Electric vehicles, the price increase to stop production?

Image source @ Visual China

Text | Shentucar, by | Zhou Jifeng, Editor | dawn

Electric vehicle jianghu, has always had such unwritten rules: "buy Tesla must hesitate, hesitation will reduce the price", "a moment of hesitation is cool, has been hesitant to be cool".

By 2022, that rule doesn't seem to be working.

Tesla, known for its "cutting leeks", began to increase prices. On the last day of last year, Tesla announced a price increase, and the Model 3 and Model Y models rose by 10,000-20,000 yuan.

Wuling Motors, which developed the National Shenche Hongguang MINIEV, has also recently joined the ranks of price increases, and its NanoEV price has risen by 3,000 yuan.

The entire electric vehicle market has ushered in a wave of price increases.

Some electric cars can be bought with extra money. Some cars are late and can't be bought.

On the evening of February 14, the Euler brand delivered a notice to the terminal that its black cat and white cat stopped taking orders. Black cats and white cats are the small explosive electric vehicles that Euler has successfully created in the past two years. The annual sales of these two cars combined are more than 80,000, contributing 60% of the sales performance of the Euler brand.

"It's not that we're stopping production, it's that we're stopping taking orders." Euler brand CEO Dong Yudong gave such an explanation. On closer examination, it turned out that the cost was too high for the company to afford to lose.

Many old owners of new energy car owners laugh at themselves: they are finally not old leeks. However, the increase in the price of new energy vehicles has indeed caused many people who are ready to buy new energy vehicles to "damage" their pockets.

A netizen even put forward such a suggestion on Weibo: "Sincerely, this year, the deposit for electric vehicles was put down early, and it doesn't matter if you don't rush to use the car, you have to wait for half a year anyway." Maybe the price will rise in the future. ”

What is going on with this wave of price increases?

A butterfly effect

At the end of 2021, several major events occurred in the electric vehicle market, but none of them attracted much market attention.

First, the news of price increases from major battery manufacturers. Second, some domestic enterprises have run abroad and frantically robbed lithium mines. In the past few years, the price of electric vehicles has begun to rise wildly.

What connects these things together is an industrial chain that spreads across the globe. To build an electric vehicle, you need to rely on factories around the world. This industrial chain is long, there are many participants, the suspension of any link will impact the entire industrial chain, and the change of any link can trigger a series of butterfly effects.

Since last year, the butterfly effect has come.

In 2021, the global new energy vehicle market will explode, with global electric vehicle sales increasing by 112% year-on-year to more than 6.3 million units. Electric cars sell a lot, but there are not enough batteries. The production speed of the CATL era to produce an average of one battery pack every 2.5 minutes is still unable to meet the demand.

According to SNE Research's forecast, by 2023, the global demand for power batteries for electric vehicles will reach 406GWh, while the supply of power batteries is expected to be 335GWh, a gap of about 18%.

Demand for power batteries is rising, but the upstream raw materials are simply not available.

According to US media statistics, it usually takes 10 years to open a new mine (the raw materials for manufacturing lithium batteries are mainly lithium carbonate and lithium hydroxide, and lithium concentrate is the main raw material for the production of lithium carbonate and lithium hydroxide), it takes about 3 years to build a battery factory, and the research and development cycle of an electric vehicle is about 2 years, and about every 10 hours, a Tesla car comes off the production line from the factory.

The speed of mining simply cannot keep up with the speed of electric vehicle production. This caused the price of battery raw materials to start soaring.

From the fourth quarter of 2020 to the end of February this year, the price of battery-grade lithium carbonate has risen from 44,000 yuan / ton all the way to more than 460,000 yuan / ton. According to data released by Benchmark Mineral Intelligence, a benchmark mineral intelligence agency, from January 2020 to January 2022, the prices of battery-grade cobalt and nickel sulfate rose by 119% and 55%, respectively.

After the tight supply of lithium battery raw materials and the soaring prices of upstream raw materials, the profits of battery manufacturers have continued to shrink. For example, the gross profit margin of Ewell Lithium Energy in Q3 of 2021 decreased by ten percentage points year-on-year.

The pressure of price increases is passed on to battery manufacturers, who in turn shift the pressure to automakers. According to the Lithium Battery Research Institute (GGII) of The High Industry, Industry and Research Institute (GGII), the actual increase in the cost of battery companies is about 20%-25%, and the purchase price of the battery that is finally transmitted to the oem may actually increase by about 10%-20%.

This is not the end, last year, the biggest production problem of car manufacturers is the lack of cores. In 2021, a Japanese semiconductor company producing wafers, Asahi Kasei, caught fire, ST's three fabs in France went on strike, and then automakers around the world experienced a core shortage crisis, and some manufacturers even had to go to the black market to snap up chips. This year, the chip problem has still not been solved.

According to CCTV Finance, due to the serious shortage, the price of most automotive chips is currently rising, and the increase is several times small.

Recently, the Russian-Ukrainian conflict is likely to further exacerbate the core shortage and the shortage of battery raw materials. After all, Ukraine, as the world's largest producer of semiconductor raw material gas, supplies more than 70% of the world's neon gas. Russia is the world's third largest producer of nickel metals, and nickel is the main raw material for the cathode of ternary lithium batteries.

Lack of cores, lack of batteries, to make matters worse, subsidies are less.

Since 2010, the state has subsidized new energy vehicles for 12 years. And 2022 is also the last year of the national supplement for new energy vehicles.

According to the latest subsidy plan, this year, pure electric passenger cars with a mileage of less than 300 kilometers are unsubsidized; 300-400 kilometers of pure electric vehicle subsidies are reduced by 3900 yuan year-on-year; pure electric vehicle subsidies greater than or equal to 400 kilometers are reduced by 5400 yuan year-on-year; plug-in hybrid model subsidies are reduced by 2000 yuan year-on-year.

Who can withstand the pressure?

Lack of cores, rising battery prices, shrinking subsidies, the outbreak of war, this spring, for most car companies, a little cold.

Some brands that could not withstand the pressure first chose to "surrender their weapons". For example, Euler's black cat and white cat have stopped taking orders. Dong Yudong once pointed out to the media: "Taking black cat as an example, after the sharp rise in raw materials in 2022, the loss of black cats alone exceeded 10,000 yuan. ”

If you sell it again, you can't afford to lose money.

As two blockbuster mini cars, Euler's black cat and white cat were once mixed.

In 2020, Hongguang MINIEV began to explode, which also brought about a boom in micro-electric vehicles. From the data point of view, in 2021, these cheap, simple configuration of A00 mini cars, the annual sales of nearly 900,000, is the largest proportion of the entire new energy vehicle market.

But this wave of rising raw material prices and subsidies have made the days of these explosive cars difficult. Chai Daixuan, director of CIC's consulting, pointed out to Shentu: "The impact of subsidies and chip shortages has a fatal blow to A00-level products of 50,000-100,000 yuan. ”

In fact, A00-class cars priced at 50,000-100,000 yuan on the market, such as Euler black cat, white cat, zero-run T03 and other models, often play the positioning of "boutique cars" when they are launched, and intelligent networking, auxiliary driving and other functions are available. These cars are basically money-making.

Dong Yudong also told the media that as far as Euler's black cat and white cat are concerned, the platformization and universality rate of its parts has reached more than 80%, which is already a very high level in the industry. Even so, black cats and white cats have not been profitable.

Now that the cost is rising, Euler's approach is to stop taking orders for white cats and black cats under 100,000 yuan on the one hand, and raise the price of good cats with higher prices on the other hand. Previously, the price of the GT version of Euler Good Cat was 135,000 yuan after subsidies, and the price increase was recently 12,000 yuan.

Not all car companies have been affected. In Chai Daixuan's view, A00-class cars below 50,000 yuan, such as Hongguang MINIEV, are not much affected, the mileage is originally less than 300km, in addition to not enjoying state subsidies themselves, chips, they are originally very low due to the degree of intelligence, and the demand for chips is smaller.

As for the higher-level models, due to the increase in comfort and luxury configurations, the proportion of basic costs such as three electricity is relatively lower, and the impact of battery price increases is often smaller.

But the disappearing subsidies and increased costs always have to be paid for.

This time, most of the car companies chose to let users pay. Tesla and Xiaopeng chose to directly increase prices. Ideally, there is no price increase, but user rights and interests are also shrinking. Ideally, from February 1, the rights and interests of the first owner of the three electric and extended range system life warranty will be cancelled and adjusted to 8 years or 120,000 kilometers.

At present, Weilai, which has a lot of money, said that it will not adjust the price for the time being, and said that users who have paid a deposit to buy ES8, ES6 and EC6 last year can still enjoy subsidies in accordance with last year's national subsidy standards if they can pick up the car before March 31, and the difference is borne by Weilai.

Chai Daixuan believes: "Some car companies that have not raised prices have adopted a 'limited time insurance price' policy, but after entering March, the costs of subsidy decline will no longer be borne by manufacturers, and price increases are imminent." ”

Burn one's boat

Tesla's price increase has risen "without fear", are you not worried that the price increase will affect sales?

Shentu chatted with many consumers who were ready to buy a car, and found that for people with a budget of 200,000-300,000 yuan, the price increase of less than 10,000 yuan was acceptable. Nor will they abandon their plans to buy new energy vehicles just because subsidies are reduced.

Behind the dare to increase prices, the waist plate of the new forces of car manufacturing is getting harder and harder.

Orient Securities said in the research report that the price increase does not affect the demand. With the improvement of the performance and hardware configuration of electric vehicles, many consumers choose to buy new cars, and electric vehicles have become a must-choose item.

The door to the new energy vehicle market has been opened. But for each new car-making force, the next challenge is even more arduous. After the subsidy tide recedes, new energy vehicles will face direct competition with fuel vehicles.

However, in Chai Daixuan's view, the impact of financial subsidies on the entire new energy market is relatively limited. "In the short term, it may directly lead to price increases for some models, but in the long run, the market will quickly return to stability." Especially in terms of high-end models, China's independent brands frequently exert their strength and have the strength to compete head-on with fuel vehicles of the same level. ”

The real challenge still comes from the supply chain. In 2021, domestic car companies are plagued by lack of cores and shortages of battery raw materials. By 2022, these crises have not been lifted.

In terms of battery price increases, Chai Daixuan's advice is not to put eggs in one basket. "The cost pressure of batteries can be resolved in many ways, such as improving battery performance, diversifying supplier selection, and incorporating supplier development into internal transactions to improve communication efficiency." At present, the main battery companies are extremely profitable, and the upstream mining enterprises have super profits, which are good measures to gradually release profits and improve supply in the future. ”

The business of new energy vehicles, large capital investment, long production cycle, many technical challenges, supply chain, policy turmoil may crush a new force. In the final analysis, only by selling more cars and forming a certain scale can we have a strong ability to resist risks. Chai Daixuan pointed out: "The scale benefit of new energy vehicles is very obvious, and with the substantial growth of industrial scale, the cost of depreciation of fixed assets of new energy vehicles can be better shared." The cost of bicycle manufacturing is more likely to play the scale advantage in the exponential growth stage. ”

Taking Tesla as an example, Tesla's single-vehicle gross profit margin remains at a high level of about 30%, even if the upstream industry chain increases prices, Tesla also has room for profit.

"This year is the most challenging year, even Wei Xiaoli is no exception." Industry insider Andy predicted: "If their sales can't go up to the next level, production capacity can't keep up with demand." Then both revenue and financing will be affected, and it will further affect their next new car development and production. ”

*The caption is from "The Butterfly Effect". At the request of the interviewee, Andy is a pseudonym.