"Black cat white cat" model loss helplessly suspended to accept orders Great Wall Motor Euler brand will push new cars

Reporter Zhao Xueyi

Trainee reporter Zhang Xiaoyu

Recently, the black cat models and white cat models under the Great Wall Motor Euler brand have stopped receiving orders, which has triggered heated discussions in the market.

"Stopping orders does not mean stopping production, and the company is actively seeking solutions." On February 24, Euler brand CEO Dong Yudong said in a statement.

In response to the loss of black cat and white cat models, Dong Yudong said in an interview with the "Securities Daily" reporter on February 25, "First, the price of raw materials has risen; second, new energy subsidies will continue to decline in 2022; third, it will be affected by chip shortages." As a result, for every vehicle delivered, the loss exceeds 10,000 yuan. ”

Why stop taking orders?

In 2021, the mainland new energy terminal market sales are hot. According to data from the China Association of Automobile Manufacturers, in 2021, the sales volume of new energy vehicles in mainland China reached 3.521 million units, an increase of nearly 1.6 times year-on-year, ranking first in the world for seven consecutive years.

However, in contradiction with the "hot" end market, there are various problems in the automotive supply chain in 2021. For example, the price of power battery raw materials nickel, manganese, cobalt, lithium and other valuable metals has risen rapidly, especially lithium carbonate, in February 2022, the price of battery-grade lithium carbonate has stood at 400,000 yuan / ton, compared with the price of about 70,000 yuan / ton in the same period last year, an increase of more than 470%.

Dong Yudong said, "From October last year to January this year, the price of lithium carbonate has risen by 110%. Affected by this, the overall price of batteries rose by 13% to 20%, of which about 13% were for small cars and 15% for medium-sized cars. The A00 class has a range of 300km to 400km of cars, the cost of the battery system accounts for 35% to 37% of the price, and the price of upstream raw materials rises, driving the battery cost up, and significantly increasing the production cost of pure trams. ”

According to data from the Ministry of Industry and Information Technology, the output of lithium carbonate in mainland China in 2021 was 240,000 tons, an increase of 40.4% year-on-year. According to the statistics of Baichuan Yingfu, by the end of 2021, the effective production capacity of domestic lithium salt is 462,400 tons, and the total output of the current period is only 230,400 tons, and the capacity utilization rate is 49.82%.

Qi Haikun, president of Beijing Teyi Sunshine New Energy, told the Securities Daily reporter: "In the context of dual control of energy consumption, as long as the downstream demand is strong, the price increase logic of lithium batteries and lithium salt products exists, and the price increase is difficult to end, and the future growth of the industry and the market space will have a situation of volume and price rise." ”

In addition to the rise in raw material prices, the decline of the subsidy policy for new energy vehicles in 2022 has also compressed the profit margins of new energy vehicles. According to the official website of the Euler brand, the long-endurance version of the black cat and the white cat have a range of 401km and 405km respectively, and the minimum endurance version of the model has a range of 301km and 305km, respectively, and the price is below 90,000 yuan. The decline in subsidies has further compressed the profit margins of black cats and white cats, which are not high.

"In addition to short-term cost increases, chip supply restrictions have led to black cats, white cat delivery deadlines have been lengthening, in this environment, black cats, white cats waiting to deliver to users of the cumulative number of orders has exceeded 20,000 units, according to the current production capacity, if you continue to take orders, the delivery of new orders will wait until the second half of 2022." Dong Yudong said that stopping receiving orders is really a helpless move.

For after-sales service and other issues, Dong Yudong said that one will actively seek raw materials, strive for the greatest resources, and quickly realize the delivery of existing orders; second, all after-sales services of black cat and white cat models will continue to be maintained and will not be affected by the cessation of orders.

Why not increase the price?

In fact, since last year, many electric vehicle companies have announced price increases. Among them, Tesla announced that the price of the rear-wheel drive version of the Model 3 and ModelY was raised by 10,000 yuan and 21,000 yuan respectively; the price of Xiaopeng increased by 4,300 yuan to 5,900 yuan; and the price of the zero-run minimum model was increased by 8,000 yuan to 9,000 yuan. On January 21 this year, BYD officially released news that it will adjust the official guidance price of related new energy models, ranging from 1,000 yuan to 7,000 yuan.

Since many car companies have chosen to face problems such as rising raw material prices through price increases, why did Euler not choose to follow the price increases, but stopped taking orders?

Dong Yudong said, "As an enterprise, there are several ways that companies can adopt: either accept losses; take the amount of losses as a strategic decision, and make up for them from other places, such as financing, listing, earning points, etc.; or increase prices or reduce allocations, such as reducing endurance, reducing allocations and reducing costs." However, as an independently operated boutique pure tram brand, these roads are not suitable. A00 pure tram companies take the route of losing money and making money, and downgrading the low-quality route, which is not a long-term solution. ”

Dong Yudong said, "After stopping receiving orders, the two products of black cat and white cat will change from two aspects: one is to seek technological innovation from the perspective of Great Wall Motor's own platform, continuously improve the production efficiency of battery cells, and reduce costs; the other is to launch customized products to improve and upgrade the original product configuration." ”

It is worth mentioning that the Euler brand, as a sub-brand of Great Wall Motors, has the advantages of the industrial chain behind it, but it still cannot avoid losses. Dong Yudong said, "The problems encountered by the Euler brand are also risks faced by the industry. ”

However, at present, the price of new energy vehicles is only a small part, and there are many A00-class models that have not increased in price. In this regard, Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of The North China University of Technology, said in an interview with the Securities Daily reporter: "The reason for the price increase is that the A00-level market competition is now fierce, and after the price increase, the competitiveness of the corresponding products will be reduced, and the sales volume will decline accordingly, vacating the market share to competitors." The A00-level market has also been developed in the last one or two years, and it is still in a stage of grabbing the market. ”

With the cessation of orders for Euler black cat and white cat models, Great Wall Motors' sales will inevitably be affected. Great Wall Motor's 2025 strategic plan released in June 2021 said that by 2025, Great Wall Motor's global sales will reach 4 million vehicles, of which 80% will be new energy vehicles. This means that Great Wall Motor's sales of new energy vehicles will increase from 137,000 units in 2021 to 3.2 million units. As its new energy brand, Euler plans to achieve a cumulative sales target of 1 million vehicles by 2023.

According to the data, in 2021, the Euler brand sold 135,000 vehicles, an increase of 140% year-on-year, but only about 10% of Great Wall Motor's total sales. Among them, the cumulative sales of black cat and white cat models exceeded 88,000 vehicles in the whole year, accounting for 65% of the total sales of the Euler brand.

With the removal of the black cat and the white cat, the pressure of Euler's future sales growth can be imagined. How do I guarantee my sales target? Dong Yudong said, "The Euler brand will launch three new models next, which are expected to be launched in March 2022, and new models such as punk cat, lightning cat and cherry cat will be launched in the second quarter, and the price will be set at 150,000 to 200,000 yuan." ”