Operation change of BYD

Table of Content
1. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1 I NTRODUCTION OF BYD ...................................................... 3

3. OPERATION CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.1 THE TRIGGER OF OPERATION CHANGE OF BYD ........................................ 3

3.1.1 From petrol manufacturer to electric car manufactu rer ......................... 3
3.1.2 The 4 Vs’ principle analysis of BYD .......................................... 4
3.2 THE EV CAR MAKE BYD COMPETITIVE IN THE CAR MARKET ................................ 5
3.2.1 Change of Transformation pro cess ......................................... 5
3.2.2 More competitive in the market by compa rison with Toyota car model .............. 6
3.2.3 Change in order winner and order qualifier ................................... 7
3.3 I NCREASING IN OPERATION CAPABILITY WITH THE SUPPORT OF THE GOVERNMENT .................. 7
3.3.1 Cooperation with the Chinese govern ment ................................... 7
3.3.2 Increasing the operation capability ......................................... 8

4. RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4.1 ARTIFICIAL INTELLIGENCE TECHNOLOGY INNOVATION .................................... 9

4.2 QUALITY AND AFTER-SALE SERVICES.............................................. 10

5. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0

6. REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

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 Operation change of BYD

1. Executive summary

In the recent decades, the advancement of the technology can change the lifestyle of
the people significantly. Organizations among the world also need to accept and create

operations change to adopt the constantly changing environment. This essay will
discuss the change in operation process of BYD. The operation strategy of
development of electric car makes BYD competitive and becomes the leading company
in the existing car market.
The evaluation will focus on three perspectives. Firstly, the founder of BYD, Wang

Chuanfu extended the market into automobile area and this provides the foundation
of BYD automobile industry (Wang & Kimble, 2010). Secondly, the development of the
electric car makes BYD more competitive in the car market rather than manufacturing
of the petrol car. Thirdly, the government subsides, and supportive policies influenced
BYD to increase its operation capability and become the leading company for the

electric car market. The analysis of the operational change in BYD over the decades
will be discussed and the recommendation on the company will be suggested in the
end of this essay.

Figure 1 Core competence of BYD

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 Operation change of BYD

2. Introduction

2.1 Introduction of BYD

BYD, the short term for “Build Your Dreams”, is a battery manufacturer and technology

company which is founded in 1995. The founder of the company, Wang Chuanfu
discovered that the battery manufacturer companies in Japan began to manufacture
the NiMH and Li-ion batteries instead of the Ni-Cd batteries. Wang found this as the
huge business opportunity. (Wang & Kimble, 2010). Therefore, the company in China
was mainly manufacturing the rechargeable Ni-Cd batteries that mostly used in the

mobile phones. In order to compete with the Japanese battery manufacturers, Wang
noticed that the labor cost in China is much cheaper than other countries. Thus, the
automated manufacturing process machines has been replaced by low-cost workers.
Wang suggest that the unit cost of the batteries in China is six times cheaper than the
batteries manufactured in Japan (Wang & Kimble, 2010).

In 2003, BYD invested 36.2 million US dollars in Qinchuan auto and stepped into the
vehicle market as a car manufacturer (Wang & Kimble, 2010). According to Wang, the
company produced over 65% of the world’s NiCd batteries in 2002 and sought more
than 193,000 petrol vehicles in 2008 (Wang & Kimble, 2010). The company expansion
brings more customers from the market. By 2016, the employees obtained by BYD

reached to 22,000 people and the 29 production bases across the globe (Cao, 2018).
Within the decades, BYD has become one of the largest batteries and vehicle
manufacturer in the world. In addition, the technology development of the company
over the years also allows BYD to stay competitive in the existing market.

3. Operation change

This section mainly focuses on the discussion of the product change of BYD from
traditional petrol car to electric car. The trigger of the operation change will be
discussed and the operation change of BYD in several prospects will also be evaluated.

3.1 The trigger of operation change of BYD

3.1.1 From petrol manufacturer to electric car manufacturer

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 Operation change of BYD

In 2003, BYD purchased the Qingchuan Auto Limited which helps the company to
obtain the manufacturing license of the vehicles (Wang & Kimble, 2010). It is suggested
by Loon that the design of the F3 vehicle model from BYD sold over 440,000 vehicles

in 2010 and became the top selling car in China (Loon, 2016). However, there are two
factors that triggered BYD to change its operation. Firstly, the petrol cars do not
competitive within the car market Secondly, the traditional petrol car is not
environmental protected.
3.1.2 The 4Vs’ principle analysis of BYD

The Design specification of BYD is analyzed using the 4Vs ’ principle. The change of
product from petrol car to electric car increase the variety and the volume of the BYD.
Petrol El ectri c
Di mension Petrol Characteristics El ectri c Characteristics
Hi gh/Low Hi gh/low
Les s s pare parts will be
BYD a l ways obtain the high-volume i ns talled. No combustion
cha ra cteristic. The repeatability engi nes, gasoline ta nk fuel
process a ppears in the fi l ters needed, the i nstallation
Vol ume Hi gh Hi gher
ma nufacturing process a nd the l ow process is easier (Rarick, 2017)
uni t cost of the product is also The company a lso obtain the
a chi eved. s ys temization characteristics
duri ng manufacturing process.
BYD ha s launched more car
model for the electric ca rs s uch
BYD ha s launched s everal ca r
a s Qi n, Ta ng, e6 models with EV
Hi gher models and the it is i nflexible to
a nd Pl ug-in hybrid mode.
Va ri ety Low tha t cha nge the design for the customer
Offeri ng with customer
Petrol a nd the process of the launching is
dema nds such as buses, taxis
s ta ndardized.
a nd convectional use (Rarick,
2017).
BYD i s able to predict the market
The el ectric car a nd plug-in
pa ttern of the conventional petrol
el ectric car a re new technology
ca r. Therefore, the high utilization of
Va ri ation Low Hi gher a nd the va riation might be
the s taff will be implemented, and
hi gher than the petrol ca r
the unit cost will also be reduced
ma nufacturer.
for hi ri ng staff.
The hi gh utilization of s taff is also BYD expose for the customers
a ppearing to the vi sibility experience by offering bus
Low a nd
Vi s ibility Low di mension for the BYD s ervi ces, taxi servi ces around
hi gh
ma nufacturing. The s taff does not the worl d (Rarick, 2017).
need the contact s kills with the Therefore, the mixed high and

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 Operation change of BYD

cus tomer and there will be a ti me l ow vi sibility processes connect

l a g for the customer to purchase the i nternal and the external
the product. ma rket which is i mportant i n
BYD’s operation.
Table 3 4Vs’ characteristic of BYD

3.2 The EV car make BYD competitive in the car market

3.2.1 Change of Transformation process

The product change is achieved with technology innovation process and it is also the
reason for BYD to stay competitive in the existing car market. The transformation
process of the company before operation change is shown below. The transformation
process indicates that the competitive factor of manufacturing the petrol car is low

price. One special strategy for BYD to reduce the unit cost is replacing the auto
machinery assembly line with the low-cost labors (Wang & Kimble, 2010).

Figure 2 The transformation process before the change

The input resource and output product of the transformation process has changed due
to the operation change. The transformed resources have changed from making the
conventional car spare parts to materials that related to battery, electric motor and

electric control system. Design staff is added to the transforming resources to design
the new energy electric car and the output product has changed from low cost petrol
car to competitive electric car.

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 Operation change of BYD

Figure 3 The transformation process after the change

3.2.2 More competitive in the market by comparison with Toyota car model
Instead of developing the traditional petrol and diesel vehicles, BYD realized that the
hybrid and electric vehicle shows a great advantage in the existing car market. With
the experience of being a battery manufacturer for decades, BYD combined its vehicl e

manufacturer technology with the battery manufacturer technology.

The company launched F3DM, its first hybrid and electric car model. The fully electric
car model E6 was also developed in the following year (Wang & Kimble, 2010).
Comparing with other car manufacturers, F3DM has both cost and technical
advantages.

The Dual mode allows the vehicle to travel over 400 kilometers and the car is only half
the price of Toyota. According to Wang, the price of the BYD F3DM model is 149,800
Yuan and the price of the Toyota Prius model is 280,000 Yuan (Wang & Kimble, 2010).
In addition, the distance of the BYD F3DM is 100 kilometers while the Toyota Prius can
only travel 25 kilometers. The table of the comparison is shown below.
Compa ny/Model BYD/F3DM Toyota /Prius
Pri ce (Yua n) 149,800 280,000
Engi ne BYD371QA Toyota VVT-i
Ma xi mum s peed 160 170
Ga s oline Consumed (L/100km) 4.9 4.7
Petrol Engine Max power (kW/rpm) 50/7,500 57/7,500
El ectri c motor Max power (kW) 75 50
Di s tance in electric mode (Km) 100 25

Table 1 Comparison of BYD and Toyota electric car model (Wang & Kimble, 2010)

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 Operation change of BYD

The table clearly shows that the Toyota Prius model take a great advantage on the
petrol mode perspective. However, BYD F3DM takes a great advantage on the electric
mode perspective. The newly developed Lithium-Iron Phosphate (Li-FePO4) of BYD

provides the 100 kilometers cruising which is four times more than Toyota Prius (Wang
& Kimble, 2010). The data indicates that the electric car makes BYD more competitive
in the car market.

3.2.3 Change in order winner and order qualifier

BYD changed the order winner and order qualifier in its own organization. The petrol
car might need the good quality and the acceptable price to attract the customer. The
electric car might focus on the green energy, cruising distance and the charging time.
The comparison is shown below.
Types Order wi nner Order qualifier
Petrol car - Low ga s oline consumption - Good quality
- Good Appearance of the ca r - Accepta ble price
- Ea s y to drive - Hi gh va riety of car models
- Good a fter s ale services
El ectri c car - Good Appearance - Good quality
- Low noi se - Accepta ble price
- Crui s ing distance - Green energy
- Fa s t charging time - Hi gh va riety of car models

Table 2 Comparison on Order winner and Order qualifier between petrol and electric
car

3.3 Increasing in operation capability with the support of the government

3.3.1 Cooperation with the Chinese government

The new energy car development is reducing the greenhouse gas emission globally.
For example, China has become one of the largest consumer markets in the world in
the recent years and the green gas emission in China is also significantly higher than

other countries (Masiero etal, 2016). The Chinese government intended to solve the
pollution problem and minimize the impact of the greenhouse emissions.
In order to conquer this challenge, BYD implements the green energy strategic to
cooperate with the government. For example, BYD established the “7+4” strategy

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 Operation change of BYD

which intended to turn all the petrol and diesel vehicles into new energy vehicles. The
number seven means seven types of transportation on the road and the four means
four types of public institution (Masiero etal, 2016).

3.3.2 Increasing the operation capability

The operation capability of BYD is increased by producing electric car rather tha n
producing the conventional electric car. The stages could be analyzed using the Hayes
and Wheelwright’s four stages. The manufacturing of the conventional petrol car is in
the stage two where BYD is adopting the its best practice in the market. BYD has

launched several measures such as replacing the machine by human labor and vertical
integration to compete with other manufacturers (Loon, 2016).

Figure 4 Hayes and Wheelwright’s four stages (Slack & Brandon, 2018)
However, the manufacturing of the electric car allows BYD to move to the stage four
which is the externally supportive stage. The technology innovation of the
combination of battery and electric car allow BYD always one step ahead of its

competitors. Cao (2018) suggest that BYD is planning to implement the electric bus
plant in Ecuador. This also indicates that BYD is always using its advantages to seek the
opportunities in the market.
BYD obeys the operation principle in the societal level in three aspects including
people, profit and planet. Besides the low cost and the profitable price of the vehicles,

BYD also considered the carbon dioxide emissions.

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 Operation change of BYD

4. Recommendations

4.1 Artificial intelligence Technology innovation

Last but not least, organization should always develop their operations according to

the change of the external environment. For example, the organization could put their
attention on the recent technology that developed such as artificial intelligence and
5G communication technology. The new technologies such as edging computing that
based on artificial intelligence and 5G communication can achieve the device to device
(D2D) network services (Zhou etal , 2019).

With the high data transmission and low latency of the device to device services, BYD
could make their electric car even smarter. This might attract the customers because
it brings convenience to the people. For instance, the self-driving could navigate the
roads more accurately than the normal navigation system (Montealegre etal, 2015).
The technology innovation might bring convenience and become one of the order

winner characteristics in the future market.

However, there are risks for the development of such technology. The system
development of self-driving is still fresh and ongoing. The reputation of self-driving
system might be tarnished should any accidents occur. For example, Lee and Kolodge
(2020) suggests that people still have trust barriers for self-driving, and they afraid

there will be errors and failures for the AI system. Therefore, BYD need minimize the
trust barrier and reduce the risk in order to implement such technology.

Figure 5 Concerns of self-driving (Lee and Kolodge, 2020)

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 Operation change of BYD

4.2 Quality and After-sale services

Although BYD has a great advantage in the electric car manufacturing, it is still a young
company that developed only for a decade and the quality management as well as the

after-sales service still need the improvement (Wang & Kimble, 2010).
Competitors such as Toyota and General motor are also developing their own electric
car to compete with BYD electric car, and their reputation and sale volume is much
higher than BYD globally (Cao etal, 2018). For example, Toyota has 50 manufacturing
facilities in 27 countries (Liu & Meng,2017).

The good quality and after sale service also bring loyalty from their customers.
Therefore, the quality control should be taking place during the manufacturing stage
and the after-sale service also will affect the reputation of BYD in the current car
market.

5. Conclusion

In conclusion, the operational change of BYD bring the success to the organization.
From the petrol car manufacturer to the electric manufacturer, BYD has transformed
successfully makes the company becoming the one of the largest technology company
and manufacturer in the world.
However, there are still challenges that BYE need to conquer. BYD must develop the

product further with technology innovations to attract customers because the

competitors are catching up rapidly in the market. In order to adopt in this rapidly
changing environment and hold its reputation in the electric car market, BYD will need
to overcome these challenges and continue to build their dreams.

Word count: 2357

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Foreign Investment-A Case Study of the Internationalization Strategy of BYD. In 3rd

International Symposium on Asian B&R Conference on International Business

Cooperation (ISBCD 2018). Atlantis Press.
2. Liu, J.H. and Meng, Z., 2017. Innovation model analysis of new energy vehicles:
taking Toyota, Tesla and BYD as an example. Procedia engineering, 174, pp.965-
972.

3. Lee, J.D. and Kolodge, K., 2020. Exploring trust in self-driving vehicles through text
analysis. Human factors, 62(2), pp.260-277.
4. Loon, M., 2016. Innovation in the Local Context–A Case Study of BYD in China.
5. Masiero, G., Ogasavara, M.H., Jussani, A.C. and Risso, M.L., 2016. Electric vehicles
in China: BYD strategies and government subsidies. RAI Revista de Administração

e Inovação, 13(1), pp.3-11.

6. Montealegre, S., Hammer, K. and Dissosway, M., Harman International Industries
Inc, 2005. Adaptive navigation system with artificial intelligence. U.S. Patent
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7. Quan, X.I., Loon, M. and Sanderson, J., 2018. Innovation in the local context: A case

study of BYD in China. International Journal of Innovation and Technology

Management, 15(02), p.1850017.
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9. Slack, N. and Brandon-Jones, A., 2018. Operations and process management:

principles and practice for strategic impact. Pearson UK.
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capacity for innovation. International Journal of Automotive Technology and

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Management, 10(1), pp.77-92.

12. Zhou, Z., Chen, X., Li, E., Zeng, L., Luo, K. and Zhang, J., 2019. Edge intelligence:
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