In 2021, China's automobile sales finally stopped the decline for three consecutive years and achieved positive year-on-year growth. Among them, the new energy models that achieved three-digit year-on-year growth provided important support. To some extent, last year's automotive industry sales can achieve growth, mainly "up" in new energy.
It is foreseeable that not only will the investment of traditional car companies in the research and development and production of new energy models increase significantly, but also more and more "new faces" will devote themselves to the ranks of car manufacturing, the main purpose of which is to produce electric vehicle models. Although new energy models are a trend in the automotive industry, such a "crazy" expansion will bring many problems, one of which is overcapacity.
At the beginning, it was during the period of rapid growth in China's automobile sales that many car companies were blindly optimistic about the car ownership in the Chinese market with a population of more than one billion, so they expanded their factories, resulting in a serious problem of overcapacity in the automotive industry today. Today's new energy vehicles are likely to drive a new round of new factory construction.
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The planned capacity of new energy vehicles has been seriously overcapacitated
According to the statistics of the Federation of Passenger Vehicles, by the end of 2021, the total production capacity of passenger cars in the country will be 40.89 million units, and the capacity utilization rate will only be 52.47%. Although it is 4% higher than 48.45% in 2020, it is still in the range of serious overcapacity.
Among the 86 companies with sales in 2021, 11 have a capacity utilization rate of more than 100%, including 6 foreign-owned or joint ventures in China, and 5 are domestic enterprises. Among them, there are 4 new energy automobile companies. There are also 8 enterprises with capacity utilization rates between 80% and 100%, including 3 joint ventures and 3 new energy automobile enterprises, and the production capacity is in a normal state.
It can be seen that among the 19 car companies with the highest capacity utilization rate, there are 7 new energy vehicle companies, which is still very high, and it also reflects from the side that the head camp of new energy vehicle companies is still in an upward trend of short supply, but from the overall situation of new energy production capacity, it is not so optimistic.
According to the data of the Federation of Passenger Vehicles, in 2021, 3.326 million new energy passenger cars will be sold, while the dedicated production capacity of new energy passenger cars has been 5.695 million units, and the capacity utilization rate is 58.4%, which is not much higher than the industry as a whole. Enterprises that already have production qualifications still have 10.46 million vehicles under construction capacity to be completed and put into operation, most of which are new energy vehicles.
There are many new projects that will be put into operation in 2022, such as FAW Hongqi's planned annual production capacity of 200,000 new energy vehicles, FAW Toyota's annual planned production capacity of 200,000 new energy vehicles, and beam vehicles' annual planned production capacity of 160,000 new energy vehicles. There are also some new factories of new car-making forces, which will also be officially put into operation this year.
Therefore, even if the sales of new energy vehicles are expected to exceed 5 million units this year, there will still be a lot of idle capacity compared with the production capacity of newly built factories. The Association has put forward an early warning that the automotive industry should solve the problem of overcapacity of traditional vehicles while also preventing overcapacity of new energy vehicles.
The integration of spare capacity has become a new test in the industry
Why car companies are keen to build new energy plants, in addition to some car companies are indeed fuel vehicle production capacity is tight, have to build new factories, most of them are based on two reasons. First, new energy models, especially electric vehicles designed with new platforms, are basically "starting from scratch" compared with fuel models, and it is difficult to achieve collinear production with existing fuel models.
On the other hand, new energy vehicle companies and new brands, if they buy other car companies to produce, still need a lot of investment for new transformation, so it is better to build new factories from local governments, design according to the latest process technology is more "trouble-free", but also get various policy support from local governments. So now on the one hand, many factories are "dormant", and on the other hand, new factories have broken ground.
According to the penetration rate of new energy models in various types of markets last year, the single-digit joint venture models are obviously new markets that need to be developed urgently, and the joint venture car companies have also begun to prepare and plan the production of new energy models while introducing more new energy models, but the way used is also the same.
For example, although Volkswagen's two joint ventures have built new plants to introduce new MEB platforms, the joint venture with JAC Motors will still renovate and expand its third electric vehicle manufacturing plant in China based on the second plant of Jacque Automobile, which is expected to be put into operation at the end of 2023, and the design annual production capacity of the plant is 300,000 electric vehicles. With this move, Volkswagen hopes to significantly increase its production of electric vehicles in China and reserve sales growth.
Dongfeng Honda, which plans to launch three e:N brand models in the next five years, plans to take over the second plant of DPCA in the Wuhan Economic and Technological Development Zone and transform it into a new plant specializing in the production of pure electric models. According to the plan, the transformed electric vehicle factory will introduce the latest automation technology, becoming Honda's first new energy benchmark factory in the world, providing strong support for Dongfeng Honda's transformation to electrification.
Obviously, the way to build a factory is different, and the input and effect will be different. With the rapid development of the new energy market, it not only brings new growth points to the automobile market, but also brings new solutions for the integration of spare capacity. However, if we hope that these idle capacity can be effectively used, we need to provide policy guidance from relevant state departments, local governments with concentrated factories, and coordination and promotion by automobile groups.
For car companies, in the face of the acceleration of the replacement of new energy models for traditional fuel models, they should also make reasonable additions and subtractions in production, control the number of factories to reduce the risk of overcapacity in the future, which is also the reason why many international car companies closed some overseas factories last year. Although China's new energy market has great potential, car companies must also be prepared for the risk of overcapacity.