BYD has set the official price of its new flagship Han sedan below the level it quoted during pre-sales.
On the evening of October 13, the Han EV, the first D-segment flagship sedan under the Dynasty series, was launched with three variants priced at 235,900 yuan, 249,900 yuan and 275,900 yuan, respectively, between 14,000 yuan and 24,000 yuan lower than pre-sale prices. The positioning continues to move upward, while pricing remains within the mainstream competitive range of just over 200,000 yuan.
What the Han brings to compete for that budget is a large body, long range and chassis configuration. The car measures 5,256 millimeters long with a wheelbase of 3,130 millimeters; the entry-level rear-wheel-drive version at 235,900 yuan offers a CLTC electric range of 1,008 kilometers, while dual-chamber air suspension and rear-wheel steering are standard across the range.
For an additional 14,000 yuan, the rear-wheel-drive flagship version at 249,900 yuan mainly adds cabin and rear-seat features, including rear-seat ventilation, heating, massage and a ceiling-mounted screen. The two rear-wheel-drive versions share the same range, with the price gap falling more on comfort and entertainment needs. This variant arrangement also echoes BYD's positioning of the Han as a car that serves both family and business use.
According to nearly a thousand pre-sale user surveys disclosed by BYD, more than 70 percent of respondents are existing car owners adding or upgrading a vehicle. The Han is targeting buyers who already have driving experience and are seeking an upgrade. The corresponding trade-in subsidy is 10,000 yuan for owners of the same brand and 6,000 yuan for owners of other brands; for consumers who qualify for the same-brand trade-in, the entry-level version comes to 225,900 yuan after the subsidy.
This car takes on an important task for BYD this year: beyond Denza, Fangchengbao and Yangwang, to also move its best-selling main brand upward. The previously launched Tang, together with the now-launched Han, form the "9 series" flagship lineup of the Dynasty series, expanding the main brand's product range upward.
Lu Tian, general manager of the Dynasty series, acknowledged in August that the biggest challenge in moving the brand upmarket is changing entrenched impressions: BYD was once seen by some consumers as representing the mainstream mass market.
Behind that name lies a huge user base and sales network, as well as consumers' existing impressions of the mass brand. Higher-priced models still have to win consumers' recognition anew.
Premiumization within BYD is a question of profit. At the June shareholders' meeting, Wang Chuanfu directly linked higher volumes of premium models to improved gross margins and per-vehicle profit. He also acknowledged that technology and products are still not good enough, while design and marketing were previous weaknesses that are being strengthened and improved. Launching a flagship is only one step; higher-positioned cars still need to sell at scale.
This year BYD has placed greater emphasis on overseas expansion and premiumization. In the first half, combined sales of Fangchengbao, Denza and Yangwang rose 61 percent year on year, but their share of the group's total passenger vehicle sales remained 12.8 percent. The new brands are growing fast, but the bulk of the group's sales still comes from the Dynasty and Ocean series. Whether the main brand's large user base can upgrade to higher price points will determine how big this round of premiumization can become.
In an investor exchange in September, BYD attributed part of the roughly 30 percent year-on-year increase in second-quarter net profit to a higher share of overseas business and premium models, with high value-added products providing a boost to profitability. Going overseas and moving upmarket have already delivered operational returns.
Beyond the profit recovery, domestic sales remain under pressure. BYD's first-half net profit attributable to shareholders was 12.325 billion yuan, down 20.54 percent year on year; domestic sales also failed to heat up alongside exports. Data from the China Passenger Car Association showed that BYD's domestic retail sales of narrow passenger vehicles in September were about 247,000 units, down 28.9 percent year on year, while wholesale sales including exports in the same period were about 455,000 units, up 15.8 percent year on year. For the domestic sales system, flagship models must both raise the product positioning and contribute real sales volume.
BYD has already publicly reflected once this year on the gap between technology and sales.
In March, Li Yunfei, general manager of the brand and public relations department, said in a media exchange that when the Han L and Tang L were launched last year, the number of charging stations and some software and hardware preparations were not yet sufficient, leaving "breakpoints" in the user experience; a few months later, fixed pricing for fuel vehicles changed the price competition environment. The buzz at a technology launch did not automatically translate into a sales advantage.
This year's approach therefore includes more upfront preparation. Before unveiling the second-generation blade battery and fast-charging technology in March, BYD first built out its charging network, and the new technology was also rolled out across brands such as Dynasty and Ocean. According to disclosures by the company at the launch event, fast-charging stations had reached 10,000 by August. The Han, equipped with the second-generation blade battery and fast charging, has caught a round of renewal in which vehicles and recharging facilities advance together.
The starting price of 235,900 yuan has already placed the Han in a crowded budget range. The Tesla Model 3 rear-wheel-drive version has a manufacturer's suggested price of 235,500 yuan, only 400 yuan less than the entry-level Han; the Han's rear-wheel-drive flagship at 249,900 yuan is priced the same as the Xiaomi SU7 Pro. Within this budget, the Han competes for users with a larger body and rear-seat space, but still has to fight the Model 3 and SU7 for orders.
BYD's technology strategy this year has pushed this question one step further. In an investor exchange on September 8, BYD explicitly stated that it would use technology to raise product premiums.
Rolling out a technology across more brands and models can expand sales opportunities, but it also makes it hard for a flagship to raise its price solely on the exclusivity of that technology.
In the first half, the gross margin of BYD's "automobiles, automobile-related products and other products" segment was 22.33 percent, up 1.98 percentage points year on year, while revenue fell 8.98 percent. Based on the revenue and gross margin disclosed for both periods, the segment's total gross profit was around 61.5 billion yuan in each period. The gain from the higher gross margin was almost entirely offset by the decline in revenue.
Pushing the main brand upmarket starts with higher order prices. If a new flagship replaces an existing model, the added revenue comes from the price difference, and the added gross profit must also account for changes in costs. Domestic competition at the same tier constrains that price difference. The operational weight of BYD's premiumization rests on how much gross profit each model upgrade can actually add to the group.
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