The prelude to the withdrawal of fuel vehicles was played, and many car companies clarified the timetable for suspension of sales

Recently, BYD announced the "immediate" suspension of fuel vehicles, becoming the first car company to officially announce the suspension of fuel vehicles. Not only that, BAIC Group, Changan Automobile and other car companies have also clarified the timetable for the suspension of fuel vehicles, so when will fuel vehicles withdraw from the historical stage, and what impact will the suspension schedule of fuel vehicles have on the industry?

The first "crab eater"

On April 3, BYD announced that it will stop producing fuel vehicles from March 2022 and will focus on pure electric and plug-in hybrid vehicles in the future.

Cui Dongshu, secretary general of the Association, said that BYD's move is a model for the world's car companies. BYD can already replace fuel models with plug-in and hybrid models to achieve good consumption upgrades and effectively replace international brand fuel vehicles.

"BYD's actions are worthy of recognition." Liu Zongwei, associate researcher of the School of Vehicles and Transportation of Tsinghua University and assistant dean of the Academy of Automotive Industry and Technology Strategy, said in an interview with China Business Daily that this is of leading significance for traditional car companies to strive to practice electrification under the dual carbon target.

As the world's first car company to discontinue fuel vehicles, BYD's layout seems to have a beginning. BYD sales data shows that BYD sold 740131 cars in 2021. Among them, the sales of new energy passenger cars soared by 231.6% year-on-year, reaching nearly 600,000 units. China Business Daily reporter combed BYD's 2017-2021 financial report and found that this is the first time in the past five years that its annual sales of new energy vehicles have exceeded the proportion of fuel vehicles in total sales.

Liu Zongwei believes that BYD's decision to stop production of fuel vehicles is a reasonable choice based on its own ability advantages and business structure, and this official announcement will help BYD further strengthen the brand image of its new energy vehicle companies.

"As far as BYD's business structure is concerned, the proportion of fuel vehicles is very low. Our statistics over the past few years show that BYD's electrification is the highest among traditional car companies, with a share of more than 90%, so the pace of its structural adjustment is naturally faster. In addition, unlike other car companies, the price of BYD's new energy vehicles is not much different from the price of its fuel vehicles of the same level, which also squeezes the development space of its fuel vehicles. Wang Xianbin, director of the Gaz Automotive Research Institute, further said.

Lin Xi, deputy secretary-general of the Intelligent Networking Professional Committee of the China Communications Industry Association, also said in an interview with China Business Daily that BYD's new energy vehicles have now established a leading position in the field of new energy vehicles, and under the dual blessing of brand influence and market share, "banning combustion" is undoubtedly the right choice.

When the fuel car will exit

While vigorously developing new energy vehicles has become a global consensus, "no combustion" has also been put on the agenda. As early as 2019, Hainan Province issued the "Hainan Provincial Clean Energy Vehicle Development Plan", which took the lead in the country and proposed that it will be the first pilot province to completely ban the sale of fuel vehicles from 2030.

China Business Daily reporter learned that in addition to BYD, there are currently DOMESTIC INDEPENDENT BRANDS SUCH AS BAIC Group and Changan Automobile, as well as many overseas brands such as BMW Group, Volkswagen, honda motor, etc. Announced the "ban on combustion" timetable, and the starting point of domestic brand suspension is mostly set in 2025, and most overseas car companies are after 2030.

So, when will fuel vehicles retire from the stage of history? A number of interviewed experts said that although new energy vehicles are rising rapidly, there is still a significant gap in the current sales volume of compared fuel vehicles, and traditional fuel vehicles will not withdraw from the historical stage in a short period of time.

Zhang Xiang, dean of the New Energy Vehicle Technology Research Institute of Jiangxi New Energy Technology Vocational College, believes that the main driver of the rapid development of new energy vehicles is government subsidies and related preferential policies. After the subsidy declines, the market competitiveness of new energy vehicles may weaken, and sales may face a decline.

"The key to deciding whether to withdraw from the market is whether the sum of the purchase and use costs of new energy vehicles can be basically the same as that of fuel vehicles, and the industry's estimated withdrawal time of fuel vehicles will be from 2030 at the earliest." Lin Xie further explained, "If the cost gap is not large, more consumers will be willing to choose new energy vehicles with a better driving experience." However, the current cost gap between the two is very large, especially after a new round of price increases for new energy vehicle companies. ”

BYD officially announced that the suspension of fuel vehicles is not completely abandoned, and its plug-in hybrid models still need internal combustion engines. In fact, many car companies that have announced plans to stop selling fuel vehicles basically refer to the suspension of pure internal combustion engine vehicles. Therefore, the internal combustion engine will not soon withdraw from the stage of history, but will continue to play a role in various hybrid models. Liu Zongwei believes that although the electrification of automobiles is the trend of the times, in the foreseeable future, the diversification of automobile power will be the basic pattern. Pure electric vehicles, extended range electric vehicles, various hybrid vehicles and fuel cell vehicles will occupy a place in the applicable scenarios and market segments.

"In the future, the most suitable power technology routes for different products under different use conditions will be different, for example, in very cold areas, instead of barely developing pure electric vehicles, it is better to use other solutions such as extended range electric vehicles, which is also the significance of power diversification." Liu Zongwei said.

Many challenges need to be solved

While car companies are blowing the horn of "banning combustion", there is no shortage of consumers who are not ready for this. In the interview, the reporter learned that the difficulty of charging is the main concern of consumers when choosing new energy vehicles.

The data shows that compared with the surge in sales of new energy vehicles, the increase in charging pile infrastructure in the country is relatively backward. According to the China Association of Automobile Manufacturers, from January to November 2021, sales of new energy vehicles were 2.99 million units, while the increase in charging infrastructure nationwide was only 704,000 units.

Zhang Xiang said that the current charging infrastructure is not popular and unevenly distributed. Most of the charging piles are concentrated in coastal areas and first- and second-tier cities, while the number of charging piles in the central and western regions and third- and fourth-tier cities is very small. In addition, the current power battery technology is not mature enough, and there is still a certain risk of spontaneous combustion.

"There are still many problems in the development process of new energy vehicles that need to be solved urgently, such as the construction of supplementary energy service bodies, mileage improvement and cost reduction." Wang Xianbin said.

Liu Zongwei said that although the new energy vehicles entering 2022 have continued the good momentum of last year, in the short term, the new energy vehicle industry will still be in a transition period from government subsidies to market-driven. At the same time, the increase in costs brought about by the rise in raw material prices and the problem of "lack of core" have brought great pressure to the new energy automobile industry, making the new energy vehicles with higher costs than fuel vehicles worse. If it becomes more difficult to make a profit in the later stages, companies may re-evaluate their production plans, affecting the confidence of the industry and consumers. Therefore, it is necessary to avoid such a recurrence in the industry during this period.

"In the short term, it is imperative for the relevant departments to do a good job of 'helping a horse and sending a ride'. First of all, we must continue to vigorously promote the construction of charging infrastructure, especially to solve the problems of difficult construction of charging facilities in old residential areas, and propose substantive solutions. Secondly, it is recommended to continue to maintain the purchase tax concessions for new energy vehicles in the case of financial subsidies, and announce policies as soon as possible to give enterprises and consumers a reassurance pill. Third, it is necessary to further relax the purchase restrictions and traffic restrictions. Finally, the double credit policy should maintain scientific and continuity, and provide strong support for car companies to launch new energy products. Liu Zongwei said.

In the second half of the increasingly fierce competition for new energy vehicles, it is still unknown whether China's new energy vehicles can continue to maintain their leading position. In this regard, Liu Zongwei suggested that, first, we should strengthen the basic development of key technologies, especially to be prepared to meet the transformation of the power battery system; second, we must seize the opportunity of intelligence and networking, promote and support enterprises to explore innovative practices and product landings in key technical fields such as automatic driving from the policy, and strive to seize the strategic commanding heights in international competition.

"Adhere to technological innovation and strive to enhance the core competitiveness of the industry." Adhere to openness and cooperation, and strive to enhance the level of industrial internationalization. Adhere to the bottom line thinking, focus on dealing with various security risks. Lin Nianxiu, deputy director of the National Development and Reform Commission, said that he will continue to strengthen the top-level design with relevant departments and industries, continuously optimize supporting policies, build a long-term mechanism to promote industrial development, and pay more attention to the overall improvement of quality and brand while promoting the accelerated development and growth of the new energy automobile industry.

Source | China Business Daily

Responsible Editor | Hong Yu