Is the power exchange cut into the Ningde era a good business?

Source: Radar Finance

Changing the electric wind, "King Ning" entered the game.

Some analysts pointed out that this move of the Cataline Era means that it has officially entered the replacement market of vehicle and electricity separation, hoping to cut a new cake in the accelerated development period of new energy vehicles. Affected by this news, the Ningde era rose 5.1% on the 17th, and the stock price returned to above 600 yuan.

As a new type of electric vehicle energy replenishment solution, the power exchange mode can solve the two core pain points of electric vehicle endurance and charging time. At the policy level, warm winds are blowing frequently, and car companies such as Weilai, Beiqi Blue Valley and Xiaopeng have also stepped up their layout. Weilai officially disclosed that with the recent launch of foshan Chancheng Zhuoyuan Square substation, as of January 15, 2022, 791 substations have been laid out nationwide.

NIO plans to expand the number of substations to 1,300 by the end of 2022. Excellent service and exclusive power exchange model give Weilai a lot of points, but industry analysis, with the larger Ningde era into the game, or make Weilai's desire to open the power exchange system to other car companies disappointed, profitability is more distant.

There are also many challenges in the Ningde era. Zhang Xiang, an analyst in the automotive industry, told Radar Finance that one is that the battery models and battery pack specifications of different car brands are not uniform and the degree of standardization is low; the second is the resistance from the main engine factory, including that many models do not support power exchange, and car companies are reluctant to introduce standardized battery packs for interests.

"Past cases show that so far, no enterprise has achieved business model access in the field of power exchange, and there are no successful cases." Zhang Xiang believes that the economic account of the power exchange model cannot be calculated, including Weilai's power exchange business, which is still experience-oriented.

Ningde era admission power exchange mode

The trillion giant will step into the power exchange track, which has satisfied the appetite of the market. In addition to the high-profile countdown on the WeChat public account, according to media reports, Ningde Times Company also responded twice.

In response to the news of entering the power exchange market, relevant people in the Ningde era confirmed that the newly launched power exchange products will also be for all car companies in the future.

The so-called "power exchange" refers to the "separation of vehicle and electricity" service. The industry looks forward to the future of the development of new energy vehicles, it is expected to achieve the separation of the car and the standardized battery, when the battery of the electric vehicle needs to be charged, the owner can go to the replacement power station, directly replace a fully charged battery, you can complete the charging process.

Some netizens uploaded a set of physical pictures of the replacement power station printed with the "CATL Ningde Era" logo. In the photo, the substation is suspected to be composed of two "containers", one side for the battery replacement vehicle for power exchange, and the other side for storing spare batteries. However, due to the design of the gate on one side and the door of the freight car on the other side, it was evaluated as "too simple compared to Weilai".

The relevant person in charge of the Ningde era said that the online picture is a test station, which has not been industrially designed, and it is not the same as the release on January 18.

The latest news shows that CATL will hold a press conference at 15:30 on January 18 to launch the power exchange brand EVOGO. The name of the new brand means Evolution+Go, and Evolution means evolution, evolution.

Prior to this, the Ningde era was frequent in the field of power exchange.

In August 2020, it joined hands with NIO Automobile and Guotai Junan International Holdings Co., Ltd. to establish Wuhan Weineng Battery Asset Co., Ltd. to promote the development of the new business model of "separation of vehicle and electricity", and launched the BaaS (Battery as a Service, battery rental service) business on this basis.

At the annual performance briefing held in May 2021, Zeng Yuqun, chairman of NINGDE Times, said that the company believes that power exchange and fast charging are better than hydrogen energy in terms of economy and maturity, and is negotiating relevant cooperation with car companies. In September of the same year, through the signing of an agreement with Foton Motor, the two sides cooperated around Foton's full range of new energy commercial vehicles battery banking, substation and other businesses.

In the second half of last year, CATL first established a subsidiary of Times Electric Service in Xiamen, Fujian Province, as the main bearer of the power exchange business, and then Times Electric Service established a regional power exchange business company in Liaoyuan City, Lin Province.

On December 24, 2021, CATL signed an agreement with the Guizhou Provincial Government to cooperate in the construction of a power exchange network. According to the agreement, the two sides will cooperate in depth in the construction of new energy vehicle power exchange network facilities and the improvement of new energy vehicle power exchange capacity.

The active layout of the Ningde era is inseparable from the support of the policy level. In April 2020, the Ministry of Finance and other four ministries and commissions jointly issued the "Notice on Adjusting and Improving the Subsidy Policy for New Energy Vehicles", which requires that the price of new energy passenger vehicles must be less than 300,000 yuan (including 300,000 yuan) before subsidies, and at the same time, in order to encourage the innovative development of new business models such as "power exchange", the 300,000 yuan limit requirement for new energy vehicle products that adopt the "power exchange" model is not implemented.

In 2021, the government work report once again mentioned that facilities such as substations should be added. In May of that year, the National Energy Administration, together with the Ministry of Industry and Information Technology, studied and formulated the Implementation Opinions on Further Improving the Service Guarantee Capacity of Charging and Replacing Infrastructure (Draft for Comments), proposing to accelerate the promotion and application of the power exchange model and support the construction of special replacement power stations.

In October 2021, the Ministry of Industry and Information Technology officially issued the "Notice on Launching the Pilot Work on the Application of the New Energy Vehicle Power Exchange Mode", which decided to start the pilot application of the new energy vehicle power exchange mode and delineated 11 cities with a range of ten points.

According to the statistics of the Ministry of Public Security, by the end of 2021, the number of new energy vehicles in the country will reach 7.84 million, accounting for 2.60% of the total number of vehicles. At the same time, according to Guo Shougang, deputy director of the First Department of Equipment Industry of the Ministry of Industry and Information Technology, by the end of 2021, the mainland has built a total of 75,000 charging stations, 2.617 million charging piles, and 1,298 replacement power stations.

At present, the players in the power exchange market, in addition to the Ningde era, there are also Aodong New Energy, Weilai Automobile and so on. According to the data in 2021, from the perspective of sub-operators, Weilai has 789 substations, accounting for 60.8%, Aodong has 402 substations, accounting for 31.0%, and Hangzhou Botan has 107 substations, accounting for 8.2%.

"The power exchange needs to have two sets of batteries, one set of batteries is installed in the car, and the other set of batteries is placed in this replacement station, and the power exchange mode will bring about an increase in the number of batteries." Therefore, the Ningde era to do power exchange business is beneficial to themselves, if any car company to purchase this replacement battery, its purchase order will increase significantly, doubling. Zhang Xiang believes that the Ningde era cut into the power exchange market at this time, in addition to the industry ushered in the development of the outlet, in fact, it is also a "good business" for itself.

Or face resistance from OEMs

Although driven by the policy, the power exchange ushered in the development of the wind. However, according to institutional analysis, the power exchange model has obvious advantages in cost and efficiency, but its development also faces more pain points.

Soochow Securities Research Report said that the standardization of charging technology interfaces has promoted the popularization and promotion of plug-in mode electric vehicles, and the importance of unified standards is self-evident, but the current low degree of standardization of power exchange hinders the further development of power exchange modes.

According to the data, the current power exchange methods of different models are quite different. Weilai and Tesla mostly use vertical plug-in type, Zotye, Lifan, etc. mostly use side-to-side plug-in type, BAIC New Energy uses end-face power exchange, and unified standards need to transform different body and chassis structures.

On the other hand, the battery standards are not uniform. At present, there are nearly 10 major power battery manufacturers in the world, with different specifications such as materials, arrangements, and energy density. If different enterprises are forced to change their production methods, it is bound to involve the interests of all parties, and even be opposed, and subjectively they will encounter greater resistance.

Because the willingness of car companies for battery standardization is not strong, only the unification of battery standards is realized within car companies, resulting in a small scale and difficult profitability of the power exchange model in the market. Weilai, which leads in the scale of power exchange, has only realized the unification of battery specifications internally.

Better Place, the first Israeli company in the world to do power exchange, went bankrupt in 2013 because battery standardization was not supported by car manufacturers. Later, it was concluded that Better Place did not make it clear that the battery of electric vehicles, like the engines of existing cars, is a core technology that is difficult to share among major car companies.

A similar dilemma exists at home. Because for car companies, unified batteries mean that automakers with different development paths need to open or share the core technology platform to other companies, but the core competitiveness of automakers is their own automotive platforms, such as Volkswagen's MEB, Geely's SEA, and the development of replacement power stations may threaten the right to speak of automakers.

According to Zhang Xiang, there are also factors of interest mixed in. Automakers are reluctant to standardize battery packs because the profits of battery packs are high, accounting for about 40%-60% of the vehicle cost. Once the power exchange is standardized, the battery pack can be done by a third party, which is something that car companies do not want to see.

And in the case of power exchange, to buy two sets of batteries, the cost has undoubtedly increased.

Huaxi Securities also holds the same view, believing that the power exchange mode has difficulties such as high construction cost, equipment reliability and battery consistency are not easy to guarantee, technical standards are not uniform, and it is not easy to integrate and coordinate the interests of all parties.

"Battery suppliers need to consider economic benefits when laying out the power exchange business. At present, the business model in the field of power exchange is not clear. For now, in addition to the more abundant 'Ning Wang', it may not be possible for other battery manufacturers to lay out the power exchange business. Zhang Xiang said.

The business model is difficult to land in the short term

Compared with household charging piles that only need a few thousand yuan, the heavy asset attributes of the replacement power station include land use, manpower, power exchange equipment, battery reserves and electricity costs.

According to the announcement of GCL Energy, the investment required for a single passenger car replacement power station is 5.0072 million yuan, of which the investment in the substation is 2.6072 million yuan, accounting for about 52%, in addition to the line investment and battery investment of 1 million yuan and 1.4 million yuan respectively.

The investment required for a single heavy-duty truck replacement power station is more, the investment in the substation is about 4.2014 million yuan, the investment in lines and others is 2.35 million yuan, the investment in batteries is 3.5 million yuan, and the total investment of 10.1514 million yuan is about twice that of a single passenger car replacement power station.

Soochow Securities estimates that under the above investment conditions, if it serves an operating vehicle with a daily mileage of 200 kilometers, a single substation can achieve breakeven by serving 100 vehicles per day and utilizing 24% of the utilization rate; if it serves a commercial vehicle with a daily driving mileage of 800 kilometers, a single substation can achieve breakeven by serving 20 vehicles per day and utilization rate of 5%.

However, in reality, various companies have invested in huge replacement power stations, which are basically in a state of loss.

Taking Aodong New Energy as an example, according to an announcement by Changlian Shares, from 2018 to 2020, the operating income of Aodong New Energy was 82.4749 million yuan, 212 million yuan and 190 million yuan, and the net profit in the same period was 186 million yuan, 162 million yuan and 249 million yuan, respectively, with a cumulative loss of 597 million yuan in three years.

According to the person in charge of the company, the average price of industrial electricity consumption in Beijing is about 0.87 yuan, which is relatively high, resulting in a small profit of the substation; the lack of power station customers is also a major problem that the power exchange model is difficult to make a profit, in the 34 substations operated in the city, the general replacement vehicles maintain about 70-80 vehicles per day, and the number of replacement vehicles in the transportation hub power station is slightly higher than 100 per day, but the load rate is also much lower than the nearly 300 times of replacement per station within 24 hours.

It is understood that the load rate of a single substation reaches 50% to achieve breakeven. That is to say, a power station that can change the power 300 times a day must complete at least 150 or so power exchanges every day to not lose money.

Weilai, which is facing the mass market private car exchange, can only make a profit by selling more cars.

According to the late LatePost article, Shen Fei, vice president of Weilai, estimated that according to the calculation of 6 cents per kilowatt hour of electricity and an average of 50 kilowatt-hours of electricity per unit, 50 singles a day of electricity replacement and a year of income of 500,000 or 600,000 yuan can basically cover the site rent and equipment depreciation.

If you calculate according to the electricity replacement of each vehicle once a week, a replacement power station must radiate about 350 vehicles to support 50 orders a day and reach the break-even point. Considering the current number of substations in WEILAI and the owners of the installed home charging piles, it is slightly estimated that at least 800,000 units of total sales are needed to cover the cost of substations, which is much higher than the 167,000 vehicles delivered by WEIlai at the end of last year.

It is worth mentioning that in July last year, on the occasion of the third anniversary of NIO Power, Qin Lihong, president of NIO, announced, "NiO Power charging and replacing system and BaaS service are open to the whole industry." The industry interprets this move as saying that WEILAI is actively fighting for the dominance of the power exchange mode standard, because the cooperation means that car companies must adopt the same battery pack specifications and standards as Weilai Automobile.

However, public information shows that there is no response from car companies at present. And with the same launch of the CATL era for all car companies to replace the power service, Weilai's expectations of leading the industry standard may be disappointed. Without the participation of other car companies, it is difficult to significantly increase the utilization rate of Weilai replacement power station. With the passage of time, THE FIRST BATCH OF BATTERY WEAR AND LOSS AGING WILL ENTER THE DECOMIZATION CYCLE, AND IT WILL BE ANOTHER LOSS AT THAT TIME.

Weilai does not do a good business, can the Ningde era do a good job? Zhang Xiang believes that the situation is also not optimistic.

"In addition to Weilai, like Xiaopeng, Ideal, and large car companies BYD and Geely, they will not cooperate with the Ningde era to change electricity, mainly do not want to open the core technology to a third party." It may be that there are some small car companies, such as the second echelon and the third echelon car companies with small sales, based on the traffic and popularity of the Ningde era to cooperate to increase their sales. Zhang Xiang judged that the commercial conditions for power exchange in the past two or three years are not available, so in addition to the Ningde era, there may be no third-party and capital entry in the short term.

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