Midea's "car-making" business experience

Reporter Wu Yueming reported from Guangzhou

Recently, Fang Hongbo, chairman and president of Midea Group, attended the groundbreaking ceremony of the project with the largest total investment amount ever invested by Midea Group.

"China Business Daily" reporter learned from the Midea Group that the Anqing Welling Strategic Base Project covers an area of about 300,000 square meters, with a total investment of more than 10 billion yuan, planning to build a new intelligent factory of vehicle-level intelligent electrification components, and to create a research and development center and national laboratory for thermal management, main drive, auxiliary/intelligent driving. As a result, Midea Group's industrial technology will form a strategic layout of six major R&D centers and two major production bases in the field of new energy auto parts.

At the beginning of 2022, Fang Hongbo mentioned in his keynote speech "Firm Growth, The Sea is Wide and High" that "the development of the new energy automobile industry is a great development direction of our company".

With the vigorous development of the new energy automobile industry, the original industrial chain pattern has quietly changed, and it has also attracted new players on this track. And this track, in the eyes of the outside world, the next 10 years will create a new batch of global auto parts leading enterprises.

In fact, Midea Group has been planning on the "car-making" track for many years, as a home appliance giant, its eyes are on the new energy vehicle parts industry. What kind of underlying logical synergy exists between home appliance companies and the automobile industry, and what are the opportunities and barriers to enter the supply chain of automobile companies?

Chen Jintao, general manager of Welling Auto Parts Company, told reporters, "All products in the entire automotive sector are products that are positively independently developed, and their core focuses on the incremental components of new energy vehicles." Combined with our own advantages and industry pain points, we focus on the three major areas of electric drive system, thermal management and intelligent driving. Among them, the thermal management sector will take the lead. ”

Challenges for new entrants

After three consecutive years of decline, China's auto market will finally return to positive growth in 2021, of which sales of new energy vehicles will increase significantly. The recovery of the automotive industry has also brought a large number of orders to related parts and components companies.

The news of the market recovery has inspired the spirit of various entities in the industrial chain, but with the rapid rise of the new energy automobile industry, this cake has also ushered in more and more new entrants.

As Fang Hongbo said, "In the great changes of the times, everything is violently subverting and reconstructing." In the past we emphasized borders, but that border is now blurred. ”

But in fact, there are still various challenges for new entrants in the automotive industry chain.

Fu Yongjun, vice president of Midea Group and president of Midea's industrial technology, once said bluntly, "From the home appliance industry to the automotive industry, the challenge is still very huge. I personally feel that instead of the challenge of the technology itself, but your recognition as a new entrant, the customer's recognition of you has not yet been established, we discuss whether there are chickens or eggs first, you can only raise the chickens first, in order to have eggs. ”

In fact, as early as 2017, Midea Group transformed into a globally operated technology group, and since then it has continuously expanded its business boundaries, including medical treatment, robotics and other aspects.

At the end of 2021, Midea Group officially changed its former mechanical and electrical business group to "Midea Industrial Technology". Fu Yongjun explained this in order to let the partners know us better.

Fu Yongjun introduced, "Usually Meizhi compressors and Welling motors give the impression to the outside world as enterprises that are the core components of home appliances, but in fact, in the past 5 years or so, we have continuously carried out new industrial layouts and expanded industrial boundaries." ”

Fu Yongjun further explained, "30 years ago, the home appliance industry began to develop, and we have developed and grown with China's reform, opening up, and industrial development. Now in the automotive industry, especially in the field of new energy vehicles, there are still many key core components that need to be imported. This requires us to use the accumulation in the home appliance industry to do horizontal expansion, not only for our own development, but also for the industry to create a better quality, responsive, with a better supply chain to do our work.

In his view, the cross-border auto parts track of home appliance companies has its underlying logic. "For example, we have accumulated technology accumulation in the home appliance industry to control motors and precision machinery, and we have expanded our accumulation of these technologies to automobiles, industrial automation, and green energy." I believe that midea group will make greater investment in the field of TO B business and industrial technology in the future, leading midea group to become a technology group, leading midea group to have greater room for development. ”

The "thermal management plate" took the lead

There are different interpretations of whether midea groups will further build complete vehicles in the future. In this regard, Fu Yongjun mentioned that "China does not lack car-making enterprises, what is missing is the enterprises that really dive into the heart to do a good job in auto parts."

In fact, Midea Group established midea Welling Shanghai R&D center more than a decade ago and entered the EPS steering motor research and development; 5 years ago, it began to start the research and development of electric air conditioning compressors in automobiles. In 2018, Midea Group established an auto parts company and operated under the "Welling" brand, determined to enter the field of auto parts.

The reporter noted that one of the current bottlenecks in electric vehicle technology is to increase the driving range of the whole vehicle in winter. This performance depends not only on battery capacity, but also on thermal management technology. Because in different seasons, the core components of electric vehicles such as batteries, motors, and electronic controls need to be cooled or heated accordingly to maintain their performance and service life.

Therefore, the new energy vehicle thermal management system is also the key direction for the layout of many automotive industry chain enterprises.

In May 2021, Midea Group released a variety of auto parts products from Welling, covering the product lines of three new energy vehicles: drive motors, thermal management and assistance, and autonomous driving.

The reporter learned from the Midea Group that under the technical support of the Midea Group, the thermal management track is its main front.

Chen Jintao, general manager of Welling AutoMotive Parts, said, "We have laid out core parts, components and components related to thermal management, especially the compressor-led products, because its market demand is very high, and the pain points in the industry are obvious. ”

Chen Jintao explained, "Welling has invested a total of 100 million US dollars, after ten years of tempering, to have today's product competitiveness and official production. For example, the R134a scroll electric compressor, with a speed of 2000rpm, supports triangular circulation heating, and can still be effectively heated even at -30 °C. Another product is midea group breakthrough invention of rotor electric compressor, innovative use of natural refrigerant CO, so that it not only has high efficiency, low noise, lightweight and other technical characteristics, but also to meet the needs of efficient refrigeration and low temperature heating, even in the low temperature environment of -35 °C, the heating capacity is still strong. The electric compressor has up to 220 domestic invention patents and 14 international patents, with completely independent intellectual property rights. ”

For the layout of auto parts products, Chen Jintao said that it can be represented by 5 words: "innovation, difficulty, and speed". "All products in the entire automotive sector are positive and independently developed products, and their core focuses on the incremental components of new energy vehicles. Combined with our own advantages and industry pain points, we mainly focus on electric drive systems, thermal management tracks, and intelligent driving related tracks. ”

According to the "2022-2026 Automotive Thermal Management Industry In-depth Market Research and Investment Strategy Recommendation Report" released by the New Thought Industry Research Center, in the international traditional automotive thermal management market, the total market share of the four enterprises of Mahler of Germany, Valeo of France, Denso of Japan and Han Ang of South Korea accounts for more than 70%. Under the general trend of domestic substitution, domestic automotive thermal management enterprises have ushered in a good opportunity for development.

Grab the time window

Under the background of "carbon peaking and carbon neutrality", the relevant departments of the state have issued many policies in 2021, which has effectively promoted the surge in new energy vehicles.

For example, the "2021 Automotive Standardization Work Points" released by the Ministry of Industry and Information Technology pointed out that in the field of new energy vehicles, the focus of work mainly includes strengthening the safety guarantee of electric vehicles, focusing on the use of fuel cell electric vehicles, supporting the innovative development of power exchange models, and supporting the green development of electric vehicles.

According to data from the Ministry of Industry and Information Technology, in 2021, the production and sales of new energy vehicles in the mainland reached 26.082 million units and 26.275 million units respectively, with production increasing by 3.4% year-on-year and sales volume increasing by 3.8% year-on-year.

In addition to Midea Group, due to the growth of new energy vehicle sales, Weitang Industry, Double Ring Transmission and other upstream auto parts enterprises intend to expand the production capacity of new energy vehicles related parts products to meet the needs of downstream customers.

Taking Weitang Industry as an example, on February 7, 2022, Weitang Industry issued an announcement that in January 2022, Weitang Industry signed an agreement with the People's Government of Qingcun Town, Fengxian District, Shanghai, where Weitang Industry intends to settle down and set up a new subsidiary by purchasing suitable industrial land use rights or leasing suitable industrial housing carriers in the administrative area of Qingcun Town, Fengxian District, Shanghai, and intends to build a new energy vehicle core components production capacity project.

For the future direction of technology, Chen Jintao said that based on his own situation, "we will tend to consider core components related to vehicle control such as intelligent chassis." At present, we focus on the motor and control, precision machinery, valves, software control and other technical fields, according to their own advantages, select difficult intelligent products to develop. This is our important direction."

According to the analysis of Minsheng Securities, the first half of electrification has created a global leader in the power link, and the second half of intelligence needs more independent and controllable Chinese leading suppliers. The comprehensive rise of independent brands requires China's version of "mainland" and "Bosch". Among them, the wire control chassis is expected to replicate the penetration curve of electric vehicles in the past 5 years and quickly increase the volume, taking the lead in revenue.

(Editor: Zhao Yi Proofreader: Zhai Jun)