Core Viewpoint - BYD is shifting away from using its in-house financial notes (Dilian) to pay suppliers, opting instead for commercial paper or bank notes, which marks a significant change in its payment practices [1][2][3]. Group 1: Payment Practices - BYD has informed some suppliers of its intention to stop using Dilian notes, which are electronic promissory notes issued on its platform launched in 2018 [1]. - The move comes amid a challenging environment in the Chinese auto industry, characterized by a price war that has negatively impacted parts suppliers, leading to longer payment periods and pressure to reduce prices [2][4]. - The Dilian system is perceived to carry a higher default risk compared to commercial paper or bank notes, which are more regulated [4]. Group 2: Financial Implications - Analysts suggest that the Dilian system has allowed BYD to maintain a large cash reserve, reducing reliance on external funding and lowering working capital costs [4]. - A transition away from Dilian could complicate BYD's financial management, especially as the company faces slowing sales and declining profits while planning significant overseas investments [4].