Produced by | Tiger sniff car group
Author | Wang Xiaoyu
Header image | IC Photo
Do you think electric cars should sell more expensive, or cheaper?
In 2014, when Tesla first entered China, electric vehicles were shown as "high-end toys", and the price once exceeded one million. Now you want to own a blue Tesla, which is undoubtedly a symbol of wealth or nobility. Until these two years, Hongguang MINI EV became popular, so that the price bottom line of electric vehicles was pulled to less than 5 digits overnight, and the village was its figure.
From the data point of view, including Hongguang MINI EV, BYD Dolphin, electric vehicles with a starting price of less than 100,000 yuan have occupied half of the country. According to the data of the Association, in January 2021, the wholesale sales of A00-level vehicles were 105,000 vehicles, accounting for 32% of the share of pure electric; the wholesale sales of A0-class were 51,000, accounting for 15% of the share of pure electric; the sum of the two was equivalent to 47% of the entire new energy vehicle market, accounting for nearly half of the share.
Those "little guys" who were once looked down upon are becoming the sales code for 2022.
First, scale is king
In january' new energy car rankings, 10 of the top 15 models had a starting price of less than 100,000 yuan (including 100,000 yuan). It can be said that this track has become the world of micro electric vehicles (A00 level) and small electric vehicles (A0 class).
But in the form of everyone running in unison, some people began to slow down. The Hongguang MINI produced a record of 26,682 units in January, but compared to 50,561 units in December last year, a decrease of more than 40%, and only recorded a 3.5% increase from January last year. The slowdown in sales growth of Hongguang MINI EV was somewhat unexpected. You know, its previous monthly sales were generally hovering around 40,000-50,000 vehicles. In addition, Tesla Model 3 failed to rank in the top 15 in domestic sales data due to overseas exports.
In BYD's total sales data of 95,000 vehicles in January, the most eye-catching is still the BYD Qin, which is positioned as an A-class sedan, with a year-on-year growth rate of 1323.9%, tightly biting the tail of the Hongguang MINI, and the difference between the two is only 141 units. Secondly, the BYD Dolphin, which is positioned in the A0 class, ranks fourth with a score of 10,602 vehicles. QQ Ice Cream, which positions A00-class Chery New Energy, ranked fifth with 9,984 units. The former rushed into the top five for the first time, while the latter also rushed into the top five just after selling for a month.
Why are car companies keen to build these "little guys"?
The double integral policy is the reason why the outside world has interpreted the most before - the production of new energy vehicles has positive points, fuel vehicles have negative points, and for enterprises that have mainly produced fuel vehicles before, they either spend money to buy points or sell more new energy vehicles to earn points. For example, SAIC-GM-Wuling, with the sales of Hongguang MINI EV, won 440,000 points in 2021, solving a certain double point gap for SAIC.
But in fact, with the overall growth of new energy vehicle sales, as well as the introduction of various policy control measures, 2022 points will become more and more worthless, to earn double points oriented car manufacturing behavior, sooner or later will not be able to play. The rise of the micro and small electric vehicle market needs to be seen more from the perspective of manufacturing - for scale.
Taking BYD Dolphin as an example, the car was officially launched and delivered on August 29, 2021. At that time, when it was listed, there was a lot of controversy about dolphins. Because Dolphin is the first mass production car based on BYD's e platform 3.0, but everyone has not understood why BYD uses the latest technology platform on a small electric vehicle with a starting price of 100,000 yuan.
According to the current industry practice, new technologies will be the first to be applied on higher-end models. Like lidar, solid-state batteries, and large-scale automatic driving chips, these are undoubtedly high-end electric vehicles with more than 400,000 yuan. But higher selling prices mean smaller markets, making it difficult to achieve scale. The end result is that the cost remains high, relying on capital to transfuse blood to enterprises.
George Maxi and Aubrey Silburstone in the United Kingdom put forward a famous curve of the relationship between automobile production and unit product cost in the book "Automobile Industry" - "In the initial stage of production expansion, manufacturers have achieved the most savings, and when the annual production is increased from 1,000 to 50,000 units, the cost is expected to fall by 40%." When annual production doubled to 100,000 units, costs fell by 15 percent. Doubling production to 200,000 units could result in further savings of 10 percent. When it jumped to 400,000 vehicles, it saved another 5%. ”
In addition to the "cost head" power battery that we are familiar with, the sum of the cost of motors, electronic controls and other components of the vehicle is also nearly 60% - even if the entire upstream raw materials of lithium batteries fluctuate, the scale effect can still bring cost optimization to car companies. As we all know, many car companies and upstream suppliers are locked in long-term contract prices. The larger the amount you want, the lower the price will naturally be.
According to the latest analysis of the Association of Passenger Vehicles: "The scale benefits of new energy vehicles are obvious, and the scale of bicycles of the head enterprises continues to increase and the cost decreases." With the substantial growth of industrial scale, the cost of fixed asset depreciation and other costs of new energy vehicles can be better apportioned, and the cost of bicycle manufacturing is easier to play the scale advantage in the exponential growth stage. ”
Don't look at the dolphin starting price of only 96,800 yuan, but it actually has a lot of BYD's new technology. For example, the eight-in-one electric powertrain integrates the drive assembly (motor and transmission), motor controller, PDU (power distribution unit) BMS, and so on. It also includes a new generation of electrical and electronic architecture with an integrated domain controller design, the first byD OS, and the direct cooling of the refrigerant and heating of the battery thermal management.
In theory, this set of new technologies on the BYD e platform 3.0 can be placed on a new model with a higher price, and the price of the product can be raised through various "debut" labels. But one of the possible reasons why BYD did not do this is to let A0-level pure electricity such as Dolphin run through the supply chain first and quickly achieve scale to reduce the cost of mass production of new technologies.
Remember, when the DM-i hybrid technology was just launched, BYD chose to start on the Qin PLUS with a starting price of 108,800 yuan, and then it was equipped with DM-i on the mid-to-high-end models such as Song Plus and Tang. Because the former promotes the scale effect, the latter has the opportunity to enter the market at a more cost-effective price. According to the latest data, DM models sold 46,500 units in January, more than seven times year-on-year.
Let's look at the Dolphin car. In less than 6 months since its launch, Dolphin has sold 40,000 vehicles. Wang Xianbin, senior analyst of The Gaz Automotive Research Institute, analyzed to Tiger Sniff: "BYD Dolphin models position A0 products, and achieve 'parity' of fuel vehicles of the same level through BYD e platform 3.0 technology and more intelligent configurations."
The so-called parity can be understood as the same type of electric vehicles and fuel vehicles in the production cost of the same level, and finally without relying on external intervention such as subsidies, the price of the same type of electric vehicles and fuel vehicles is the same. Only by achieving parity can we attract more consumers to switch from fuel vehicles to electric vehicles. In other words, Dolphin also has the potential to further encroach on the 100,000-class fuel vehicle market. At the same time, the follow-up of other more high-end products based on the same platform also has the potential to cannibalize the sales of fuel vehicles of the same level.
Second, bydir's carnival
In fact, it is the trend of the times for electric vehicles to replace fuel vehicles. According to the data of the Association of Passenger Vehicles, the traditional fuel vehicle market for passenger cars continued to decline, falling by 8% from traditional vehicles in 2019, 8% year-on-year in 2020, and 6% year-on-year in 2021. For comparison, new energy vehicles recorded a growth of 169.1% in the whole of 2021.
But when it comes to replacing the issue, the factional struggle between fuel vehicles and electric vehicles will ignite instantly. Not long ago, Li Bin, founder and CEO of Weilai, triggered a debate among electric vehicle enthusiasts and fuel vehicle fans because of a remark that "I don't understand why anyone still buys a fuel car".
It is true that the high-end automobile market in which Weilai is located has BBA in it, coupled with the high cost of high-performance power batteries, it will take longer to achieve parity with fuel vehicles. But on the contrary, small and micro pure trams (A00 class and A0 class), because of the price and size, the trend of replacing fuel vehicles will accelerate significantly.
Wang Xianbin analyzed to Tiger Sniff: "The logic followed by the NEV market is definitely that the purchase price of A00-A0-A-B is constantly the same as that of fuel vehicles. The A00 is still to meet the rigid demand class and replace low-speed electric vehicles. In general, the domestic market is already stock structural competition. If electric cars are cheaper, natural fuel vehicles will not have a chance. ”
Volkswagen, as the representative of fuel vehicle companies, launched a compact car pure electric ID.3 at the end of last year. At that time, Volkswagen's expectation for this car was to do "golf in the electric age". In fact, from the appearance and size point of view, dolphin and ID.3 have a similar product logic. Relying on electric vehicles in terms of acceleration, cost, comfort, etc., the market for fuel vehicles of the same level has been snatched up.
Judging from this trend, the shorter the endurance of the model, the sooner it will achieve parity with the oil car, and the faster it will replace the same level of oil car.
According to the data of the "China Electric Vehicle Cost and Benefit Assessment (2020-2035)", the BEV250 (pure electric vehicle with a range of 250 kilometers) and THE BEV300, which have a relatively short pure electric mileage, will basically achieve parity with gasoline vehicles in 2025-2027, while the BEV400 and BEV500 with a relatively long pure electric mileage will basically achieve parity with gasoline vehicles in 2027-2031 due to the larger power battery capacity.
In addition, the cost of using a car is bound to be smaller and more economical.
Taking compact cars as an example, consumers who buy a new compact gasoline car in 2025 will have to pay an average of $2400-2600 more than consumers of compact BEV new cars in the 5-year first owner holding cycle. Similarly, the maintenance cost of BEV is also $1600 less than that of gasoline vehicles. The result of the SUV is greater in absolute terms than the cost difference of the compact car, but the base is also larger.
The cost of buying and using will quickly form a benign closed loop.
On the one hand, it is to drive more users to experience electric vehicles, and naturally the market education will be more profound, thereby changing consumers' stereotypes of electric vehicles, which in turn will bring more increases/exchanges. On the other hand, while small and micro electric vehicles support the new energy vehicle market, they will also drive the use of charging infrastructure, which in turn will accelerate the construction of infrastructure, which in turn will promote the purchase of new energy vehicles as a whole, forming a ripple effect.
Third, the sinking market is even crazier
The key to triggering the growth momentum is not in the north, Shanghai and Guangzhou, but in the sinking market.
For example, the new car QQ ice cream that first appeared on the monthly sales list was just listed on December 28 last year, and the price range after subsidies was 29,900-4.39 million yuan. In the first full sales month, the data of 9,984 units was produced, all thanks to the help of the sinking market.
A Chery new energy salesman told Tiger Sniff: "Beijing does not, this car (QQ ice cream) endurance is too short, only more than 100 endurance, and there is no fast charging, can not run far, can only slow charging." She went on to say: "It is OK to open in other towns and towns, and commute for a short time." ”
In 2021, a total of 1.068 million new energy vehicles were sold in the countryside, an increase of 169.2% year-on-year, about 10 percentage points higher than the overall market growth rate, and the contribution rate was approaching 30%. "It's an incremental market." Fu Bingfeng, executive vice president and secretary general of the China Automobile Association, said that the current is a critical period for the promotion of new energy vehicles, and it is very important to sink to the third, fourth, and fifth-tier markets and help rural consumption upgrades.
Models of the A0 class and below are the main products in the countryside. The travel needs of county and township users are more compatible with A00-class electric vehicles. The overall user portrait from the automobile enterprise shows that the annual household income of many county and township users exceeds 50,000 yuan; the budget expenditure for car purchase is generally less than 70,000 yuan, mainly concentrated in about 35,000 yuan. Most of this group travels within 30km per day, rarely more than 100km, daily car purchase is mainly used for migrant workers and pick-up and drop-off children, charging is mainly based on household charging treasures, charging economy is high, and has convenient charging conditions.
Sinking this piece of fat meat in the market, many domestic car companies are already sharing food.
In 2021, the new energy vehicle to the countryside activity released two batches of recommended models list, 68 models of 24 car companies entered the list, the vehicle is priced at less than 100,000 yuan, the mileage of less than 300 kilometers of small and micro cars, SAIC, Dongfeng, Great Wall, BYD and other traditional mainstream car companies and Weima, zero run and other new forces have actively participated in the countryside activities, and came up with concessions ranging from 3000-8000 yuan.
Li Jinyong, president of the New Energy Vehicle Branch of the Automobile Dealers Chamber of Commerce of the All-China Federation of Industry and Commerce, said at the 2022 Electric View Conference that in 2021, non-restricted cities contributed about 70% of the share of new energy vehicle sales, while 58% of users in non-restricted cities purchased A00-class cars. A00-class electric vehicles will rely on more stylish shapes, spacious spaces, intelligent experiences and lower costs of use, taking the lead in replacing the same level of fuel vehicles. "If the lack of cores is not serious, production and sales will reach 1.5 million to 2 million vehicles in 2022."
Write at the end
Seth Karaman argues in The Margin of Safety that anything that doesn't bring cash flow is speculation.
The role of high-end new energy vehicles in promoting the industry in the technology and service system is beyond doubt, but the share at this stage will not be too high. If an automobile manufacturing company does not have enough production capacity and insufficient market share, it is difficult to maintain a healthy state of development. The existence of 100,000 yuan electric vehicles is also more meaningful than this, they are the strongest boosters of the scale effect.
Therefore, every small electric vehicle sold is contributing to the cost of high-end electric vehicles.
Resources:
"China New Energy Vehicle Supply Chain White Paper 2020" Source: Chebai Think Tank, Roland Berger;
"The annual sales of models in the countryside exceeded one million, and new energy vehicles continued to deepen the sinking market" Source: Auto Magazine;
"China Electric Vehicle Cost and Benefit Assessment (2020-2035)" Source: International Clean Transportation Committee, China Automotive Technology and Research Center.