The year of new energy vehicles: the pattern is just beginning, and the war is gradually getting better

Image source @ Visual China

Text | Laika Think Tank, author | Posting, Editing | G3007

At the beginning of the new year, the war on new energy vehicles has begun.

In the past year, at the moment of tight global supply chains, new energy vehicles of various brands have achieved new sales highs, the domestic market pattern has just emerged, and the scale effect has begun to appear. According to the latest forecast of the China Automobile Association, the sales of new energy vehicles will reach 3.4 million units in 2021, an increase of 1.5 times year-on-year; while the sales of new energy vehicles in 2022 are expected to reach 5 million units, an increase of 47% year-on-year, and are expected to account for about 20% of total vehicle sales.

In the new year, the decline of financial subsidies has allowed some new energy vehicle brands to start competing through price increases, along with the multiple models launched by more car companies this year, the competition under the market will only be more white-hot, but the supply chain problems such as chip and battery shortages are still not optimistic.

At the same time, there are more new car-making forces pouring in. The latest news shows that consumer electronics giant Sony officially announced the establishment of a mobility company to enter the field of electric vehicles, and Wanda has also reported that it will cross-border car manufacturing.

01 The pattern of new energy vehicles has just taken shape, and each company will win in 2022

With the end of 2021, various new energy vehicle companies have also released their annual report cards, and we can also glimpse the market pattern.

According to official data released by Tesla, the brand's global delivery volume is 936,000 units in 2021, of which the Chinese market is expected to deliver more than 450,000 vehicles. Byd's new energy passenger car sales in 2021 even reached 594,000 units, an increase of 231.6% year-on-year.

The three new domestic car-making forces, WEILAI, Ideal and Xiaopeng, continued to maintain a stable growth trend, and the delivery volume in 2021 also exceeded 90,000 vehicles, of which Weilai/Xiaopeng/Ideal delivered 91,000 vehicles, 98,000 vehicles and 90,000 vehicles respectively, an increase of 109%, 263% and 130% respectively year-on-year. In terms of other new forces, the cumulative delivery volume of Nezha Automobile in 2021 is 69674 units, with a growth rate of 362%; the annual delivery volume of WM Automobile is 44157 units, close to the sum of cumulative deliveries in the past three years; and the annual sales volume of zero-run cars is 43121 units.

In the past year, traditional car companies have also accelerated their catch-up in new energy, gradually narrowing the gap with the new forces at the head. According to the disclosed data: after the Volkswagen ID. series was intensively launched with a variety of new cars, a total of 70,000 units have been delivered since March last year. GAC Aeon's annual delivery volume also reached 123,600 units, an increase of 119% year-on-year, and completed the "small target" of 100,000 annual sales. Geely's Extreme Kr and Dongfeng's Lantu Free have also seen their sales climb month by month since they began delivering vehicles in the second half of last year.

Judging from the sales volume of each company last year, China's new energy passenger car market has basically formed a pattern of "two super + three strong + N new and old forces". Among them, BYD and Tesla are in the top position with hundreds of thousands of deliveries, and their position is superior. And "Xiao WeiLi" relies on their respective core competitiveness and occupies the second echelon with differentiation. The other "N new and old forces" have become catch-ups and challengers, and some of them have begun to diverge.

For 2022, a number of institutions predict that the head of the new force enterprises are also expected to achieve better sales results, mainly because with the continuous growth of sales, the new forces will launch more models, build a more complete charging service and marketing, after-sales service network, the brand effect can continue to expand, sales will continue to increase. But at the same time, Baidu, Millet, Niuchuang, Light Orange Era, Box Car and another group of new car manufacturers will also join the competition of new car-making forces, competing with traditional car companies for market share, and perhaps more new forces will continue to enter the market in 2022. According to incomplete statistics, in 2022, all kinds of car companies will launch a total of 90 electrified models, new energy vehicle products usher in the product year, and new car-making forces will also face a more severe test in a hundred flowers.

A research report released by Tianfeng Securities shows that Xiaomi, Apple, Huawei, Didi, Baidu Jidu, etc. will launch new cars in the next few years, considering brand promotion and new models, new production capacity climbing, it is expected that technology companies will officially join the battlefield around 2024, and compete with traditional car companies and new forces in an all-round way.

In addition to the increase in competition in the entire market, the focus of competition in new energy vehicles in the future will also shift from electrification to intelligence. Huaxi Securities report pointed out that the annual delivery volume of the three top three car-making forces exceeded 90,000 vehicles, all of which have completed the doubling of growth, taking the lead in the first half of the competition dominated by electrification, with the delivery of many new cars this year, from 1 to the development stage of N, and the differentiated competition will be more embodied in intelligence, this aspect is manifested in intelligent driving, self-developed L4 automatic driving technology, lidar front-loading mass production has almost become the "standard" of new models. At the same time, Weilai and Xiaopeng are also one of the earliest car companies to implement the software charging model, building another profit growth point. On the other hand, it lies in the intelligent cockpit, self-developed customized operating system, builds the underlying ecology, and helps hardware interaction and collaboration with one core and multiple screens. Xiaopeng and Ideal have completed the dual listing of Hong Kong stocks, and Weilai is expected to return to Hong Kong for listing, and a new round of capital injection will help the second phase of car manufacturing start.

02 Subsidize the price increase of declining car companies, from policy support to market-oriented operation

The initial stage of new energy vehicles is inseparable from the strong support of policies, but with the expansion of today's market scale, policy effects will gradually be handed over to the market.

On December 31, 2021, the Ministry of Finance and other four departments issued the "Notice on the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles in 2022", which mentioned that in 2022, the subsidy standard for new energy vehicles will be reduced by 30% on the basis of 2021, and the implementation period will be until the end of 2022; urban buses, road passenger transport, taxis (including online car-hailing), sanitation, urban logistics and distribution, postal express, civil aviation airports and vehicles in the official field of party and government organs that meet the requirements. The subsidy standard will be reduced by 20% compared with 2021. This means that if there is no change, 2022 will be the last year of new energy vehicle subsidies, new and old players are bound to find ways to meet the expectations and needs of more consumers, and market competition will also enter a white-hot.

Deng Xue, managing director of the research department of CICC and chief analyst of the automotive industry, said that the current price of the main demand models of new energy is below 80,000 yuan or more than 250,000 yuan, and for micro-electric vehicles with a price of less than 80,000 yuan, their mileage is generally within 300km and cannot enjoy subsidies, and the subsidy adjustment has no impact on them; for new energy vehicles above 250,000 yuan, the proportion of subsidy changes in the purchase price of automobiles is less than 2%, and consumers are less sensitive to subsidy changes The expected subsidy decline has a controllable impact on the current demand for the main price range of new energy vehicles. For 8-16 million yuan price model, the subsidy change accounted for 3-5% of the car purchase price, considering that the price range consumers are sensitive to price changes, it is expected that the decline or will have a certain impact on the sales of existing new energy vehicles, at the same time, in 2022, the price range will launch more high-quality hybrid models, which is expected to catalyze new demand.

Cui Dongshu, secretary general of the Association, also said: "The subsidy decline of 30% will have a certain impact on the growth rate of new energy vehicles, especially the annual subsidy scale is capped at about 2 million vehicles, in fact, the scale is significantly reduced compared with last year, whether it is the amount of subsidized bicycles or the total amount, it is in a relatively low state." Therefore, car companies are facing the challenges of the post-subsidy era, and they will inevitably adjust their prices. ”

In fact, as early as last November, some car companies released the news that the price of the whole vehicle was going to increase, and said that the reason for the price increase was on the one hand because of the subsidy decline in 2022, on the other hand, the continuous pressure of the upstream raw materials, battery price increases and chip supply tensions has been transmitted to the whole vehicle. Previously, power battery manufacturers such as Fu Neng Technology and Guoxuan Hi-Tech have clearly stated in an interview with the media that "due to the continuous price increase of upstream materials, they are already discussing price increases with car companies."

However, there are also car companies that choose to bear the difference in subsidies themselves. For example, on December 31, NIO announced the release of the 2022 car purchase subsidy plan: users who paid a deposit to buy ES8, ES6 and EC6 before December 31, 2021 (inclusive), and successfully picked up their cars before March 31, 2022, can still enjoy subsidies in accordance with the 2021 national subsidy standards, and the difference is borne by NIO. Xiaopeng Automobile has also adopted a time-limited insurance strategy similar to THATOs: users who pay a deposit from January 1 to 10, 2022 can enjoy the same subsidy policy as in 2021, and the difference in subsidies between 2022 and 2021 is borne by Xiaopeng Motors.

In addition to the rising cost of car purchases, the cost of using a car is also rising at the same time. The China Insurance Industry Association recently issued to property insurance companies the "Explanation on the Calculation and Adjustment of the Benchmark Pure Risk Premium Table for Commercial Insurance Exclusive Products of New Energy Vehicles" shows that in terms of smoothing the rate of vehicle damage insurance, the benchmark premium of new energy vehicles with a price of less than 250,000 yuan is not floating; the benchmark premium of new energy vehicles with a price of more than 250,000 yuan can fluctuate up and down.

Soon after the launch of this new energy exclusive car insurance, a news of Tesla's 80% price increase caused concern. Some car owners posted policy information on social platforms, Tesla Model Y in December 23, the cost of 8278 yuan, and after the 27th, the insurance cost rose to more than 14,000 yuan, an increase of 80%. In addition, the premiums of Model 3, Model P and other models have also increased to varying degrees. A data provided by Xiaopeng Motors to the media also shows that according to the national premium feedback from various insurance companies on December 28, 2021, the average increase of Xiaopeng models across the line ranged from 2.9% to 18.2% (the increase of different insurance divisions, different regions, and different models was slightly different), and the specific amount was subject to the quotation of the local insurance division.

Although there is upward pressure on the short-term purchase cost of new energy vehicles, in the long run, price reduction is the trend of the times. Cui Dongshu pointed out that the future price reduction potential of new energy vehicles is large. On the one hand, the continuous increase in battery production capacity can reduce the purchase price of batteries; on the other hand, new energy vehicles have a scenario-based travel direction, and can customize the existing structure of corresponding products according to different use scenarios, which is expected to reduce the cost of the vehicle. "In 2022, the production and sales of new energy vehicles are expected to reach a scale of 6 million units, of which more than 5.5 million new energy vehicles will be used for passenger vehicles, achieving a super growth trend."

In the post-subsidy era, the new energy automobile industry will turn into a fully competitive market-oriented operation, in the past those who grew up by subsidies, lack of competitiveness of production capacity and brand, may face great challenges, but this is also the only way for China to move from a big automobile country to an automobile power.

03 The lack of core and lack of electricity is still gone, facing the normalization of supply chain shortages

In the past 2021, due to the ongoing epidemic and natural disasters, the supply of chips, batteries and other parts has been plaguing the global automotive industry. Chip shortage car manufacturing many car manufacturers to reduce production or stop production, insufficient capacity supply, dealer delivery cycle extension, and even dealers lack of inventory, no car to sell. General Motors, Ford, Tesla, etc. have been forced to adjust production and rethink the entire supply chain. According to AFS data, as of December 19, 2021, the global automotive market has reduced production by about 10.232 million units, of which the Chinese automotive market has reduced production by 1.982 million units, accounting for 19.4% of the total production reduction. AFS expects that due to the shortage of chips, global production will be reduced by 11.31 million units in 2021.

Although the market is extremely optimistic about new energy vehicles, and upstream foundries have begun to build additional factories and expand production capacity to alleviate the problem of lack of cores, it will take many years for new production capacity to be released from the construction of the factory to the release of production capacity to truly enter the supply chain of the vehicle factory. Therefore, the shortage of automotive chips will continue until 2022. Xiaopeng Motors also told the media that like all industry peers, it is facing a shortage of supply chains including chips in 2021, which is a challenge that the entire industry must deal with. Xiaopeng Automobile has been working hard to work with suppliers to cope with the supply chain system, while constantly improving the supply chain system of production and supply. However, these problems cannot be solved overnight, and the problem of supply chain shortages still needs to be faced in 2022.

At the same time, in the process of accelerating the shift to electrification in the global automotive industry, the continuous rise in the price of raw materials such as nickel, cobalt and lithium has caused insufficient supply of power batteries, and the battle around power batteries is also on the verge of breaking out. In the past year, major car companies have laid out the upstream and downstream fields of batteries through various ways such as investment, self-construction or strategic cooperative relationship binding, ensuring that the battery supply is "not wasted" in the case of the "lack of core" crisis, and then reducing costs to avoid falling behind in the future market competition.

"Factors such as chips, batteries, lithium salt prices, etc., may still become a constraint on the new energy vehicle market in the short term." Because of the normalization of the epidemic and the uncertainty of the international political and economic environment, the cost of raw materials in the whole world has risen sharply, and the scope and duration of the impact of these factors on the new energy vehicle market are now difficult to accurately estimate. However, some insiders said that in the long run, the rapid development of the new energy vehicle market is the trend of the times, and these problems cannot hinder the development of new energy vehicles.

At present, 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.