BYD and Daimler, the parent company of Mercedes-Benz, have officially "parted ways."

According to Tianyancha, on September 14, Shenzhen Denza New Energy Automobile Co., Ltd. underwent equity changes.

Specifically, the shareholding ratio of BYD Automobile Industry Co., Ltd. in Denza increased from 90% to 100%, with the subscribed amount rising from 6.984 billion yuan to 7.76 billion yuan. Mercedes-Benz (China) Investment Co., Ltd., which previously held a 10% stake, completely exited. In other words, Denza has transformed from a joint venture between BYD and Daimler to a wholly-owned subsidiary of BYD.

In reality, as BYD's premium brand, Denza has not had a smooth ride lately. According to statistics, Denza sold 9,989 vehicles in August, a decline from 10,340 in July.

Currently, Denza primarily relies on the Denza D9 DM-i, which sold 8,722 units in August. However, the Denza N7, its flagship model, only sold 808 units, while the Denza N8 has not reported sales figures for three consecutive periods, with an average monthly sales of only double digits in the first half of the year.

For BYD, monthly sales of over 300,000 units have become routine, thanks to the support of its Dynasty and Ocean series. With sales no longer a concern, accelerating its transition to high-end products has undoubtedly become BYD's primary goal for the next stage.

The establishment of the Denza brand dates back to 2010.

At that time, BYD and Daimler, the parent company of Mercedes-Benz, signed a cooperation agreement to officially plan a brand collaboration. A year later, the two companies jointly established a technology joint venture with each holding a 50% stake. Shortly thereafter, the Denza brand was officially launched, positioning itself as a domestic premium electric vehicle. BYD provided the electric drive system, while Daimler was responsible for vehicle manufacturing. With BYD's technological support on one side and Mercedes-Benz's brand power on the other, Denza stood on the shoulders of giants from the start.

However, despite its formidable background, Denza's development fell far short of expectations. According to media statistics, from 2016 to 2020, Denza's annual sales were 2,287, 4,713, 1,974, 2,089, and 4,175 units, respectively. Due to poor sales, Denza has consistently operated at a loss - net losses of 1.299 billion yuan, 477 million yuan, 887 million yuan, 1.152 billion yuan, and 426 million yuan, respectively, from 2016 to 2020.

Looking back, Denza's failure at the time was inevitable. On the one hand, while Denza's electric drive system was provided by BYD, BYD's technology was not advanced enough to support a premium brand at the time. For example, the Blade Battery was officially launched only on March 29, 2020, and the DM-i super hybrid technology was introduced in 2020. On the other hand, while Mercedes-Benz is a luxury brand, its influence is primarily in the gasoline-powered vehicle market, with limited impact in the new energy vehicle market.

A turning point occurred in 2022.

In July 2022, BYD Automobile Industry Co., Ltd. increased its shareholding in Denza from 50% to 90%. Since then, BYD has taken the lead in Denza's strategy and operations, while Mercedes-Benz has shifted from strategic investment to providing support behind the scenes. With BYD's increased influence, Denza began to transform: In 2023, Denza sold over 120,000 vehicles, ranking first among new energy luxury brands priced above 400,000 yuan, with an average price exceeding that of BBA (BMW, Benz, Audi). Notably, the flagship model "Denza D9" sold 119,182 units from January to December 2023, crowning it as the best-selling MPV in China across all categories for the year.

However, despite Denza's strong rebound in 2023, it primarily relied on the "Denza D9" model, with sales of other models remaining unimpressive. For example, as mentioned earlier, Denza N7 sold only 808 units in August, while Denza N8 has not reported sales figures for three consecutive periods, averaging only double-digit sales in the first half of the year. This sales structure is putting increasing pressure on Denza, as evidenced by its monthly sales of 9,989 units in August, falling below the 10,000-unit threshold considered crucial for survival.

Perhaps due to this sales pressure, Denza ultimately became a wholly-owned subsidiary of BYD. Following the equity change, BYD has invested more technology into Denza. For example, the Denza Z9GT, launched on September 20, is equipped with the world's first intelligent control technology platform, "Easytrip," which integrates three independently driven electric motors and rear-wheel dual-motor independent steering technology. It can rotate around any front wheel at any angle from 0 to 360 degrees, achieving a maximum crab-walking angle of 15 degrees globally and pioneering functions such as compass-like turning. Additionally, it premieres BAS (BYD Assistant System) 3.0+, an intelligent driving technology that significantly enhances driving capabilities, "surpassing human driving limits."

Currently, BYD's sole ownership undoubtedly provides Denza with greater technological support. For example, "Easytrip" will become Denza's exclusive technology. As for final sales figures, only time will tell.

Behind BYD's sole ownership of Denza lies both the sales pressure on Denza and BYD's ambitions for high-end development.

Previously, Wang Chuanfu stated that the Denza brand is a crucial part of BYD's automotive brand matrix. "In BYD's automotive brand ecosystem, Denza has become a pivotal link connecting its various brands. It integrates resources and support from the Dynasty and Ocean networks downwards and provides a solid foundation for the premium brand Yangwang upwards." Given Denza's significance, BYD chose to take sole ownership after sales began to decline.

In recent years, as sales have stabilized above 200,000 units, BYD has accelerated its transition to high-end products. However, this transition has not been entirely successful. For example, BYD's other premium brand, "Equation Leopard," sold only 4,876 units in August. While this figure is decent considering "Equation Leopard" currently only offers one model, the Leopard 5, it pales in comparison to BYD's overall sales of 373,000 units in August.

Looking at BYD's ultra-premium brand, "Yangwang," it sold only 303 units in August. As a million-yuan premium brand, "Yangwang" is facing a decline in popularity and sales.

Furthermore, even within the Dynasty and Ocean networks, low-priced models dominate sales, while high-priced models struggle to sell.

According to financial reports, the proportion of BYD's sales of models priced above 200,000 yuan has been on an upward trend since the second half of 2023. However, after peaking in February this year, the proportion quickly declined from 27.6% to just 18.7% in July. Additionally, the market share of BYD's mid-to-high-end models dropped from 8.4% in February 2024 to 6.7% in July 2024. Specifically, monthly sales of the Tang DMI and Han DMI have fallen from highs of 17,000 and 18,000 units to just 10,000 units in July.

Due to the decline in the proportion of high-end model sales, BYD's gross margin also declined significantly in the second quarter. BYD's gross margin was 18.69% in the second quarter, a decrease of 3.19 percentage points from 21.88% in the first quarter. Looking at specific business segments, the gross margin of BYD's automotive business (excluding BYD Electronics) was 22.4% in the second quarter, a nearly 6% decrease from the previous quarter and below market expectations of 24%. According to the analysis of media outlet "Dolphin Investment Research," excluding the battery business, the actual gross margin of BYD's vehicle manufacturing business has fallen below 20%.

As the current "overlord" of the new energy vehicle industry, BYD has a dominant position in the low-price market. However, its sales of high-end models have been sluggish. For BYD, it is evident that it is not content with dominating the low-price market alone; the high-end market is also a must-win territory. Taking sole ownership of Denza is a crucial step in BYD's pursuit of this goal.