Diwang erupts, BYD Company Limited (01211) leads the era of "technological equality" in automobiles.

Last month, Shanxi Guoxin Energy Corporation's car achieved a monthly penetration rate of over 50% for the first time, reaching a critical point. In August, this growth momentum continued. According to the China Passenger Car Association's analysis of the national passenger car market in August, the retail penetration rate of new energy vehicles climbed again to 53.9%; the retail monthly sales volume exceeded a million vehicles for the first time this year, reaching 1.027 million vehicles, a year-on-year increase of 43.2% and a month-on-month increase of 17.0%. From January to August 2024, the retail sales of new energy vehicles reached 6.016 million vehicles, a year-on-year increase of 35.3%. With the rapid development of Chinese car companies in technology, brand, and services, as well as a deep understanding of the local market and consumer demands, electrification has weakened the technological barriers of traditional fuel vehicles. This trend is evident in the semi-annual reports recently disclosed by major mainstream listed car companies for 2024. According to a report released by the China Listed Companies Association, the automotive industry's operating income grew by over 8% in the first half of this year, and net profits increased by over 20%. Among China's mainstream car companies, BYD Company Limited, GEELY AUTO, Great Wall Motor, and Chongqing Sokon Industry Group Stock achieved double-digit growth in revenue and profits in the first half of this year. However, joint venture car companies such as SAIC Motor Corporation and Guangzhou Automobile Group saw a decline in performance. In terms of per vehicle profit, according to the list of per vehicle profits released by Yiche for the first half of 2024, the top ten per vehicle profits among domestic mainstream listed car companies were: Great Wall, Geely, IDEAL, BYD Company Limited, Chongqing Sokon Industry Group Stock, Jiangling Motors Corporation, BAIC Group, SAIC Motor Corporation, Chongqing Changan Automobile, and Guangzhou Automobile Group. Although BYD Company Limited ranked first in net profit and sales volume, it only ranked fourth in per vehicle profit, with approximately 8,500 yuan, lower than Great Wall Motor and GEELY AUTO. The discrepancy between BYD Company Limited's total net profit and per vehicle profit is due to the balance it has achieved between high-quality corporate development and consumer benefits, entering a period of virtuous cycle. The concept of "technology parity" has played a significant role in this. The term "technology parity" means allowing consumers to experience better technology at a relatively lower cost. To achieve "technology parity", it is crucial to master advanced core technology, which has been the focus of BYD Company Limited's efforts. The significant investment in R&D compared to net profit is another testament to BYD Company Limited's high regard for technological research and development. In the past 14 years (from 2011 to the present), BYD Company Limited has invested more in R&D than net profit in 13 years, sometimes even several times higher. According to current trends, BYD Company Limited's R&D investment for the full year of 2024 is expected to reach the level of 50 billion yuan. It is worth mentioning that, in the entire A-share market, Wind data shows that in the first half of this year, BYD Company Limited topped the list of R&D expenses for the first time and became the undisputed "king of R&D" among over 5300 listed companies. From the "electric cheaper than gasoline" at the beginning of the year to the fifth generation DM technology in the middle of the year, BYD Company Limited, through its vertical integration strategy, continuously drives product design optimization through technological innovation, finding a stable balance point among overall corporate profits, market scale, and product prices, thereby continuously promoting the long-term high-quality sustainable development of the company. The data from the China Passenger Car Association shows that the momentum of development for domestic brands remained strong in August, with the market share of Chinese brand passenger cars reaching 63.4%, hitting a historic high. Independent brands represented by BYD Company Limited have broken the traditional pattern of monopoly by joint venture cars in the Chinese automotive market. Behind this, the rapid growth of new energy vehicles is an important reason for the rapid increase in the sales volume of independent brands. BYD Company Limited predicts in its 2024 half-year report that the new energy vehicle market will usher in a more extensive development space, maintaining a strong and rapid growth momentum, with the penetration rate expected to break through once again.