Chinese electric vehicle giant BYD is shifting away from its in-house financial notes system, Dilian, to pay suppliers, sources told Reuters. The move marks a major change for a practice that helped BYD grow rapidly but has been criticized for putting parts suppliers at a disadvantage.
Under the new approach, BYD plans to use commercial paper or bank notes instead of Dilian’s electronic IOUs, which carry higher default risks and often come with steep discounts if cashed early. The change comes amid regulatory pressure to shorten payment times and improve transparency in the auto industry, News.Az reports, citing Reuters.
Dilian, launched in 2018, allowed BYD to keep costs low and speed up production, but suppliers often faced delays of up to 127 days—well above the Chinese industry average of 108 days and global norms of 60–90 days. While the system helped BYD maintain large cash reserves, slowing sales, falling profits, and plans for overseas expansion are adding urgency to the shift.
China’s new rules now require automakers to pay suppliers within 60 days and limit the use of non-cash payments, though loopholes remain. BYD said it has already accelerated payments this year and remains within regulatory guidelines. Analysts say the transition away from Dilian could create short-term challenges as BYD adapts its supply chain financing while navigating a tougher domestic market.
