At the beginning of 2022, the price of power batteries rose and subsidies declined, making many vehicle companies begin to raise product prices.
In March, vehicle companies began a wave of intensive price increases. The logic behind it is that power battery products have added another wave of price increases.
What is the impact of repeated price increases on sales?
Let's explore how new energy vehicles can survive this growth pain under the prospect of electric vehicle sales in 2022 and the complete withdrawal of subsidies in 2023.
Let me start with the conclusion here:
Q2 began to increase the impact of the price shows that Q2 sales may be the same as Q1, Q3 gradually increased, Q4 impulse, new energy passenger car annual terminal sales of about 4.5 million units;
The proportion of A00 will decline somewhat, and the proportion of PHEV will be further improved;
In 2023, the cost of batteries does not decline, and subsidies continue to decline, it is difficult to maintain stable growth.
01
The cost of upstream raw material power batteries has risen
For pure electric vehicles, the cost of power batteries is the largest part of the cost of the whole vehicle, accounting for about 40% of the cost of the whole vehicle.
In past developments, the decline in the cost of power batteries is the key to driving the penetration of electric vehicles in China and the world. Technological progress, scale effect, and control material cost are the main cost reduction paths for power battery systems.
Thanks to technological progress and scale effects, the cost of power batteries is still in a rapid decline stage, which is essentially an effective support for China's new energy vehicles that have effectively supported the decline of subsidies, and have gone through a difficult period of transition from the policy stage to the market stage.
With the joint efforts of the upstream and downstream industry chain of power batteries, the power battery system will reach a low price in 2021:
Figure 1 China's power battery prices show a gradient decline
Among the prices in 2021, the price of ternary battery systems is about 775 yuan / kWh (excluding tax), down 38% compared with the beginning of 2019; the price of lithium iron phosphate battery systems is about 625 yuan / kWh (excluding tax), down 46% compared with the beginning of 2019.
By 2022, as China's power battery scale reached a new high in February, it completely pushed up the price of upstream resources. On the one hand, Europe and the United States emphasize the route of electric vehicle transformation, on the other hand, they are constantly emphasizing the safety of local supply chains, and domestic and foreign power battery companies are expanding production synchronously.
Figure 2 Global market demand opens
This is a detailed description of the "Supply Chain Expansion and Upgrading" speech we made in the electric vehicle observer before, and the expansion plan does reach a very considerable data on paper, which makes the expansion of upstream raw materials locked in very early.
Figure 3 Expansion of China's power battery industry (unit: GWh)
In the original cost structure, the four major materials account for nearly 50% of the cost of power batteries, of which cathode materials are the highest proportion of a link, the power battery companies through technical upgrading, compress their own labor and manufacturing costs to control the cost, but with the improvement of lithium, copper and aluminum and other materials, this price is difficult to control.
Figure 4 Analysis of the main materials in a battery system
1GWh lithium iron phosphate batteries require 2000-2500 tons of cathode material, while a ton of lithium iron phosphate material requires about 0.25 tons of lithium carbonate. From the microscopic point of view, 60kWh lithium iron phosphate battery, a car needs 30kg of lithium carbonate.
At present, the domestic price of lithium carbonate remains high, resulting in the high price of lithium iron phosphate, catching up with the previous ternary price, although the price of the latter is also soaring. Battery companies to the upstream resources layout, through the purchase of minerals, equity investment, signing a long-term agreement and other ways to control the amount and price of upstream raw materials, to a certain extent to offset the risk of lithium, cobalt, nickel and other mineral resources price fluctuations, but in the short term if the demand does not decline, battery prices are high.
Figure 5 The price increase of lithium carbonate and lithium hydroxide corresponds to the price of domestic 811 and lithium iron phosphate materials
02
What should be done about demand in 2022?
In the analysis done by THE NE Institute, there is one page that is very valuable. From the perspective of big logic, under the cost of 625 yuan / kWh in 2021, the marginal contribution rate of 100,000 electric vehicles is negative, and in 2022, it will face a decline in subsidies (300 km models), a broken point (from 2000+ to about 300) and a 30-50% increase in battery costs (low base battery prices mean a higher proportion of increases).
Figure 6 Comparison of marginal contribution rates of electric vehicles and internal combustion engine models in 2021
Judging from this round of price increases, this has broken the previous way of playing the Internet that enterprises subsidize consumers.
The original new forces (including Tesla), new enterprises, and some urgent transformation enterprises are currently benefiting consumers from multiple links, making consumers feel cost-effective in the consumer experience link, and at the same time actively improving the user's experience of the customer car link, prompting the user to form a positive reputation.
When the cost rises rapidly, this big logic changes, the new force to lead the big brother - Tesla needs to transfer its own costs, in the global market to bear the consumer, and in China, Xiaopeng and BYD have begun to choose to rise.
That is to say, the overall sales pattern in 2022 may start from the price increase in April, and the overall demand pattern will begin to weaken and go downstream. The current monthly insurance data is as follows:
January: 315,600
February: 238,900
The first three weeks of March: 290,000, the data for March is expected at 385,000
That is, Q1 sales of 939,000, more than double the 435,000 in Q1 2021, this start is still very good. But the situation in Q2 may be two-level differentiation:
1) At present, the original goal of Wei Xiaoli's three companies is to increase from 100,000 levels to 200,000 levels, and the sales impact at more than 200,000 levels will not be great;
2) 10-200,000, this piece of look down the impact is the largest, because the price is in the sensitive zone, according to the 60kwh per kWh increase of 2.5 gross data, this piece of general single car increased cost of 15,000, so the price is not in place, I believe that this piece of manufacturers will be very contradictory, basically rely on about 180,000 pricing;
3) Below 100,000, the design of the original 35kwh subsidized model has been unable to be realized. Only 8-10kwh of Wuling Hongguang, Ben Ben and QQ Ice Cream can survive. But as far as I know, the cost of the original low-end battery has risen a lot, and 50% of the price increase of the battery cell is not profitable, so this is only the first price increase, with the amount reaching a certain level, it may not be directly accepted (the compliance is enough to lose).
So my personal understanding is that from the perspective of Q2, Q3 and Q4 in 2022, Q2 may be about 900-1 million with Q1; Q3 will gradually increase to 1.20-1.3 million, and Q4 will rush to 1.5 million units, so the new energy passenger car will be about 4.5 million for the whole year.
Compared with 2021, the proportion of A00 will be somewhat reduced, and the proportion of PHEV will be further increased.
At present, plug-in hybrid in the first two months of the insurance data of only 132,000 vehicles, this part of the car companies to increase sales efforts, the entire proportion will gradually increase to 100,000 vehicles / month (74,000 vehicles in January, 58,000 vehicles in February), so this year's probability will exceed 1.2 million, to about 1.5 million.
Figure 7 Major models in 2022
And 2023 is our real test.
If you estimate it at 4.5 million vehicles, this year's growth is good. In 2023, if the cost of batteries does not fall, coupled with subsidies continue to decline, it will be difficult to maintain stable growth. After all, at this time, the penetration rate is already very high, the double integration strategy has completely failed, and the new energy vehicles all rely on market-oriented means to support, which is to rely on the enthusiasm of consumers for this piece.
Figure 8 Where does the purchase tax relief end? Penetration is difficult to sustain after reaching 30%.
Summary: Due to the lack of perfect consideration of key materials in the process of promoting electric vehicles in the world, the shortage of raw materials has recurred, and the high price of raw materials has restricted the accelerated penetration of electric vehicles. So, I think we have to have enough strategic patience in 2022 to wait for another balance. This is not just a problem that can be solved by simply developing lithium resources.
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