Oil prices rise car market differentiation, new energy vehicles collective price increase is still "fragrant"?

Is the collective price increase of new energy vehicles still "fragrant"?

(This article was first published in Zijin Business Review, authorized to be published by Zijin Finance, please indicate the source when reprinting)

Recently, Xiaopeng Automobile announced that it will increase the price, according to the instructions, after March 21, the price before the subsidy of Xiaopeng Automobile will rise by 10100-20000 yuan.

In addition to Xiaopeng, the recently announced price increases are also WM Motors, zero-run cars, and geometric cars.

Looking at the announcements of various car companies, zero-running cars adjusted the official guidance price after the subsidy of all C11 models, from March 19, the price of the luxury version increased by 20,000 yuan, the premium version and the performance version increased by 30,000 yuan respectively; from March 19, the price of geometry A Pro, geometry C, EX3 models increased by 3,000-7,000 yuan; WM Motor adjusted the price of its products, ranging from 7,000-26,000 yuan, which was implemented from March 28.

In fact, this is less than half a year, the second wave of new energy vehicles price increase, in the end of 2021 to the middle of February 2022, Tesla, Weilai, Xiaopeng, BYD, FAW-Volkswagen, SAIC Roewe, Volvo and other 16 car companies have adjusted the price of products, the price increase range of 1000 yuan - 21088 yuan.

According to the explanations of industry insiders, the "culprit" that led to these two price increases is the rise in raw material prices, and the price increase of raw materials may continue. Ideal Auto CEO Li Xiang believes that "the increase in battery costs in the second quarter is very outrageous."

Although this price increase has made some consumers who are ready to buy new energy vehicles dissatisfied, in view of the fact that oil prices are also rising, most consumers are still more optimistic about the development of the new energy automobile industry.

However, the recent price adjustment of new energy vehicle companies has also exposed that there are still many problems to be solved in related industries.

Structural overcapacity

With the increasing acceptance of new energy vehicles by consumers, the mainland new energy vehicle market has shown a strong growth momentum. According to relevant reports, from 2015 to December 2021, the mainland's new energy production and sales have ranked first in the world for six consecutive years.

The industry has broad prospects, not only attracting the entry of many capital, but also attracting the entry of a number of Internet manufacturers, in recent years, Baidu, Xiaomi, Huawei and other Internet companies have officially announced their entry into the new energy automobile industry. Not only that, affected by industry trends and emission reduction declarations, traditional car companies have also accelerated their transformation and accelerated the research and development and production of new energy vehicles.

Under the enthusiasm of capital, the production and sales of new energy vehicles continue to grow, and the production and sales of new energy vehicles in mainland China will usher in a new high point in 2021.

According to data from the Ministry of Industry and Information Technology, in 2021, the sales volume of new energy vehicles in the mainland reached 3.521 million units, an increase of 1.6 times year-on-year, accounting for 13.4% of new car sales, an increase of 8 percentage points year-on-year. The number of new energy vehicles increased to 7.84 million, accounting for 2.6% of the total number of vehicles in the mainland and accounting for about half of the global new energy vehicle ownership.

Specifically, the production and sales of pure electric vehicles were 2.942 million units and 2.916 million units, up 1.7 times and 1.6 times year-on-year, respectively; the production and sales of plug-in hybrid vehicles were 601,000 units and 603,000 units, up 1.3 times and 1.4 times year-on-year, respectively; the production and sales of fuel cell vehicles were 0.2 million units, an increase year-on-year.

However, behind the growth of new energy vehicle production and sales, there is a hidden pain point of the industry - structural overcapacity.

In the automotive industry, capacity utilization rate is a measure of whether there is overcapacity indicators, in general, capacity utilization rate between 79% and 83% is normal, capacity utilization rate of more than 90% is insufficient capacity, below 79% there may be overcapacity.

At present, a major problem in the mainland new energy automobile industry is low-end overcapacity and high-end production capacity.

According to the Association of Passenger Vehicles, 3.326 million new energy passenger cars will be sold in 2021, while the dedicated production capacity of new energy passenger cars has reached 5.695 million units, with a capacity utilization rate of about 58.4%. At present, about 10.46 million units of production capacity under construction will be put into production, mainly from new energy vehicle companies.

On the whole, in 2021, there are 11 companies with a capacity utilization rate of more than 100%, basically having opened a full three-shift system, and they have to work appropriate overtime on rest days. Among the 11 enterprises, 6 are wholly foreign-owned or joint ventures in China and 5 are local enterprises.

Thanks to the dividend of the new energy market in 2021, there are 4 new energy vehicle companies with a capacity utilization rate of more than 100%, including Tesla. There are 8 car companies with a capacity utilization rate between 80% and 100%, of which 3 are new energy vehicle companies.

Based on the above data, we can see that the capacity utilization rate is more than 80%, and there are only 7 new energy vehicle companies that remain above the normal level, and most of the remaining have the problem of overcapacity.

According to the data of Tianyancha, as of September 2021, there are 198 new energy vehicle manufacturing enterprises in the mainland, that is to say, the proportion of new energy vehicle companies above the normal production capacity is only 3.5%, and the proportion of enterprises with excess capacity is as high as 96.5%. These overcapacity new energy vehicle companies are generally small in scale and low in sales, unable to meet market demand.

Taking it a step further, the problem of low-end overcapacity will continue for some time. CCID Research Institute believes that by 2025, the total production capacity of domestic new energy vehicles is expected to reach 36.61 million units, while the market size of new energy vehicles in that year is expected to be 5.3 million units. Based on this calculation, the capacity utilization rate will still be at a low level of 14.47%.

If this structural contradiction is not guided, this problem of low-end overcapacity and high-end capacity shortage will hinder the coordinated development of the mainland new energy automobile industry and is not conducive to the high-quality development of the industry.

The market is highly competitive

Although the new energy automobile industry is now a blue ocean, as more and more players enter the track, the market competition is becoming more and more intense.

According to the data of enterprise investigation, the number of new energy automobile enterprises registered in the mainland has increased rapidly in the past three years, and there are 452,000 existing new energy vehicle related enterprises. In 2019, 52,000 new enterprises were added, an increase of 0.89% year-on-year; 85,000 new ones were opened in 2020, an increase of 62.83% year-on-year; and 180,000 new energy vehicle-related enterprises were added in 2021, an increase of 111.63% year-on-year, and the growth rate increased year by year.

Although the number of new energy vehicle-related enterprises has surged, new energy vehicles account for a small proportion of the large plate of car ownership. According to data from the National Development and Reform Commission, the Ministry of Commerce and other departments, in 2021, the number of new energy vehicles in the mainland has reached 7.84 million, accounting for 2.6% of the total number of vehicles in the mainland.

Although affected by the "zero emission" vehicle declaration and the timetable for banning the sale of fuel vehicles, the sales of traditional fuel vehicles will naturally show an upward trend in 2021.

According to Jinlianchuang data, the sales of traditional cars in 2021 reached 26.275 million units, an increase of 3.88% year-on-year. Compared with the sales volume of 3.521 million new energy vehicles in 2021, it can be seen that the sales of new energy vehicles in 2021 are only 13.4% of the sales of traditional vehicles, and the domestic market is mainly occupied by traditional fuel vehicles.

So many new energy vehicle companies are actually grabbing 2.6% of the market share. Although this share will increase in the future, the competitive pressure corresponding to the huge number of new energy vehicle companies can be imagined.

In addition, there are still some obstacles for consumers to choose new energy vehicles, after all, the development of the entire industry of new energy vehicles is not perfect, such as the construction of charging piles is seriously insufficient. According to the report of Zhiyan Consulting, the number of charging piles for new energy vehicles in mainland China in 2021 is only 1.962 million units, which is only 25% of the total number of new energy vehicles in mainland China.

How tight is the charging pile? At the end of December last year, CCTV Finance reported that winter charging is frequent, and new energy vehicle charging piles basically rely on robbery, especially those with longer car age, which used to be charged one day a day, and became two charges a day in winter, so that they had to grab charging piles every day, and even some people got up at 4 o'clock to grab charging piles.

In addition to imperfect supporting facilities, as the "brain" of new energy vehicles, the vehicle system technology is not mature enough, so once the conditions are available, traditional fuel vehicles are still the choice of many consumers.

In addition, the competitors facing domestic new energy vehicles are foreign new energy vehicle companies, not only Tesla's "technology companies", but also foreign traditional old car companies, BMW, Mercedes-Benz, Volkswagen and other car brands have announced a fully electrified route.

According to the data of titanium media, the old car companies are accelerating to seize the new energy vehicle market, and although the domestic independent brand car companies (traditional independent and new car-making enterprises) have been in a dominant position, the overall market share has shown a downward trend, which has dropped from 96% to 73%, a 5-year decline of about 24%.

Power battery resources are in short supply

The development of new energy vehicles has promoted the demand for lithium batteries, lithium iron phosphate, nickel cobalt manganese oxide and other types of power batteries to increase significantly.

Previously, Deloitte Prospective Industry Research Institute predicted that the compound annual growth rate of lithium batteries in 2021-2025 will reach 34.4%, and in 2025, the overall global demand for lithium batteries will reach 1223GWh, accounting for 75.2% of power batteries.

The growth demand for new energy vehicle power batteries has also driven the growth of related metal demand. China Environment News predicts that in 2025 and 2030, global (lithium, cobalt, nickel, manganese, etc.) metal demand will rise by 6.1 times and 11.2 times respectively compared with 2020 metal demand.

However, at present, these metal resources are very limited, and their supply is not enough to meet the needs of the future new energy automobile industry. The lack of power battery resources has made many industry practitioners and relevant experts feel anxious. Stanley Whitingham, the "father of lithium batteries" and winner of the 2019 Nobel Prize in Chemistry, expressed extreme concern, and he even pessimistically predicted at the Future Energy Development Forum at the World's Top Scientists Carbon Conference last November, "In 5 to 10 years, the raw materials currently used to produce lithium-ion batteries will be exhausted." ”

The situation on the mainland is even more dire. Because the mainland has the world's largest consumer market, but also the world's largest new energy vehicle market, in the past 5 years, the Chinese market power battery demand has ranked first in the world, in 2020 China's power battery terminal consumption demand accounted for 44.1%, followed by Europe accounted for 30.4%, the United States accounted for 19.7%.

According to the report of China Merchants Bank, the global proportion of lithium resources in the mainland is only 6%, mainly lithium brine. According to the Ministry of Natural Resources, the continent's proven base reserves of cobalt resources in 2019 were 77,300 tons (slightly different from USGS data), accounting for 1.10% of the world's total reserves.

Limited resources coupled with growing demand, lithium, cobalt, nickel and other power battery raw materials have risen in price.

According to Benchmark Mineral Intelligence, an organization that tracks the global battery supply chain, from the beginning of January 2020 to mid-January 2022, the prices of battery-grade cobalt, nickel sulfate and lithium carbonate rose by 119%, 55% and 569%, respectively. Taking ternary material batteries as an example, the cost of cathode materials containing metal elements such as lithium, cobalt, and nickel accounts for nearly 50% of the cost of battery materials. In general, the cost of cathode materials accounts for about 30%-40% of the cost of lithium batteries.

The price of lithium batteries is also rising, and data from market research institute IHS Markit shows that in the late 2021, the price of lithium-ion batteries rose by about 10%-20%, while the increase in raw material lithium salts reached about 400%.

Industry insiders analyzed that due to the increase in the price of resources, the price increase of automobiles is still secondary, and the most important thing is that if the key resources are in the hands of others, they will become an obstacle to the development of the mainland new energy automobile industry and restrict the development of the entire industry.

There is no doubt that the double carbon target and the green development strategy indicate that the development of the new energy automobile industry is the trend of the times, but without solving the above problems, it is difficult for the overall development of the industry to achieve a leapfrog breakthrough.