Oil prices "broke 9", new energy vehicles collective price increase, will the 2022 car market pattern change?

Oil prices "broke 9", new energy vehicles collective price increase, how should consumers choose? Will the 2022 automotive market landscape change as a result? How long will the wave of raw material prices continue?

In response to the above hot topics, on March 25, Tencent News & Daily Economic News jointly presented a special live broadcast. Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, said that the epidemic and raw material price increases are not conducive to the development of new energy vehicles this year, but the increase in oil prices will also affect consumer choices, in addition, consumers' awareness of new energy vehicles is constantly improving, which will be a favorable factor for the market. He expects that the sales of new energy vehicles will reach 5 million units this year, compared with last year's 40% growth, while the overall automobile market is expected to be 27.5 million units, a 5% growth, relatively pessimistic.

Xu Haidong believes that this year's chips are still in a relative shortage, and the real capacity release may not be until around 2023. In response to the problem of raw material price increases, he believes that in addition to supply and demand factors, there are some capital speculating on raw materials, and even some middlemen are hoarding, artificial speculation and irrational price increases, which will bring bad impacts to the industry in the future.

Zheng Yun, global senior partner of Roland Berger and head of the Greater China Automotive Industry Center, believes that the price of raw materials must now go up, but the phenomenon of extremely high raw material prices can enter a stable state in about a year.

The following is a transcript of the dialogue (slightly edited and abridged):

Moderator: Fan Wenqing, editor-in-chief of the car channel of the Daily Economic News

Guest: Xu Haidong, Deputy Chief Engineer of China Association of Automobile Manufacturers

Zheng Yun, Global Senior Partner at Roland Berger and Head of The Center for the Automotive Industry in Greater China

Ouyang Chen, founder of automotive technology media "Electric Planet News" (new energy owner)

Senior Editor of Tencent Automobile Xia Qing (Fuel Owner)

Fan Wenqing: How do you view the current phenomenon that fuel vehicle users want to change new energy vehicles? In your opinion, what are the reasons behind the rise in oil prices and new energy vehicle prices?

Xu Haidong: First of all, let's talk about fuel prices. Global consumption and production are declining due to the pandemic, global energy isolation, and factory shutdowns. Last year, oil prices fell to negative oil prices, but with the improvement of the epidemic, production and consumption in various countries have gradually recovered, but oil processing has been relatively slow to recover, and oil prices have been in short supply, so oil prices have risen. Coupled with the recent conflict between Russia and Ukraine, fuel and gas prices continue to rise. After the oil price breaks 9, it will indeed have a great impact on the use of traditional fuel vehicles, consumers will feel that the cost is very high, and some consumers will want to turn to new energy at this time.

Regarding the price increase of new energy vehicles, the first is the issue of supply and demand. In 2019, the sales volume of new energy vehicles was only 1.2 million units, in 2020 more than 1.3 million units, and last year it became 3.54 million units, which is a very fast growth rate. New energy vehicles need power batteries, but the raw materials it uses, that is, lithium ore, anode materials, diaphragms and electrolytes, have not grown so quickly. We see some data, for example, the battery expansion cycle is about 6 to 8 months, raw materials generally take about a year and a half, its production capacity can be produced from scratch, if the lithium mine along the lake may take two and a half to three years. Therefore, this is obviously a rapid growth in demand and supply cannot keep up.

Therefore, the price of raw materials has risen sharply, according to our understanding, like lithium carbonate from the original 50,000 yuan a ton, a rise to 500,000, others may also be doubled growth, some even three times, four times, the emergence of a large gap will lead to a rise in raw material prices, which means that battery prices rise, auto companies are difficult to digest, so in the end may have to force car companies to increase prices.

In addition, we also found that there is some capital speculating on raw materials, and even some middlemen are hoarding, and we see that the original prices are long single effects, such as the next quarter or even farther away to agree on a price, a bit like futures. But last year we saw a company in Australia come up with a certain amount of raw materials to auction, I can't set the price, you auction it yourself, who wants to take it at a high price. This situation has a very big impact on our entire industry. In general, if it belongs to the normal supply and demand relationship, we can understand it, but hoarding and artificial speculation and irrational rise will have a bad impact on the industry in the future.

Zheng Yun: On the one hand, the rise of new energy vehicles is because in the raw material side of upstream batteries, whether it is lithium, nickel or cobalt, there is a rapidly growing demand, but the corresponding capacity expansion cannot be followed up in a very timely manner. In addition to the raw material side reasons, there are also overall subsidy decline factors, including the decline in the actual operation of the double integral price, superimposed on the outbreak of the epidemic and demand, which has promoted the rise of the price of the entire market.

Moderator Fan Wenqing: A survey by Tencent News shows that more than 40% of users who drive fuel vehicles on a daily basis are considering buying new energy vehicles because of rising oil prices. As a veteran electric vehicle owner, after many years of experience in the car, what do you think are the advantages of electric vehicles? Will you still buy a fuel car in the future?

Ouyang Chen: First of all, I would like to share a very interesting judgment about the price increase of this round of new energy vehicles, although there are reasons for demand and supply, but car companies have found that the nature of speculation is greater through the investigation of upstream manufacturers and mines, and the gap between demand and supply is not so large, and the bigger is from artificial speculation.

As a new energy car owner, I think the difference between new energy vehicles and fuel vehicles is quite large. You may only be able to get a new energy license plate in this city, but from a global perspective, new energy vehicles have become the main development path.

The second is the cost of the car. In fact, as a new energy car owner has a rough algorithm, if you can run 20,000 kilometers in a year, the cost of the car will definitely be lower than the fuel car, I myself also found a situation, after using the tram is not running less is running more. Another perception is that the experience of new energy vehicles is very different from that of fuel vehicles, this is a revolution of new energy vehicles, in addition to the energy revolution there is also an information revolution in it, intelligent cockpit, intelligent driving, I am now basically on the city expressway or running long distances, I will let the vehicle can drive itself when basically let the vehicle drive itself, accounting for 90% of the mileage. This is a particularly big difference in experience, and it helps you a lot in the use of time and energy. Therefore, new energy vehicle owners will rarely return to fuel vehicles, not to say that there are none, but you will find that if you change a pure electric car, in fact, you will not think about buying back a fuel vehicle, unless you have your own special feelings about such a power form, its sound, or its control.

Fan Wenqing: We know that Teacher Xia Qing is more fond of fuel vehicles, what is the reason why you don't change electric vehicles now?

Xia Qing: I very much agree with this point of view, once you drive an electric car, you can't go back, and I have such friends around me, who all say that electric vehicles are fragrant. I also represent a part of the perception of real fuel car owners, first of all, I prefer the traditional way of driving, of course, it is not that I can not accept new things, new things must have its meaning of existence, but in the process of use, it has a very realistic problem, I live in the old community, without their own parking space, the charging environment is not very convenient. Like our company is fine, the basement provides charging piles, and it is free, but many companies do not have convenient conditions, so many of us do not choose new energy vehicles because the actual conditions do not allow.

In fact, there is a point is also forced, how much oil prices rise my days still have to live, the car still has to drive, to our daily use of small displacement family cars, the daily cost of a tank of fuel difference of twenty or thirty yuan, is not unacceptable. Before the explosion of the increase may be 92, 95 oil about a dollar increase, but in fact about 6 cents increase, and oil prices are fluctuating at any time.

Fan Wenqing: We have also observed that compared with the era of traditional fuel vehicles, a new phenomenon in new energy vehicles is to resell new car orders, and even some people have made it into a business, how do you think about the practice of turning new car orders into wealth management products?

Xu Haidong: First of all, you summed it up very well and turned it into a wealth management product, in fact, this is a characteristic of the market economy, because the imbalance between supply and demand and information asymmetry, there are always people in the market economy who use this time difference to make money. If it is not illegal, in fact, there is nothing wrong with it, in the final analysis, it is a manifestation of the vitality of the market economy, and it will also stimulate people to continue to innovate.

If we were to eliminate it, it might be the planned economy. Planned economy and market economy, we hope to absorb the advantages of both, while avoiding some of its disadvantages, in fact, we are now seeing the shortage of chips and new energy battery materials, are the same reason. We say it is better to say that it is called financial management, some middlemen are hoarding, which is equivalent to making some greater profits in the process, which should be understandable, as long as it is not absolutely illegal, it should be said that it is not easy to deal with.

Fan Wenqing: Recently, some netizens have exposed Tesla's "no resale commitment letter", what do you think of this phenomenon?

Zheng Yun: On the supply side, Tesla has indeed received relatively good recognition, not only in China, but also in the global market. Of course, purely from the perspective of the details of the legal contract, I am not a professional, from the perspective of the main engine factory, I think it is hoping to protect the rights and interests of its brand advocates, of course, in the distribution end, you can also put the terms in its sales process, but to be honest, to find similar loopholes, people always have this path to do some circumvention. Of course, due to various fluctuations Tesla raised the price several times, as the main engine factory side is still more hoping to protect the interests of existing depositors and potential customers, so I do not think that this commitment letter is how on-line I, this is completely a market economic behavior, you can choose to buy, you can also choose not to buy.

Xu Haidong: The characteristics of the Tesla brand are very independent, it may be to really attract consumers, for some wavering consumers, that is, people who want to resell to make a little money in the future, Tesla is likely to let you give up. So Tesla wants to establish his own brand and attract his real fans, this kind of thing will not be a problem for real fans, will be willing to sign. There may be some impact only on those who arbitrage consumers, so in this case, I think this problem may not be a violation of rights.

Fan Wenqing: Teacher Ouyang, how do you view this situation as a senior new energy vehicle owner?

Ouyang Chen: The resale of car orders is a market behavior, and Tesla's "no resale commitment letter" is not aimed at car owners who really want to buy a car, but may still be aimed at some professional scalpers. According to my observation, Tesla has recently transferred orders on the second-hand transfer platform. One is that I want to pick up the car early, Weilai did not increase the price, he will also have a transfer order, the user wants to pick up the car early, basically there is no arbitrage to speak of, some people want to transfer, some people want to collect. There is also a kind, such as zero running, Xiaopeng has announced a price increase, the amplitude of the increase is actually not small, then there is some room for profit, but it can not be said to be a scalper, some people are prospective owners, seeing that there is an arbitrage opportunity inside, they will take this arbitrage.

In this case, I think in essence, it is still a willing to fight, a willing to suffer, since there is such a spread, you have to let people make this money, the car business is still not the same, the scattered orders are essentially a change in the will of the prospective owner, so each brand offline store will have different methods, according to our survey, there are still some ways to avoid some brand pricing problems. However, the resale of new energy vehicle orders will have a small impact on the entire market in essence.

Xia Qing: Regarding Tesla's "no resale commitment letter", I said this as a consumer, if there is this provision before I buy the car, I will think"Why not let me transfer and transfer within a year?" "If I have some financial problems that need to be liquidated, it's my freedom to sell my car. In turn, of course, I also hope that car companies will consider and avoid the so-called scalper scalping order from the source, rather than signing such a commitment letter.

Fan Wenqing: Tencent Auto survey shows that consumers are more favored by BYD, Tesla and "Wei Xiaoli", and traditional brands and luxury cars have not seen significant advantages, how to view this phenomenon? When will the penetration rate of new energy surpass that of fuel vehicles?

Zheng Yun: First, our current sensory cognition is that we feel that new energy vehicles are popular brands, including the fact that everyone pays very much attention to it may be slightly different from the traditional fuel market, but in fact, it is still two different stages of the market, and the fuel vehicle itself has reached a very stable pattern after so many years of development. As a new category, especially based entirely on these platforms developed for electric vehicles as we say, products built on this basis, and then superimposed on what we call intelligent, networked functions, including future automatic driving functions, are indeed a different category of products.

From the current point of view, for all new energy brands, whether it is a new force, or an independent brand, or a high-end brand derived from an independent brand, including some joint venture car factories, everyone has a different rhythm of the supply side of new energy vehicles, and the core customers they choose, the way they reach customers and the input of resources are different. So I think it is still a process at this stage, but I think that perhaps for the existing brands that perform better in the new energy vehicle market, one thing they must have done right is who the core customer group they define themselves is, they are more accurate to push their products to the group of people they want to buy, and they have also been recognized by this group of people, which is very practical.

Regarding the penetration rate, Roland Berger predicts that new energy vehicles will account for 68% of the overall passenger car market penetration rate in 2030, and this proportion will continue to climb after 2030. On the one hand, the OEM brand will indeed have a big wave, and we will see some more medium- and long-term brand interpretations and results. On the passenger car side, around 2027, the penetration rate of new energy will surpass that of fuel vehicles, and in the Chinese market, 2027 is the peak of fuel vehicle ownership, and then it will enter a slow downward curve.

Fan Wenqing: Judging from the questionnaire results, nearly 70% of fuel vehicle users said that they were reluctant to buy new energy vehicles because of inconvenient charging. How soon do you think this phenomenon will get better?

Xu Haidong: I think the state has now attached importance to this problem, and has issued a lot of documents on the problem of charging facilities, from the transformation of old residential areas, charging facilities into the community and so on. I think solving the problem of charging should be relatively fast, your survey shows that 70% of users are not willing to use new energy vehicles, 30% of users are willing to choose, in fact, it is about the current stage of market penetration, then by 2030-2035 new energy vehicle penetration rate will be half, then the charging problem will be improved.

Fan Wenqing: At the beginning of the year, the China Automobile Association predicted that the sales of new energy vehicles in the mainland may reach 5 million in 2022.

Xu Haidong: First of all, let's analyze the unfavorable factors in the development of new energy vehicles this year. The first is the price increase, in fact, new energy vehicles last year is a dumbbell structure, A00 and A0 will account for about 40%, A class is about 20% more, B level and C level is about 30%. This price increase is said to be more affected by cheaper models, that is, the consumer side of A00 and A0 will have a greater impact. For example, more than 200,000 cars, it is appropriate to rise a little, I am afraid that this impact will not be too big. But in general, first of all, it may have an impact on sales, and now everyone thinks that you have increased your price, is it that consumers will not buy?

Second, automobile consumption comes from the macro-economy, and we are more concerned about the impact of the epidemic and employment on consumer income, which may be the most critical factor affecting our consumers' decision to buy a car or not. The combination of these two factors is detrimental.

From a favorable point of view, the oil price after 9 yuan to refuel is some meat pain, a better car a tank of oil is 500 yuan, the electric price of electric vehicles is indeed cheap. In addition, the car is still a bulk consumer product, and the price elasticity will be relatively weak. People who are ready to buy tens of thousands of dollars of things may have a relatively poor impact on thousands of dollars, unlike other things, because this is a powerful person.

Third, we think that the market is inertia. Especially now that we have entered a stage of rapid development of new energy vehicles, consumers have begun to accept new energy vehicles, consumption habits have entered a state of growth, and even we have a rapid development momentum of buying up or not buying down, so market sales may not be said to fall because of the price increase.

Fourth, we believe that the country also has the determination and confidence to stabilize the economy, so combining these favorable factors and unfavorable factors, my personal opinion is that I seem to be more pessimistic about the overall automobile market, which is 27.5 million vehicles, a 5% increase. However, for new energy vehicles, it is still maintained the original forecast, 5 million units unchanged, about an increase of more than 40%.

Fan Wenqing: How long do you think the trend of rising raw material prices will continue?

Zheng Yun: The price of raw materials will definitely go up now, but the rise from 50,000 to 500,000 is obviously not a reasonable range, far beyond the demand side of its demand. The price of the entire raw material side is steadily upward, and it is within the acceptable range of battery factories and OEMs, and it is understandable that we provoke you that this is normal business behavior.

Because the adjustment weights of the battery factory and the main engine factory are not so much, you either say that you are making some adjustments at the material end, or that it is a breakthrough in the new technology end, or that you make adjustments in the product structure. Therefore, we believe that this unhealthy state of raw material prices should be able to enter a stable state in about a year.

Fan Wenqing: Can the chip shortage phenomenon be solved this year?

Xu Haidong: Our current judgment is that the chip is probably still in a relatively short state this year, and its real capacity release may be around 2023, so the first half of this year may be tighter, and the second half of the year may be better next year.