMs,one on one discussionSignup on WeChat:yicheresearch(please provide name,position,company and cell phone#)-a New Book from TengYi(Yiche)Research Institutes Industry Analysis Series gives a deeper look into the past,present and future evolution of Chinas car market centered on specific user segmen

154、ts,thereby empowering core components of carmakers including strategic planning,product optimization and sales&marketing.How to get your book:OEMs,dealers and Yiche customers shouldcontact their Yiche service personnelNon-Yiche customers please contact TYRI(YRI)directly(WeChat:yicheresearch)From Dec

155、ember 2024 to April 2025,TYRI(YRI)will kick off its 9 round of“Insights Clear as Blazing Fire”Auto Industry Trends&Analysis Dialogue Tour,covering the core topic of“creating a segmentation specific ecosystem”to help carmakers capitalize new opportunities presented by new market trends.thDemystifying Chinas Auto MarketDemystifying Chinas Auto Market(2024 Edition,Part II)Contact UsFollow UsWeChatJuns Market TalkBenya Shi，Industry AnalystMobile：188 0118 7009Mail：WeChat：yicheresearch