BYD Whistleblower Reveals 30% Forced "Needs Improvement", Overtime Driven Evaluation, and Hiring Freeze

BYD’s Internal Workforce Shake-Up: A Whistleblower’s Allegations and Investor Implications

BYD Under Fire: Allegations of Workforce Restructuring Through Performance Pressure

BYD, the world’s largest electric vehicle maker, is facing internal scrutiny after an employee whistleblower alleged a systematic effort to push workers out under the guise of performance management via an email sent to CTOL.digital. The claims, which have surfaced on Chinese social media platforms, paint a picture of aggressive HR practices, prolonged overtime policies, and strategic layoffs, raising concerns about employee morale and potential long-term operational risks.

Key Allegations from BYD Employees

1. Forced “Needs Improvement” Labeling System

BYD is allegedly enforcing a bottom 10% forced ranking policy across different divisions, but the breakdown varies significantly:

R&D Roles: 10% of employees are tagged as “Needs Improvement.”
Non-R&D Roles (including testing roles): A staggering 30% of employees are given this label, significantly increasing the pressure on non-engineering staff.
Those tagged “Needs Improvement” for two consecutive years face a freeze on promotions and salary increases.
These employees also receive reduced performance bonuses and profit-sharing awards.
In some cases, persistent low ratings could lead to demotions, pay cuts, or even forced resignations.

While the company has framed this as a workforce optimization strategy, insiders suggest that this system effectively serves as an indirect layoff mechanism, pushing employees to leave voluntarily without officially terminating them.

2. Intensified Overtime Policies Against Industry Trends

The whistleblower also highlights BYD’s increased emphasis on overtime as an evaluation metric, particularly in its Engineering Institute and New Technology Institute.

This approach appears to run counter to broader industry shifts in China’s tech and manufacturing sectors, where companies like DJI, Midea, and Haier are actively reducing overtime requirements to improve employee well-being and innovation efficiency.

3. Hiring Freeze and Workforce Restructuring

Corporate-wide hiring freeze: BYD has suspended external recruitment, halting onboarding for new hires already in the recruitment process.
Replacement Strategy: The company is implementing a one-in, one-out hiring policy—each newly hired fresh graduate replaces an existing senior employee.
Increased Layoffs in Intelligent Driving and Smart Cockpit Sectors: These areas are seeing job cuts due to rapid technological shifts that render certain expertise obsolete.
Phasing Out Older Employees for New Recruits The company is actively replacing older, higher-paid employees with younger, lower-cost talent to optimize labor costs.

The alleged internal directive is to prioritize younger, lower-cost talent while gradually phasing out senior employees, especially in teams where AI-driven innovations have disrupted traditional roles.

Industry and Business Context: Why Is BYD Restructuring?

1. Overexpansion and Overhiring in 2023

BYD ramped up hiring aggressively in 2023 to support its record-breaking EV sales. However, sales projections for 2024 are less optimistic, forcing the company to cut costs and streamline operations.

2. Accelerated Product and Technology Cycles

The speed at which the EV and intelligent driving sectors evolve is outpacing employee adaptability.

For instance, rule-based autonomous driving algorithms were still seen as promising, but large AI models have disrupted their relevance overnight.
Companies now need fewer engineers working on outdated systems, leading to a wave of layoffs across the industry, not just at BYD.

3. Competitive Cost Pressures

With competition from Tesla, NIO, and Geely, BYD must keep production costs low. One way to do this is to replace experienced employees with fresh graduates, who typically accept lower salaries and work longer hours.

Risks and Opportunities

Short-Term Benefits

Cost Optimization: Reducing high-wage employees and freezing promotions helps protect profit margins in a softening EV market.
Younger Workforce Adaptability: Bringing in new graduates may allow BYD to align talent with cutting-edge AI and software-driven vehicle developments.
Maintaining Production Efficiency: Enforcing overtime-heavy work culture could sustain aggressive production targets despite hiring freezes.

Long-Term Risks

Employee Morale and Retention Risks: Forced performance rankings and relentless overtime could drive talent exodus, reducing long-term innovation potential.
Reputational Damage: With ESG (Environmental, Social, and Governance) concerns gaining traction globally, reports of workforce stress and harsh HR policies could impact BYD’s standing with international investors.
Regulatory Scrutiny: Labor laws in China are evolving, and companies enforcing extreme performance pressure may face government intervention.

What to Watch

For investors, BYD’s current HR policies reflect a high-risk, high-reward approach to labor cost management. The company’s short-term financials may benefit, but its long-term talent retention, innovation capacity, and corporate reputation could be at stake.

Key indicators to monitor:

Turnover rates in engineering and R&D teams
Changes in labor policies amid potential regulatory shifts
Employee satisfaction and public sentiment on Chinese social media
R&D output and competitive positioning in AI-driven automotive technologies

As BYD moves forward with global expansion and a rapidly shifting EV landscape, how it balances cost efficiency with sustainable workforce management will determine whether it remains a leader or faces unexpected setbacks.