Selling a loss under the deformity of the industry is in a dilemma for new energy small cars

With the decline of subsidies and the rise in raw material prices, new energy vehicle companies are under pressure. For the pure electric small car market, which is itself at a lower price, the challenge is even greater.

The price of new energy small cars itself is low, the user group is more sensitive to the price, facing the pressure of rising costs, new energy vehicle companies based on small cars either increase prices or self-digestion. If you follow other car companies to increase prices, due to their own premium ability is not enough, consumers may be difficult to pay again. If you choose to self-absorb the cost, small cars with already small profits will face losses. With the rapid increase in sales, the loss will also become higher and higher.

"This round of subsidies is declining, raw material prices are rising, and small cars are the most uncomfortable." An auto industry source said that although this part of the market still occupies a large market share, with the maturity of the new energy vehicle market, it will also be like the development law of the fuel vehicle market, and small cars will be gradually eliminated.

New energy small cars sold one at a loss

According to the latest subsidy standards, the pure electric vehicle type subsidy of 300 km to 400 km of pure electric vehicle type subsidy is 9100 yuan, which is 3900 yuan less than 2021, and the pure electric vehicle type subsidy of 400 km is greater than or equal to 12,600 yuan, which is 5400 yuan less than 2021. According to the policy, the new energy subsidy will be officially withdrawn next year, which also means that the cost pressure faced by new energy vehicle companies will be further increased.

It is precisely for this reason that at the beginning of this year, more than 10 new energy automobile companies, including Tesla, BYD, and Nezha Automobile, have raised the price of models. In addition, the rise in raw material prices, chip shortages, etc. are also the main reasons for the price increase of new energy vehicle companies, and at the same time, due to the lack of core and less electricity, the pick-up cycle of new energy vehicles is also generally lengthened.

The quotation of lithium battery related raw materials in recent days is still continuing to rise wildly, of which the main material in the power battery lithium carbonate is also rising fiercely, the price of battery-grade lithium carbonate in 2018 is less than 30,000 yuan / ton, but it has now exceeded 500,000 yuan / ton, up more than 10 times.

"The cost of raw material price increases has shifted to car companies, taking the A00-class models with 30 kWh electricity and 300 to 400 kilometers of endurance as an example, and the price increase of battery packs is between 3100 and 3500 yuan." Coupled with the 30% reduction of new energy subsidies in 2022, the subsidy amount per vehicle is reduced by about 3400 yuan. These two items alone have made each black cat and white cat lose 7,000 yuan more. Euler CEO Dong Yudong said that the direct cost of new energy vehicles is relatively transparent, from the current market status and cost analysis, most of the standard passenger cars over 300 kilometers of losses, there may be enterprises by adjusting the financial model, the cost of capitalization, part of the cost transfer and other means to reduce the book loss, but most of the models of straight material costs are about equal to the price plus subsidies, so the loss is certain.

Lithium analysts of the new energy division of Shanghai Iron and Steel Union believe that in the operation of the industrial chain, there are still long orders, and the price of long orders is still lower than the spot market price, so there is a phenomenon of selling a loss, but not all of them are the case.

The industry believes that the impact of subsidies and chip shortages has a greater impact on small cars. According to public data, the current price range of new energy vehicles with rising prices covers less than 100,000 yuan to more than 300,000 yuan. It is worth noting that among them, models below 100,000 yuan have a higher increase, and the average price increase is about 4800 yuan. That is to say, in the face of rising costs, small cars have the weakest ability to bear pressure, and therefore the price range is the highest. At present, Wuling Motors, Geometric Cars, etc. have adjusted the price of their small cars, the price of the new Wuling Hongguang MINI EV has exceeded the mark of 50,000 yuan, and the price increase of the ex3 Kung Fu Niu model of Geometric Automobile is as high as 7,000 yuan.

From the current point of view, even Euler, who believes that the industry has good cost control capabilities and is backed by Great Wall Motors, cannot withstand the pressure of this round of cost increases. As a domestic head independent brand, Great Wall Motors has achieved the ultimate in supply chain management and scale benefits, and thus formed an efficient cost control system. "From the supplier side, the process end to the research and development end has been doing, even if it is a small point, a dollar, have been caught, never changed." Dong Yudong said. But even so, small cars have little room to explore their costs.

On the other hand, due to the acceleration of sales growth of new energy vehicles, the relationship between supply and demand of points has changed, and the current price of points has fallen sharply. With the further growth of new energy vehicle sales, the price of points will further decline. Dong Yudong said that last year's point price was 2500 to 3000 yuan / point, and it has now dropped to 500 yuan to 800 yuan / minute. The depreciation of points means that new energy vehicle companies can no longer obtain high income by selling points, which will bring greater challenges to new energy vehicle companies mainly small cars.

The A00-level market is shrinking

In the past two years, the A00-class new energy vehicle market has become popular rapidly because of its cost performance. In the new energy vehicle market in 2021, this market segment accounts for more than 30%. However, many industry insiders frankly said that for many car companies, the original intention of the development of A00-class vehicles is to meet the demand for points, and the market structure of new energy vehicles will eventually change from dumbbell shape to spindle shape.

At first, the A00-level market was a product of the subsidy policy. Since 2014, due to the subsidy policy at that time, which tended to be low mileage products, a number of A00-class cars represented by Zhidou D1, Roewe E50 and BAIC EC180 have emerged, although sales growth has been driven in the short term. However, with the increase of the subsidy policy threshold and the change of the market, such small cars have quickly been eliminated by the market. In 2019, with the listing of Wuling Hongguang MINI EV, small cars became popular again with cost-effective advantages, which also made more and more players pour into the market. Compared with the previous round, the popularity of this round of small cars lies in its aim at market demand and product upgrades. However, the re-popularity of small cars has made some low-speed electric vehicle players of lower quality also join in, resulting in uneven product quality, due to fierce competition, some companies have sacrificed performance in order to reduce costs, and the industry has always been in an unhealthy state of development.

Due to the rising cost, for small car companies with high requirements in terms of configuration and quality, their cost control capabilities have almost reached the extreme, and they are not willing to balance costs by reducing allocation and reducing quality. However, the development of small car companies is still uneven, and some companies may make some abandonment in terms of performance in order to seek downward exploration space on cost. This approach may gain market in the short term, but increases security risks while leaving the industry in aberration.

From the perspective of the industry, the current market of A00 is divided into three price ranges: less than 40,000 yuan, 40,000 to 60,000 yuan, and more than 60,000 yuan, but the quality gap of the product is obvious. Dong Yudong said that some A00-level products now have four low characteristics, including low price, low endurance, low performance and low safety. For brands such as Euler, they are reluctant to sacrifice performance and quality in exchange for the market. Faced with factors such as rising raw material prices and subsidies, Euler, who has suffered huge losses, can only helplessly stop taking orders for its black and white cats. With the increase in the cost of the entire industry again, it is a huge burden for Euler and even the entire Great Wall Motors. Because this means that the better the models sold in the market, the more they lose money. And if the price rises sharply, the market will no longer pay for small cars that rely on cost performance. However, Dong Yudong said that Euler is actively seeking solutions, actively seeking raw materials to strive for the greatest resources, and quickly realizing the delivery of existing orders.

According to the survey data of the E-Car Research Institute, among the car purchase factors of the intended users of scooters in 2021, price is the aspect that they care about the most. That is to say, such models have gained the market at lower prices in the past, but as the cost rises, it may be difficult for consumers to accept if such small cars are adjusted at the terminal. If car companies choose to self-digest the pressure of rising costs, this will make enterprises fall into the quagmire of losses, and the development of the industry will also move towards deformity. Obviously, small cars have fallen into a dilemma.

Car companies such as Wuling Hongguang and Geometric Automobile have also adjusted prices for small cars. Compared with the lower price itself, this round of price adjustment is higher, which may hit the consumer confidence of small car users to a certain extent. For users, the cost-effective advantage of small cars after the price increase is no longer prominent. In January this year, Wuling Hongguang MINI EV sales have been slashed.

A research report recently released by Ping An Securities shows that the Wuling Hongguang MINI EV launched in 2020 has greatly increased the market volume of A00. However, from the perspective of growth space, the incremental space of the A00-level market in 2022 is close to the bottleneck.

At present, the growth potential of small cars seems to have peaked. Users of small cars are generally more price sensitive, and the small car market may decline as the price of models rises. With the improvement of the maturity of the new energy automobile industry, the development of small cars will also embark on the old road of fuel vehicles and gradually be abandoned by consumers. "We realize that brands need to advance, and the waist market, including A0-level, A-class, and B-class new energy products, will rise sooner or later." Euler also found the possibility of a breakthrough in the A0 market from good cats. Dong Yudong said that with the development of the industry, he realized that only products of more than 150,000 yuan have room for profitability.

From the current market performance, the A0-level and A-class markets are also gradually rising, and the sales of good cats positioned at the A0 level have continued to rise after being listed last year, while bydir and other car companies with models of more than 100,000 yuan have also begun to squeeze the fuel vehicle market. The industry believes that the future waist market is the mainstream market for new energy vehicles.