The illustrations are from Canva Paintable
At first, A00-class fuel vehicles were abandoned by consumers due to their high cost of use; now, A00-class electric vehicles are optimistic about consumers with low prices and low costs. Taking Hongguang MINI EV as an example, as of December 31, 2021, the overall sales volume of Hongguang MINI EV has exceeded 550,000 since its listing, of which the cumulative sales volume of 2021 has 426452 units, winning the annual sales championship of new energy.
According to the data of the Association of Passenger Transporters, the sales volume of A00-class pure electric cars is about 898,500 units, which can almost be equated with the sales of A00-class cars, while the A00-class pure electric cars will account for 30.1% of the sales of new energy vehicles in mainland China in 2021, which is the largest single subdivision category. It can be seen from the data that A00-class electric cars are very popular in the consumer market and have even become the mainstay of the new energy vehicle market. Behind the hot sales of electric cars, what do car companies think?
Electric trolleys carry the heavy responsibility
Whether it is Nezha, zero-run and other new car-making forces, or traditional car companies such as the Great Wall and SAIC, they have poured into the subdivision of A00-class cars to try to get a piece of the pie. The price range of A00-class cars is 30,000-80,000, can such a low price really make money? In fact, under the influence of the double points policy, neither the new car-making forces nor the traditional car companies rely on selling cars to make profits. In other words, electric cars do not assume the profit targets of car companies, but have other responsibilities.
One is to grab more market share. The new energy vehicle market is already a red sea under the agitation of players such as Wei Xiaoli, and the late entrants do not have the high-end technology of Wei Xiaoli, nor do they lack market recognition, and if they want to cut into the new energy vehicle market, they can only start from the sinking market and grab the third- and fourth-line market share that Wei Xiaoli has not yet swallowed. Due to the particularity of the sinking market, cost-effective electric cars are loved by this part of the consumer.
The second is to earn new energy credits. The double integration policy requires that the fuel consumption of fuel vehicles meet the standards, and the power consumption of new energy vehicles meets the standards. When the points are settled, the car company needs to fill in the negative points of the two types of cars through various ways to avoid penalties, otherwise it will face penalties such as suspending the declaration and production of high-fuel consumption products. The new energy vehicle integral is "recognizing the car but not recognizing the price", and the A00-level electric vehicle with low research and development difficulty can also produce positive points, which brings new ideas to traditional car companies and new energy vehicle companies.
For traditional car companies, electric cars are built to help meet the standards of points, thereby reducing the huge cost of buying points. From the perspective of business type, the main profit business of traditional car companies is still fuel vehicles, which makes the more fuel vehicles are sold, the higher the negative fuel points of car companies. This part of the negative credit needs to be offset by the positive credit of new energy, or purchased or transferred by affiliated enterprises. Therefore, traditional car companies accumulate positive points for enterprises by developing and selling electric cars to fill the gap in new energy credits.
According to a research report by Caitong Securities, according to the cost estimates disclosed by various parts suppliers in the market, the gross profit margin of Wuling Hongguang MINI EV may be between 2% and 3%. Although Wuling Hongguang MINI EV is making money, it also shoulders the heavy responsibility of SAIC Group's points, not only making up for the negative points of SAIC Volkswagen and SAIC GM, but also earning 300-400 million yuan for SAIC through points trading.
For new energy vehicle companies, selling points has become an important source of revenue for enterprises. According to the financial report, NIO sold about 200,000 points in the third quarter of 2021 and made a profit of 517 million yuan. As mentioned above, electric cars can also produce positive points, and the technical strength is not as strong as other car-making players such as Zero Run, Nezha and other car companies naturally choose to build low-difficulty electric cars to accumulate positive points in order to carry out points transactions in the later stage.
The collective anxiety of A00-level vendors
In 2022, a series of factors such as rebates and price increases will impact the new energy vehicle market, and the most vulnerable of them is undoubtedly the A00-class electric vehicle market. Although manufacturers do not rely on selling electric cars to make profits, they can inevitably fall into anxiety in the face of electric cars that "leak in the house and rain overnight".
First of all, the decline of new energy subsidies has plunged car companies into market anxiety. A00-class electric car has been favored by consumers with new energy policy subsidies, and once the subsidy declines, it is likely to shake the existing A00-class electric car market. According to the announcement jointly issued by the four ministries and commissions of the state, the subsidy standard for new energy vehicles in 2022 will decline by 30% compared with 2021. Electric cars with a cruising range of less than 300 km are not subsidized, such as Hongguang MINIEV; electric cars with a cruising range of 300-400 km are less subsidized by 3900 yuan, such as zero-run T03. In general, the subsidy decline this time has a greater impact on low-end models such as zero-run T03 and Euler black and white cats.
Secondly, the price increase of raw materials has caused car companies to fall into cost anxiety. The prices of battery-grade cobalt, nickel sulfate and lithium carbonate have risen by 119%, 55% and 569% respectively, and the huge increase in battery raw materials has made the price of power batteries continue to increase, which also increases the production costs of new energy vehicle companies. However, "small car profit" is the consensus of the industry, in the case of increased costs, in order to ensure that the sale of cars does not lose money, car companies either raise prices, or reduce allocation, but the loss of cost-effective electric cars and why make consumers satisfied?
Finally, the shortage of chips has made it difficult to deliver electric cars, and car companies have fallen into reputation anxiety. Due to the impact of the epidemic, supply chain and other factors, the lack of cores has spread to mobile phones, automobiles and other industries, and chip shortages have become a common problem in new energy vehicle companies. As mentioned above, in the case of chip shortage, car companies are obviously more willing to use chips on other models with higher profits, and the delivery of electric cars is far away. This delay in delivery affects the user's consumer experience, arouses consumer dissatisfaction, and lowers the brand image.
In summary, subsidies have declined, lack of core and less electricity, etc. have made car companies fall into anxiety, but the low-end models have thin profits, manufacturers want to lose money and have to take low-end models to open the knife, with Euler and zero running as the representative of the A00-level manufacturers have their own new actions.
Euler turned
Euler's black cat and white cat models are aimed at the A00 consumer market and are quite popular with consumers. According to the data, the cumulative sales of Euler black cats and white cats have reached 175,000 vehicles, and they have won the A00 market sales championship many times. Under the influence of many factors, the Euler brand passed the notice of black cat and white cat stopping taking orders to the sales terminal on February 14, which means that Euler has now chosen to withdraw from the A00-level market. As far as euler's development is concerned, it is inevitable that this will be turned.
First, the hot sales of white cats have led to the development of the Euler brand, and stopping the black and white cat orders is Euler's strategic stop loss. According to Euler's official data, the cumulative sales of Euler good cats in 2021 will be 50,931 vehicles, and its price will rise to 100,000-150,000 yuan, which has belonged to the price ceiling of the A0-class car market. From the price and hot sales of white cats, it can be seen that good cats have great development prospects in the A0-level market and are very likely to lead the brand to break through.
In addition, Dong Yudong, CEO of The Euler brand, said: "Although there are advantages in the industrial chain behind the Euler brand, but taking the black cat as an example, after the sharp rise in raw material prices in 2022, the loss of a single unit exceeded 10,000 yuan. "It is an indisputable fact that low-end models bring huge losses to the Euler brand, and timely stop loss can ensure the long-term development of the Euler brand."
Second, Euler continues to broaden the product matrix, trying to break the limitations of market segments and seek greater profit margins. Euler's customer base is predominantly female consumers, and while the consumer market is solid, there are limitations. According to the company's planning, in 2022, Euler will launch lightning cats, ballet cats, punk cats and other models, making the company's positioning more accurate and the IP more distinct. The launch of this series of new products will not only help Euler to cover a more diverse user base, but also further enhance its brand value and enrich its brand image, so as to obtain greater profit margins.
Zero run to maintain stability
Zero run is different from Euler's stop loss by stopping orders, but by upgrading the configuration of T03 and then raising prices, the pressure caused by cost increases is transferred. However, this decision to run zero is also due to its own large constraints.
First, zero run needs T03 to carry sales. According to the official data released by Zero-Run Cars, it sold a total of 43,960 new cars in 2021, an increase of 480.71% year-on-year. Among them, the zero-run T03 sold 39,433 vehicles in the whole year, accounting for about 89.7% of annual sales. Zero-run T03 is crucial for zero-run, once it loses this sales championship, zero-run is bound to be left behind by the same echelon of Nezha and Weima, and even inferior to other car-making players. At the same time, zero running is also sprinting to the market, and the huge sales and revenue brought by T03 make zero running dare not easily stop taking orders.
Second, zero running requires T03 to continue to occupy the market. Since its release, there are only three models of S01, T03 and C11, and the product matrix is thin. Not only that, there are still certain problems in S01, in 2020, Zero Run recalled 150 2019 Zero Run S01, and the State Administration for Market Regulation said that the reason for the zero run instrument software resource optimization Bug, accidents may occur in extreme cases, and there are certain safety risks. C11, on the other hand, dragged its feet in delivery, frequently angering consumers.
From the annual sales volume mentioned above, it can also be seen that the sales of these two models are weak, the user base is poor, and it is difficult to attract consumers. In the case that the new model C01 has not yet been released and its subsequent market performance is not known, zero running still dares not give up the low-end market, T03 still needs to continue to seize the low-end market share, and draw a safe area for zero running on the road to build cars.
Write at the end
The fire caused by the decline of the new energy subsidy policy and the lack of core and lack of electricity has burned into the electric car market, and manufacturers must give solutions. Euler wanted to enhance the brand image, suspended the black and white cat to take orders; zero run to maintain the existing market share, plus a price increase to sell T03, these two players are based on their own considerations, made different choices.
In fact, due to the particularity of consumers in the A00-level market, whether manufacturers suspend orders or increase prices, they will eventually cause consumer dissatisfaction. If you can take the opportunity to find a development path that suits you, it is not necessary to temporarily "offend" consumers.
Text/Liu Kuang public number, ID: liukuang110