The tide of price increases "engulfed" micro-electric vehicles

Economic Observer reporter Pu Zhenyu as the biggest "hero" to support the sales of new energy vehicles in 2021, micro-electric vehicles have been hit by "critical hits" after entering 2022.

According to the data of the Association of Automobile Associations, the sales volume of new energy vehicles in China in January-February 2022 was 765,000 units, an increase of 1.5 times year-on-year, but the year-on-year growth rate of micro-electric vehicles was only 85%, which was far lower than the overall level of the market, and far lower than the growth rate of micro-electric vehicles in the same period in 2021 and the growth rate of the whole year of 2021.

The slowdown in sales growth is not unrelated to the rise in the price of micro-electric vehicles. From January to February this year, new energy vehicles ushered in a round of price increases, involving many micro-electric vehicles. For example, the price of zero-run T03 increased by 9100 yuan, Reading mango increased by 3000 yuan, and Wuling Nano increased by 3000 yuan. In addition, Chery Small Ant, SAIC Coleway, Sihao E10X and other models, although the official did not announce the price increase, but the terminal dealer level of the preferential treatment was basically canceled, which in the eyes of some consumers is equivalent to a disguised price increase. "Compared with other models, micro-electric vehicles face greater sales pressure after the price increase." Qi Haiyan, president of Beijing Teyi Sunshine New Energy, told the Economic Observer that the price increase of new energy vehicles is mainly due to the rising cost of lithium batteries and various raw and auxiliary materials, and car companies have to conduct price cost transmission. Since micro-electric vehicles mainly rely on cost-effective and low-price competition to attract users, price increases may lose some buying groups.

It is worth noting that the price increase tide of micro-electric vehicles this round has further expanded momentum, and even the best-selling model in the market, Wuling Hongguang MINIEV, is also involved. On March 23, SAIC-GM-Wuling announced that due to the comprehensive factors such as the continuous sharp rise in upstream raw material prices, the official guidance prices of Wuling Hongguang MINIEV series models, Wuling NanoEV models and Baojun KiWiEV models will be adjusted, ranging from 4,000-8,000 yuan.

At the beginning of this year, the Association predicted that the cumulative sales of new energy passenger vehicles in China will exceed 5.5 million in 2022, and the market penetration rate will reach about 25%. However, in the case of new energy vehicles rising in price and micro-electric vehicles becoming more and more expensive due to severe cost pressures, can the expected target of new energy vehicles in 2022 be achieved?

Or drag down the new energy vehicle market

In 2021, China's new energy vehicle sales reached 3.521 million units, an increase of 1.6 times year-on-year, and micro-electric vehicles are the most important engine of this round of growth. In the pure electric passenger car market in 2021, micro-electric vehicles are the highest sales volume among all levels of models, accounting for 36%, the highest point in the past three years (27% in 2019 and 33% in 2020).

Since 2022, due to the sales growth rate lagging behind other levels of electric vehicles, the market share of micro-electric vehicles has begun to decrease, accounting for 33% in January 2022 and only 28% in February, not only down 5 percentage points month-on-month, but also down 9 percentage points from February 2021.

Behind the decline in market share is the huge cost pressure faced by micro-electric vehicles. At present, the price of raw materials for electric vehicles continues to rise, and small and micro electric vehicles are also under the greatest pressure of production and marketing due to their highest cost sensitivity.

Specifically, as the main raw material of power batteries, lithium, cobalt, and nickel have all seen a sharp increase in prices. In the middle of March this year, the comprehensive quotation of the battery-grade lithium carbonate market was 480,000 yuan -520,000 yuan / ton, while the price of battery-grade lithium carbonate in early 2021 was only 50,000 yuan / ton. At the same time, cobalt prices have also risen from less than 300,000 yuan per ton at the beginning of last year to nearly 600,000 yuan per ton in March this year, nearly doubling.

The frequent price increases of raw materials are eventually transmitted to new energy vehicles, and new energy vehicles have recently "risen". Among them, some enterprises have been difficult to bear. Great Wall Euler previously chose to suspend the production of two micro-electric vehicles, black cat and white cat, because of "selling one and losing ten thousand". At present, zero-run cars and Nezha automobiles, which use micro-small electric vehicles as the main sales force, are also facing major pressure.

Under tremendous pressure, where will micro-electric vehicles go? Will the overall new energy vehicle market be affected? In the view of industry experts, the impact of the current pressure on the new energy vehicle market is still controllable.

Cui Dongshu, secretary general of the Association, told the Economic Observer that the prospects for the new energy vehicle market this year are still relatively optimistic, and the sales volume in January and February has exceeded the expectations of the Association, and it is too early to talk about lowering the sales target. But at the same time, he also proposed that if the price of power battery raw materials continues to rise in the future, the association will adjust the forecast sales of new energy vehicles throughout the year according to the actual market conditions.

"(The pressure on micro-electric vehicles will definitely have an impact on the market market), but it will not interrupt the rapid growth of new energy vehicle sales." Qi Haiyan believes that at present, new energy vehicles are in the "incremental penetration" stage, after reaching a penetration rate of 20%, sales will increase faster, technological innovation and product iteration upgrades are very fast, product prices are also easy to rise, and the overall impact of price factors on sales should not be too obvious.

It is yet to get rid of policy dependence

In addition to the pressure of rising raw material prices, micro-electric vehicles are also facing the challenge of changing the price of new energy vehicle credits.

At the beginning of March this year, China Automobile Data and other units jointly released the joint research results of the 2021 new energy vehicle credit price prediction: the forecast for the transaction period from January to December 2021 is 2600-2900 yuan / min, and the forecast for the trading period from January to September 2022 is 1000-1400 yuan / min. This means that only half a year later, the agency's forecast of the price of new energy vehicle credits has plunged sharply. "Last year, the value of points was about 2500 yuan / point and above, and the lowest was about 2350 yuan / point, but because the sales of new energy vehicles increased by 160% last year, so there are more and more points, and this year the point value has only been 500-800 yuan a point." Dong Yudong, CEO of the Great Wall Motor Euler brand, recently revealed in an interview with the Economic Observer and other media.

Some industry analysts believe that in recent years, most of the various types of micro-electric vehicles on the market are small profits or unprofitable, and some are even loss-making. The reason why car companies are also willing to launch such models is because they value the points of new energy vehicles.

Caitong Securities Research Report said that according to the cost price estimates disclosed by various parts suppliers in the market, the gross profit margin of Wuling Hongguang MINIEV may be only 2%-3%. However, Wuling Hongguang MINIEV contributed a lot of revenue to SAIC at the "double integral" level, not only offsetting the negative fuel points of SAIC Volkswagen and other companies, but also earning 300-400 million yuan by selling new energy vehicle credits.

Now, with the reduction of the price of points, the enthusiasm of car companies to lay out the micro-electric vehicle market may be hit. In fact, looking back at the development of micro-electric vehicles in the past decade, it can be found that the market segment of micro-electric vehicles has always been more affected by policy factors than market factors.

The boom in micro-electric vehicles dates back to after 2013. In September 2013, the four ministries and commissions jointly issued the "Notice on Continuing to Carry out the Promotion and Application of New Energy Vehicles", and the scope of subsidies for new energy vehicles was moved from pilot to national, and the scope of promotion was changed from the public domain to the private sector, thus opening the beginning of large-scale subsidies.

Due to the low threshold of the subsidy policy at that time, almost all pure electric vehicle models can get higher subsidies, which attracts a large number of capital in the industry to produce new energy vehicles, of which the micro-electric vehicle with low research and development and manufacturing costs is the "fragrant food" in the eyes of various enterprises, and the market has emerged such as Zhidou and Kandi, which once produced and sold two-year-old micro-electric vehicle enterprises.

According to the data of the Association, in 2017, the sales of pure electric passenger cars were nearly 449,000 units, of which micro-electric vehicles sold more than 277,000 units, accounting for 62%; in the top ten pure electric vehicle sales list in 2017, as many as seven models were micro-electric vehicles.

However, with the adjustment of the mainland's new energy vehicle subsidy policy, the fate of micro-electric vehicles has taken a turn. In 2018, the mainland's new policy of subsidies for new energy vehicles, with the "mileage" as the benchmark, the shorter the mileage, the greater the subsidy for models with a cruising range, of which models with a range of less than 150 kilometers directly canceled the subsidy.

This is a fatal blow to micro-electric vehicles with low range. In June 2018, when the subsidy new policy was officially implemented, sales of micro-electric vehicles were 16,700 units, down 25% year-on-year. By 2019, the market share of micro-electric vehicles has dropped to a freezing point of 27%.

In recent years, with the "double points" policy launching mandatory assessment and trading, micro-electric vehicles have ushered in a recovery period. According to the data of the Association of Automobile Manufacturers, the market share of micro-electric vehicles increased from 27% in 2019 to 33% in 2020, and reached 36% in 2021, an increase of 9 percentage points in just two years.

Yan Jinghui believes that A00-class (micro) electric vehicles must get rid of the development model of relying on policy factors for revenue. Trying to take the high-quality, personalized product route to meet the needs of diversified markets may be a direction worth exploring. But in any case, A00-class electric vehicles can not maintain too high a market share in the future, and A-level or above should be the mainstream of the market.

Objectively good for low-speed electric vehicles

From the perspective of the evolution of the overall automobile market, with the continuous upgrading of consumption, those "low-cost and low-quality" models are always the first to be eliminated. In the era of fuel vehicles, chery QQ, BYD FO and other popular small cars have actually disappeared in the long river of history. However, with the promotion of new energy vehicles, such models have "resurged". Due to policy factors, "big ups and downs", so that micro-electric vehicles have been questioned by "not meeting the real needs of the market".

In fact, there is a class of micro-electric vehicles, which have always relied on the promotion of market demand to develop and grow. That is the low-speed electric car known as the "old man's music". Because they have not yet obtained a formal status, low-speed electric vehicle manufacturers cannot obtain new energy credits or subsidies, and such products have been growing barbarically for a long time. Statistics show that the annual output of low-speed electric vehicles is about one million, and its sales are for the vast fourth- and fifth-line sinking markets in the country.

However, due to the low safety of low-speed electric vehicles themselves, frequent traffic accidents, they have been strictly regulated by policies in the past many years. Around 2014, regular car manufacturers launched a large number of micro-electric vehicles, in addition to being encouraged by subsidy policies and credit policies, another big reason is to see the opportunity to "replace low-speed electric vehicles".

Low-speed electric vehicles have been hit, and regular manufacturers can fill the gap in the millions of markets, which is an important market logic for the development of micro-electric vehicles. In recent years, most of the new energy vehicle activities led by national ministries and commissions to go to the countryside are small and micro electric vehicles with affordable prices, such as the Rongguang electric vehicle, the new Baojun E300, and the Euler White Cat in the first batch of selected models.

But with the regular micro-electric vehicles due to cost squeeze and the cost performance is no longer available, will the low-speed electric vehicles that still have price advantages make a comeback? In this regard, Cui Dongshu told the Economic Observer reporter: "At present, the price of lithium battery raw materials continues to rise, which is objectively a positive for low-speed electric vehicles, because a large number of low-speed electric vehicles use lead-acid batteries. ”

According to the data, more than 90% of the low-speed electric vehicle manufacturing enterprises are informal "small workshop" enterprises, with many brands, uneven product quality, and the average price is less than 30,000 yuan, which is lower than the micro-electric vehicles produced by regular automobile enterprises.

At the same time, the policy is also continuing to promote the upgrading of low-speed electric vehicles. In 2021, the Ministry of Industry and Information Technology revised the "Technical Conditions for Pure Electric Passenger Vehicles", adding technical requirements for micro low-speed pure electric passenger cars. The national mandatory standard "Technical Conditions for Four-Wheel Low-speed Electric Vehicles" proposes that low-speed electric vehicles will be allowed to be used in specific areas.

Low-speed electric vehicles that meet the requirements of technology and environmental protection may regain the positions they once lost. In this regard, Qi Haiyan told the Economic Observer reporter, "The consumer group and consumption power of 'Old Man Le' are limited after all, can not become the main group, there should be a certain market in the county townships, but in the eyes of young consumers, in the consumption field such as urban travel, the (regular) electric vehicles that can be licensed will still be the mainstream." ”