Rising raw material costs, subsidies declining, and industrial transformation imminent, how does Yin Tongyue lead Chery to meet the three major challenges?
Wen | Wang Xuanxuan, a reporter for China Entrepreneur
Edited | Ma Jiying
Photography | Deng Pan
"I am afraid that the battery resource problem will affect the development momentum of new energy, so I call on the country to make overall strategic arrangements." In an exclusive interview with China Entrepreneur on March 3, Yin Tongyue, deputy to the National People's Congress, secretary of the party committee and chairman of Chery Holding Group, was a little worried.
At the two sessions of the National People's Congress this year, Yin Tongyue brought as many as 13 proposals, one of which was to recommend that the raw materials of power batteries be included in the national strategic reserve resources. Yin Tongyue suggested that the state set up a special fund to support and encourage domestic enterprises to acquire foreign battery material resources and maintain the stable development of the new energy automobile industry.
Judging from public information, the impact of rising raw material prices has been reflected. In March, Great Wall Euler and WM Motors announced that they would increase the prices of their products due to factors such as rising raw material prices and subsidies. Although Xiao Ant, the sales pillar of Chery New Energy, announced in January that it would not increase prices, Yin Tongyue said, "If the price of battery raw materials has been rising by 20%, it is indeed a huge loss for us." ”
In addition to batteries, another key word in Yin Tongyue's bill is "export". He called for negotiations with relevant countries on free trade agreements, improve the two-way trade-related system, and provide trade facilitation for Chinese car companies to go global.
In 2021, China's automobile exports increased by 104.6% year-on-year. Not only traditional car companies, but also new car-making forces are also looking to overseas markets. Chery has ranked first in China's brand passenger car exports for 19 consecutive years, and in 2021, Chery Automobile exported 269,200 units, an increase of 136.3% year-on-year.
Yin Tongyue believes that China's auto industry is getting bigger and stronger, and one of the signs is the acceleration of export growth. Automobile exports to continue to grow, to achieve "like home appliances, mobile phones, become a major product of China's exports", but also need the attention of the national level, it is recommended that the Ministry of Commerce to speed up the comparison of Japan, South Korea and other countries' auto tariff policies, accelerate the signing of trade agreements or tariff alliances with china's major auto export market countries and regions, to create a fair competition environment with Japanese and Korean enterprises.
At the same time, like other auto companies, Chery is also facing severe transformation pressure and chip shortage.
In 2021, Chery's annual sales reached a historic 961,900 units, a year-on-year increase of 31.7%, but it did not break through the million mark. Yin Tongyue said that the main reason is the shortage of chips.
However, in 2022, Chery still put forward the goal of ensuring annual sales of 1.5 million vehicles and striving for 2 million vehicles. Yin Tongyue's confidence mainly comes from the incremental space brought by new energy vehicles. "The growth rate of new energy in 2022 will be relatively large." Yin Tongyue said.
In terms of industry transformation, Chery's hand-in-hand with the "fruit chain brother" is a "circle breaking" of Yin Tongyue. On February 11, Luxun Precision issued an announcement that it intends to purchase 19.88% of the equity of Chery Holdings, 7.87% of chery shares and 6.24% of chery new energy held by Qingdao Wudaokou for 10.054 billion yuan. At the same time, it plans to jointly establish a joint venture with Chery New Energy, hoping to become a leading manufacturer of Tire 1 auto parts.
Yin Tongyue said that now is the integration period of the automotive and IT industries, and Luxshare Precision's experience in the consumer electronics industry can help Chery improve the precision of management.
So, will Chery make mobile phones? Yin Tongyue said: "The car is already a big cake. ”
The following are the main contents of the interview with Yin Tongyue from China Entrepreneur:
Talk about the cooperation with Luxshare Precision: promoting Chery's reform
"China Entrepreneur": What are the considerations behind Luxun Precision's investment in Chery and the establishment of a joint venture between the two parties?
Yin Tongyue: Wang Laichun (Chairman of Luxshare Precision) is a top entrepreneur who bought Chery's shares from Qingdao Wudaokou, also based on internal strategic needs. For Chery, Luxshare Precision has done a very good job in consumer electronics, which is of great value to Chery. Now it is the stage of high integration of the automobile and IT industries, and the cooperation between the two sides is not only the integration of technology and ecology, but also the integration of management. Luxshare Precision can help Chery improve the precision of management, and also hopes to promote Chery's reform through their introduction of management concepts such as Apple' excellent enterprises.
The joint venture may make efforts in auto parts in the future. For example, with more and more electronic components in cars now, how to combine Luxshare Precision technology and Chery's needs to develop some new industries.
China Entrepreneur: Will it build a new car brand?
Yin Tongyue: Not at this time.
"China Entrepreneur": Speaking of the combination of automobile and IT industries, how do you think about the phenomenon of car companies making mobile phones? Will Chery make mobile phones?
Yin Tongyue: No. Car companies may be hoping to create an ecosystem to expand the scale of users through mobile phones and enhance the connection with users. I didn't do much research and we felt like cars were already a big cake.
Talk about battery price increases: worried about affecting the development momentum of new energy vehicles
China Entrepreneur: You submitted 13 proposals this year, one of which is to incorporate power battery raw materials into the national strategic reserve resources. What impact has the rising price and tight supply of raw materials for power batteries had on Chery?
Yin Tongyue: It is generally believed that the scale of the new energy automobile industry is getting larger and larger, and the cost of raw materials will become lower and lower, but I did not expect that the price of raw materials has risen sharply in the past year or so. For the new car-making forces, especially some listed companies, they can afford to lose. Some traditional car companies that have transformed to new energy have difficulty in accepting rapid cost increases and are in a stage of contradiction.
The main reason for the increase in the price of battery raw materials is that domestic mineral resources are not sufficient, such as lithium ore resources are not abundant, nickel, cobalt are relatively lacking. Therefore, we hope that the country can make some strategic layouts on a global scale as soon as possible to support the rapid and stable development of the new energy industry.
Chery's new energy vehicles are growing very fast, with a target growth of 3-4 times this year to reach 500,000 units. If the price of battery raw materials has been rising at a rate of 20%, it is indeed a huge loss for us.
"China Entrepreneur": Now some car companies have announced price increases, and Chery New Energy Model Little Ant has promised not to increase prices.
Yin Tongyue: Small ants are indeed under tremendous pressure, and we still need to study this matter.
"China Entrepreneur": Will the price increase of new energy vehicles this year be a trend?
Yin Tongyue: I am afraid that the development momentum of new energy will be affected by the increase in battery prices, so I call on the country to make overall strategic arrangements.
"China Entrepreneur": Can some measures be taken to alleviate the impact of rising battery raw material prices on Chery?
Yin Tongyue: On the one hand, it is still actively cooperating with major suppliers such as CATL and Guoxuan Hi-Tech, and also hopes to jointly develop with them to improve the energy density of batteries, reduce weight, and reduce the impact of costs through technical means.
Talk about chip shortage: the impact is greater than the price increase of batteries
"China Entrepreneur": In addition to the price increase of batteries, how much impact does the chip shortage have on Chery?
Yin Tongyue: Very large, several major chip suppliers are insufficient capacity, and now the monthly satisfaction rate is less than 50%. Many dealers don't have any show cars. The impact of chip shortages is greater than the impact of battery price increases.
China Entrepreneur: Is the situation improving this year compared to last year?
Yin Tongyue: The situation in January and February this year was much worse than in the fourth quarter of last year, and we hope that the second quarter will be better.
"China Entrepreneur": Chery's sales reached a historic 961,900 vehicles in 2021, what is the reason for this achievement? Your previous expectation was 1 million vehicles, what was the reason for not meeting expectations?
Yin Tongyue: First, in the past few years, the foundation has been consolidated and a new system has been established, especially the product development system, quality management system, and manufacturing system have played a role, and the system is a very magical thing. Second, the understanding of customers is more in-depth, Chery's technological innovation ability is still very strong, the cumulative application for more than 23,000 patents. In addition, the growth rate from overseas markets is larger.
The failure to reach 1 million units is mainly due to chip shortages.
"China Entrepreneur": In the case of chip shortage, we put forward the goal of guaranteeing sales of 1.5 million vehicles and striving for 2 million vehicles this year.
Yin Tongyue: The increase in new energy this year will be relatively large, because the chips used in our new energy vehicles are not particularly shortage of chips. Other suppliers have also made some promises to us that the second half of the year should be better.
Talk about autonomous driving: you must be in your own hands
"China Entrepreneur": Is Chery cooperating with some suppliers, such as Huawei?
Yin Tongyue: There is a lot of cooperation, Huawei's HI system has been used a lot, and a lot of sensor technology is also used.
"China Entrepreneur": Some car companies think that cooperation with Huawei, the core has been handed over, what do you think about this problem?
Yin Tongyue: It may be different in understanding, but our cooperation with Huawei is very good.
China Entrepreneur: What are Chery's considerations for the business development of autonomous driving?
Yin Tongyue: Chery established Xiongshi Technology, so that Wu Xuebin, who is at the level of vice president of the company, is responsible for being the general manager of Xiongshi Technology. In terms of smart cockpit, we hope to be at the international leading level, using Qualcomm's latest chips, but also cooperating with Horizon, hoping to import and domestic chips on two legs. In terms of automatic driving, Wu Xuebin originally presided over the Baidu Apollo project and has accumulated for many years. This year we may land some robotaxi (driverless taxis) and robottrucks (driverless trucks) to accumulate data.
"China Entrepreneur": Autonomous driving is a very expensive business, there are already car companies to spin off the automatic driving business for independent financing, what is the planning of Xiongshi Technology in terms of capital?
Yin Tongyue: It should not be burned or not, and now it has become a technical arms race. But automatic driving is a gradual development process, if you say that others have developed to L4, L5, you are too late to invest. In the automotive industry, everyone still wants to take the core operating system into their own hands.
In terms of funds, Lion Technology is also open financing, and now many institutions are also interested, and we are talking.
China Entrepreneur: Is Chery currently speeding up the listing process?
Yin Tongyue: We are actively preparing. Because there have been some changes in shareholders, securities companies are also helping us to make adjustments, and the main business sectors still need to accelerate listing.