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[YesAuto News] Affected by the decline in subsidies for new energy vehicles, BYD's net profit in 2017 and the first quarter of 2018 has been declining frequently. BYD's net profit in 2017 decreased by 19.5% year-on-year, and its net profit in the first quarter of 2018 decreased by 83.1% year-on-year. On June 20, BYD Chairman Wang Chuanfu stated at the 2017 Annual Shareholders' Meeting that BYD's revenue scale will maintain a growth of 40%-50% in 2018, and the third and fourth quarters will be a turning point in performance.

Wang Chuanfu introduced that BYD’s performance recovery will come from three positive aspects: the listing of the new BYD Tang, cloud rail business and battery business. Business growth in these areas may be expected to push BYD into the world's top 500 companies. The new BYD Tang will be launched on June 26, and plans to launch its pure electric version at the end of December. Wang Chuanfu said that it is expected to contribute higher profits to BYD.

The cloud rail business is BYD's fourth largest business segment after IT, automobiles, and new energy. BYD is building a “cloud rail + cloud bus” rail transit dual mode, mainly targeting second- and third-tier cities in China. BYD stated at the beginning of the year that it plans to start construction of cloud rail projects in more than 20 cities in 2018. Wang Chuanfu said that BYD has received more overseas orders, and the cloud rail business will gradually bring BYD performance growth in the next three years.

Shenzhen is a pioneer in the promotion of new energy vehicles in my country. In 2017, Shenzhen realized all buses with a total of 16,000 electric vehicles. In 2018, Shenzhen will realize 100% electric taxis. At present, 13,000 electric taxis have been promoted. It is estimated that there will be 7,000 vehicles in the market. In addition, Shenzhen also plans to achieve 50% electrification of logistics vehicles by the end of 2020.

As a local company in Shenzhen, BYD has benefited from the electrification of Shenzhen's transportation system. Wang Chuanfu said that BYD has long been preparing for the electrification of buses, taxis, and urban travel trucks. In the next three years, the total number of new energy vehicles in these product lines will far exceed that of its peers.

BYD has created a closed-loop ecology of new energy vehicles, self-produced and sold power batteries, and the promotion of new energy vehicles has also driven battery sales. Wang Chuanfu introduced that BYD's battery production capacity has been insufficient. By the end of 2017, BYD's power battery production capacity reached 16GWh. According to the plan, from 2018 to 2020, it will reach 29GWh, 34GWh, and 39GWh.

In April 2017, BYD announced that it would split its power battery business and supply power batteries. Shen Xi, deputy general manager of BYD's lithium battery business unit, once introduced that the divestiture of BYD's power battery business is expected to be completed by the end of 2018 or early 2019.

Although Wang Chuanfu has positive expectations for BYD's performance, it is unavoidable that with the decline of new energy vehicle subsidies, the overall profits of new energy vehicle companies and power battery companies are shrinking. In addition, domestic and foreign auto companies are accelerating the pace of automotive electrification transformation. In the next few years, the choice of new energy products on the market will also become more abundant, and the competition in the new energy vehicle market will become increasingly fierce. Cloud Rail is a new business segment that BYD places high expectations on, and the cloud rail business is still in the layout stage. It remains to be seen whether it can become a new growth point for BYD's performance.