New energy vehicle sales exceeded expectations in January!

Let's start with the rumors about green power operators!

1) Green electricity subsidy arrears are checked. According to my understanding, this matter objectively exists, and more than a dozen ministries and commissions have held joint meetings, and the next step is to systematically check the scale of historical subsidy arrears and clean up some chaotic problems. However, on the one hand, the clean-up is to solve the problem of historical subsidy arrears, and the goal is to solve the historical arrears this year; on the other hand, there is no adverse impact on the central enterprises and operators on subsidy projects that operate standardly.

I would like to make a few clarifications: a) The plan was released on the Gansu government website on January 5, 2022, and it is not issued on February 10, which is old news.

b) Gansu's policy is an overall framework document, the so-called competitive low-price Internet access should be combined with the context of interpretation, the essence is to promote the parity of scenery, considering the decline in the cost of wind and photovoltaics, to establish a supporting electricity price mechanism

c) The level of policy expression of relevant personnel in Gansu Province seems to need to be improved, which has brought a lot of ambiguity to everyone. According to my understanding, the general direction of the follow-up of green electricity prices is still marketization, green electricity trading, and promoting the development of green electricity. Encourage green electricity to maintain a premium, and create favorable conditions for green electricity consumption and the construction of new power systems, rather than blindly pursuing low electricity prices.

New energy vehicle sales exceed expectations Comments:

1. Wholesale sales of 412,000 units, +141% year-on-year, -18% month-on-month. Wholesale sales penetration rate of 19.0%, +10pcts year-on-year, compared to +3pcts for the whole year of 2021.

2. In terms of absolute quantity, the monthly sales of 412,000 units are close to the level of November 2021 (36.8/42.9/505,000 units were sold in October/ November and December 2021, respectively). Considering that December is the year-end impulse month, the sales base is high, and the month-on-month decline in January is a normal fluctuation. At present, January sales have basically continued the sales level in November, reflecting the strong downstream demand resilience.

3. From the month-on-month data, the month-on-month -18%, compared with the January 2021 -21% month-on-month decline, the decline is slightly narrower.

4. Retail sales of 347,000 units, +132% year-on-year, -27% month-on-month, retail sales penetration rate of 16.6%, year-on-year +10pcts, compared to +2pcts for the whole year of 2021.

5. In terms of exports, 52,000 units were shipped in January, of which 40,499 teslas were shipped (similar to the level at the beginning of the 21Q4 season)

6. From the perspective of car companies, the wholesale sales of 11 car companies exceeded 10,000. Among them, BYD 93,101 vehicles (flat month-on-month, sales remained high), Tesla 59,845 vehicles (seasonal fluctuations, slightly increased compared with October 2021), SAIC-GM-Wuling 40,007 vehicles (month-on-month -20,000 vehicles, there is a momentum in December, normal sales in 40,000 months).

Summary: Overall, the January sales data is very good, and there can be more than 400,000 sales under factors such as subsidies and holidays, which is a good start for 2022. We expect that domestic sales in 22 years can see more than 6 million vehicles, a year-on-year growth rate of 70%+.