Zhang Yongwei: There are 10 trends that should be focused on in the development of the new energy automobile industry in the next 3-5 years

Recently, Zhang Yongwei, vice chairman and secretary general of the China Electric Vehicle 100 Association, was invited to participate in the third international symposium across the oil age held by the Energy Research Institute of Peking University, and released the theme report of "Development Trend and Policy Outlook of New Energy Vehicle Industry". In the report, Zhang Yongwei focused on sorting out 10 important development trends worthy of attention in the new energy automobile industry in the next three to five years, and gave corresponding policy suggestions on the basis.

First, the next 3-5 years of the development of the new energy automobile industry 10 key trends

1. The development of global new energy vehicles has entered an irreversible fast lane

The only direction of global automobile development is new energy, or electrification, which has become the consensus of countries and enterprises around the world. In the past, many countries have disputed and wavered about this, while China's new energy automobile industry has been growing and constantly moving to a new level. After several years of development, the irreversible trend of new energy has basically taken shape.

At present, the penetration rate of new energy vehicles in China has exceeded 10%, that is, the proportion of electrification in the increase in automobiles has exceeded 10%, and it is expected to exceed 30% by 2025. Penetration in countries such as the United States and Europe is also growing, especially in northern Europe, where new car sales of electric vehicles in Norway account for nearly 100%. Of course, the technical route of electrification varies from country to country. China is dominated by pure electricity, Europe is dominated by plug-in electricity, and Japan is dominated by weak mixing.

2. China will still be in a leading position for a long time

Based on the prediction of the 100 People's Association research, the annual sales of electric vehicles in China will exceed 5 million in 2022 and reach at least 7 million in 2025, with an optimistic estimate of 9-10 million. From 1 million to 10 million, in just a few years, this development speed has created the "best" in the global new energy industry. The ownership, growth rate and industrial scale of new energy vehicles were unimaginable in the past. Taking power batteries as an example, by 2025, China's battery installed capacity will reach 600GWh, the world's largest.

3. Small and medium-sized cities and rural areas will become new market growth points for new energy vehicles

In the past, the first vehicles of small and medium-sized urban and rural consumers often chose fuel vehicles. Entering the stage of rapid development of motorization, consumers' first vehicles will most likely be new energy vehicles. This will become a flashpoint in China's electrification market in the next 3-5 years, after large cities, and become one of the most important areas in the future market growth. This will play a huge role in reducing carbon emissions and improving motorized mobility in third- and fourth-tier cities and rural areas.

4. China's electric vehicles have truly entered the stage of market-oriented competition

2021 is a watershed year for China's electric vehicle industry. From the perspective of market competition pattern, in 2022, all financial subsidies will be withdrawn, all car companies will be in the same policy starting line, and the competition of car companies is bound to be more intense. After the subsidy is withdrawn, newly listed models will also appear, especially foreign brands. From 2022 to 2025, China's new energy vehicle market will enter a stage where a large number of new models and new brands will emerge.

Different from the characteristics of the development of the new energy vehicle market in the past decade, market competition will enter a real stage of big waves. The production capacity and brand that have grown up on subsidies in the past and lacked competitiveness will face great challenges at this stage, some production capacity will accelerate the withdrawal, and some brands will disappear.

5. Automobile electrification and intelligence are officially integrated into one

Over the past decade, the theme of change in the automotive industry has been electrification. In the next stage, the theme of change will be intelligence based on electrification. The popularity of electrification depends on intelligence to pull, simple electric vehicles will not become the market selling point, only more intelligent cars are the focus of market competition. On the other hand, only electric vehicles can be more completely embedded in intelligent technology, and the best carrier of intelligent technology is the platform of electrification. Therefore, on the basis of electrification, intelligence will be accelerated, and the "two modernizations" will be formally integrated in the car.

6. The energy revolution and the automobile revolution achieve substantial synergy

With the implementation of "double carbon", energy-side changes will make electric vehicles green and use real renewable energy. At the same time, new energy vehicles can achieve vehicle-network interaction by connecting to the power grid. The ideal model of wind power, photovoltaics, energy storage, electric vehicles and smart grids will be realized ahead of schedule. In the next 3-5 years, technology and policies will further support the greening of electric vehicles, slowly move from small-scale pilots to the track of large-scale development, and the energy revolution and the automobile revolution will truly achieve substantial synergy.

7. The supply chain has become the bottleneck and important competitiveness of the development of automobile enterprises

Decarbonisation is the first major challenge facing the automotive supply chain. Under the vision of global carbon neutrality, almost all vehicle companies and parts industries are highly concerned about and rely on the transformation of the supply chain, and how to achieve green, low-carbon or net zero emissions in the supply chain is a problem that enterprises must solve. The carbon neutrality timeline for large auto companies is only 10-20 years before 2035 or 2040, when net zero emissions will be achieved across the entire industrial chain. This means that not only the whole vehicle manufacturing link, from the production and manufacture of upstream parts to logistics and transportation, we must achieve net zero emissions.

Intelligence is the second challenge facing the automotive supply chain, especially chips. In 2021, the global automotive industry will reduce production by about 10 million units due to chip supply shortages, and China's average production will be reduced by 20%.

The supply chain is a key threshold for the future development of electric vehicles and smart cars. This supply chain is global, and enterprises are not only affected by their own strategies, but also affected by external factors such as international. In particular, the epidemic, trade disputes between major countries, technological competition, and shipping will affect the pattern change of the supply chain of the automobile industry.

8. The pace of technological innovation of new energy vehicles will be significantly accelerated, and the curtain will be opened on the full-stack electrification of automotive products

The outbreak of the market will stimulate a new wave of automotive technology innovation. In the past, the main problem that plagued the marketization of new energy vehicles was cost. After the withdrawal of subsidies in 2022, technology will become a core factor in the competition between new energy vehicles and fuel vehicles. The progress of technology has made new energy vehicles basically have the economic advantage of competing with the same level of fuel vehicles, and truly ushered in the inflection point expected by the industry.

Due to economic advantages, the development speed of high-end brand electrification is very fast, and Weilai Automobile has entered the market of BMW and Mercedes-Benz at the same price. In the A0-level market, especially in the electric vehicle market below 50,000 yuan, its cost performance also exceeds that of fuel vehicles. Thanks to advances in technology, especially battery technology, the advantages of electrification at both ends of the "cheapest car" and "most expensive car" have become very obvious. In the next few years, the focus of industry competition will be concentrated in the "intermediate" market of about 200,000, and gradually form a new advantage.

9. Electrification drives rapid innovation of business models

After the electrification of automobiles enters the stage of true marketization, it will drive a large number of rapid innovation of business models. For example, optical storage and charging integration mode, power exchange mode, battery banking mode, etc.

10. Infrastructure facilities are gradually supplemented and derived from the integration of new formats of the three networks

The infrastructure of the fuel vehicle era is only gas stations and gas stations, and due to the development of automobile electrification, the future energy infrastructure will undergo major changes. Charging, power exchange, fast charging, slow charging, mobile battery replenishment, hydrogenation, etc., will constitute a converged infrastructure. This will be a major highlight of the future development of electrification, and it is also a hot spot for industry investment.

Second, the six-point proposal for future industrial development

1. Subsidy decline should be stable and predictable. In the stage of rapid development of vehicle electrification, policies should maintain appropriate stability and predictability. Subsidy decline in 2022 is a must, but it is best not to have high-frequency adjustments. Exiting at the end of the year rather than early in the middle of the year is a common expectation of many parties.

2. After the subsidy declines, it can be supported by double integrals. Double credit is the most important policy to promote the electrification of automobiles after the subsidy declines. Continuing to optimize the double credit policy has a huge impact on the industry, and the focus of optimization in 2022 is to further increase the proportion and allow for points trading. At the same time, the scope should be expanded, and in addition to passenger cars, trucks and commercial vehicles can also be included.

3. Include cars in carbon trading. Allowing carbon policies to constrain the automotive industry can also incentivize cars to become renewable and green.

4. Give support at the user end. After the withdrawal of the car purchase subsidy, support can be given in terms of car use. Especially in the field of new energy vehicle infrastructure construction, charging and replacing, subsidies are given to builders and users to make the cost of use lower.

5. Formulate non-monetization policies. Including in some cities to give new energy vehicles unlimited purchase, unlimited traffic, the implementation of special lanes, priority parking and other non-monetization policy support.

6. Encourage and support pioneer cities and enterprises. This includes encouraging cities in the first provinces to fully promote electrification, encouraging pioneer enterprises to take the lead in achieving zero carbon, and encouraging pilot factories to achieve net emissions or zero carbon supply chains.