The new energy business of traditional car companies loses money, either because of technical problems or because the scale is too small; and if the new forces do not go up in quantity, they do not want to make a profit.
Author 丨 Huang Yaopeng
Edited 丨tian grass
Produced 丨 Automan Media
March is the "earnings month" of car companies, and most listed car companies will release the previous year's results in this month.
Because the 2021 fiscal year cycle is from April 1, 2021 to March 31, 2022, Japanese companies' 2021 financial reports will be released after May. In this article, Automan adds the data of the first quarter of 2021 to the last three quarters of Japanese companies to form a natural year, which is convenient for horizontal comparison.
The Russo-Ukrainian War broke out in February 2022 and therefore had no impact on FY2021. In 2021, chip shortages, raw material price increases, repeated epidemics, and increasingly aggressive new forces, increasing pressure on the transformation of traditional car companies, a variety of negative factors superimposed, public opinion once thought that the 2021 financial report, will be generally dismal.
In mid-to-late March, the financial reports were heavily bombarded, only to find that the results were very different from the forecasts. All multinational first-tier car companies, without exception, have greatly improved their finances and are almost all profitable. Even if sales are in double digits compared to 2020, profits are still rising.
1
Old business raises new business
Automakers whose revenues grew more than double digits were: Volkswagen ($274.7 billion, up 12.3%), Toyota ($262.36 billion, up 16.3%), Strandis ($167.2 billion, up 14.0%), BMW ($122.1 billion, up 12.4%), Hyundai ($94.35 billion, up 13.1%), Nissan ($73.73 billion, up 13.1%), Kia ($56.05 billion, up 18.1%), Tesla ($53.823 billion, up 71%), Ferrari ($4.69 billion, up 23.4%).
Automakers with single-digit revenue growth include General Motors, Mercedes-Benz, Honda, Renault, Volvo, and Ford.
All of the above car companies have profit growth of more than 10%. Among them, the profit growth of more than three digits of the car companies are: Mercedes-Benz (340%), Ford (300%), Tesla (227%), BMW (207%), Hyundai Motor (178.9%), Kia (145%), Volvo (138%), Honda (100.5%).
At the same time, car companies with profit margins of more than 10% are: Ferrari (25.2%), Mercedes-Benz (12.7%), BMW (12.1%), Tesla (12.1%), Strantis (11.8%), General Motors (11.3%), Toyota (10.4%).
As can be seen from the above figures, in fiscal 2021, although OEMs are clamoring to be forced to cut production and stop production, this is more like putting pressure on suppliers. They have encountered unprecedented good years, and one by one they have made a lot of money.
For profit growth, most earnings reports write in the same way: cost reduction, efficiency improvement, etc.
In fact, OEMs have also opened the door to a new world. They were pleasantly surprised to find that drastically reducing the "cai version" of models, concentrating on high-profit models, increasing prices, engaging in pre-sale systems, and taking advantage of the shortage of supply (if not deliberately creating shortage information), instructing stores to increase prices unscrupulously can quickly increase profit margins.
But at the same time, for the electric vehicle business, the above car companies, except for Tesla, only account for sales, boast of sales growth, and never mention the benefits of the electric business. According to GAAP accounting principles, in addition to a company like Ford that explicitly separates the traditional business and the new energy vehicle business, it is also possible not to calculate the income of the new energy business segment separately.
Obviously, the electric vehicle business of first-line car companies is at a loss, selling one and losing one. For traditional car companies, it is now to use the old business to feed the new business.
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It is difficult to make money in new energy
If you examine the new forces that only have new energy products, you will find that except for Tesla, most of them are losing money, and some small profits are winning.
The sales volume of "Wei Xiaoli" in fiscal 2021 exceeded 90,000 vehicles. The revenue of "Wei Xiaoli" was 36.1 billion yuan, 21 billion yuan and 27 billion yuan respectively, while the net loss was 4 billion yuan, 4.86 billion yuan and 320 million yuan, respectively. Fortunately, the three cash reserves are around 50 billion yuan, and there is no danger in the short term.
BYD, which has just stopped its fuel vehicle business, will sell 140,000 fuel vehicles and 600,000 new energy vehicles (including DM models) in 2021; revenue will reach 216.1 billion yuan, up 38% year-on-year; net profit will only be 4 billion yuan, down 34% year-on-year, and the profit margin will be only 1.8%; the attributable profit will only be 1.255 billion yuan, down 57.5% year-on-year.
BYD's explanation is that it spends too much money, and research and development expenditures, sales expenditures and capital expenditures are all growing. It is also true that in 2021, BYD's R&D expenses were 10.63 billion yuan, an increase of 24% year-on-year; sales expenses were 6.08 billion yuan, an increase of 20.3% year-on-year; and management expenses were 5.71 billion yuan, an increase of 32% year-on-year, which is said to be caused by the increase in employee compensation.
There is another important factor that BYD did not talk about, that is, the "non-recurring profit and loss" increased by 510 million yuan in 2021, which is caused by the decline of subsidies. Even so, subsidies in 2021 are close to 6 billion yuan. Without subsidies, BYD would lose a lot.
Although the absolute value of BYD's research and development is high, it accounts for less than 5% of revenue; and "Wei Xiaoli" is more than 10%, of which Xiaopeng Automobile is as high as 19.6%. However, rather than saying that "Wei Xiaoli" research and development is high, it is better to say that the revenue is too low and the dilution ability is low, resulting in no profit.
3
Proven standards
BYD sold 600,000 new energy vehicles, but the profit margin is so pitiful, what is the reason?
Before interpreting, let's look at Tesla, the only new energy vehicle company with a profit margin of more than 10%. Tesla's gross profit margin of 26.5% and net profit of 14% have been aligned with the profit margins of the aforementioned first-line car companies. From the data point of view, Tesla is the only one that can achieve the same level of new energy profits as fuel vehicles.
This shows that both BYD and Wei Xiaoli are in the early stages of the new energy business (although they are different from each other), and Tesla's new energy business is relatively mature.
What is business maturity? Quite simply, the product is mature, the supply chain is mature, and the business path is mature.
Now Tesla's main products are two, Model 3, Model Y. In 2021, Tesla produced and sold 930,000 vehicles, model 3 and Model Y produced a total of 906032 vehicles, almost doubled compared with 2020; Model S and Model X produced a total of 24,390 vehicles, delivered 24,980 vehicles, an average of only 2,000 vehicles per month, accounting for 2.6% of total sales, not counting the volume.
Model 3 and Model Y are on the same platform, and Tesla now points to a platform to survive. The more products born on the same platform, the lower the marginal cost. The less the amortization of the platform and the cost of fixed assets on each vehicle, the lower the cost of the bicycle. At the same time, it also promotes the simplification of materials, production processes, and manpower training, and can also reduce costs.
In 2015, Tesla sold just over 50,000 vehicles worldwide, all supported by the expensive Model S and Model X. Tesla was also questioned by investors as to why it lost money every year, and also found a reason for Tesla, saying that 50% of the revenue was given to battery suppliers, that is, Panasonic. The operating costs of the joint venture gigafactory between the two sides ate all the profits.
But the root cause is that Tesla must rely on these 50,000 vehicles, amortizing all of its R&D and fixed asset costs, including the constant complaining Panasonic (Gigafactory). And the cheaper Model 3 and Model Y that had not yet been delivered at that time, even if it was a single car, the amortization cost was less than that of the Model S and Model X.
The answer is to solve the cost problem of the supply chain. Tesla ran to China, the battery has made one supply, two supplies, three supplies, Panasonic did not follow at all. The reason is that Panasonic can't do the domestic supplier in terms of battery cost, including LG's production capacity in China. The same is true of other suppliers, Tesla is basically replaced by domestic suppliers. Coupled with land and capital, the production cost is pulled down at once.
The business path needless to say, the car is sold to this part, the supermarket show + direct sales + self-built public pile road, Tesla is not the first to do, but the first to carry it forward and adhere to the end of the manufacturer.
Byd's new energy production has also reached 600,000 vehicles, why does the amortization capacity look weaker than Tesla?? There are both favorable and unfavorable conditions.
On the plus side, BYD itself is its own battery supplier. Mastering the supply chain itself strengthens its ability to control costs and secure supply.
But the price is that it has to bear the construction costs of the battery production line, so Fordy Battery seeks battery export, rather than just maintaining a large customer of the parent company. This is the cost of the battery production line after the output goes up, and we must find a way to amortize the battery production line.
On the downside, BYD's cars can't sell for a price. The unit price of BYD's products is undoubtedly going up (the average unit price in 2021 is about 158,000 yuan), but there is still a double gap with Tesla's price of more than 300,000 yuan.
We must not forget that the first-line manufacturers who make a lot of money in 2021 are taking the opportunity to strengthen the lucrative high-end products, abandon the low end, and get "sales fall but profits increase significantly".
On the basis of the scale that already exists, high-end models have stronger profitability than low-end models, although it seems like nonsense, but the balance of scale and unit price, under the action of external forces in 2021, has been generally pinched for the first time.
Moreover, compared with Tesla, BYD's product line is too much and too messy. BYD recognized this and tried to streamline it into the Ocean, Dynasty series, and stopped the fuel vehicles that were not very profitable, but the technology platform and models were still too complicated. This leads to the complexity of production processes and the high costs associated with production control.
BYD is also expanding, and is said to be confident of selling 1.5 million vehicles in 2022, which are basically new energy vehicles. If achieved, amortization would certainly be significantly reduced.
If according to the "maturity standard", in the short term, BYD is more profitable than "Wei Xiaoli".
The biggest problem of "Wei Xiaoli" is not that the investment in research and development is too high (the proportion is indeed high, and the relative volume is difficult to continue to be high), but that it must be expanded and sold. Stretching high-end, the amount can not go up, there is no way out.
From this point of view, Xiaopeng Automobile and Ideal Automobile, which are relatively financially severe, are actually closer to profitability. Weilai, on the other hand, is trapped by its brand image and does not want to lower prices and develop low-end products (less than 200,000 yuan).
From this point of view, the new energy business of traditional car companies loses money, either because of technical problems or because the scale is too small.
If the amount does not go, don't think about profitability, Ferrari's route can not be learned, after all, the market's ability to accommodate supercar brands is too limited. This is the immature side of the new forces.
The new forces should spare no effort to expand the scale, and the amount has gone up, which is much more important than the brand image of the virtual head. Perhaps, it is more conducive to the brand image.
If there are new energy profiteers in 2022, they must follow the "mature standard".
In this way, the penetration rate of the new energy market continues to go up, reaching 30% of the first line, and a number of car companies that use new energy to make profits will appear. If the number of new energy vehicles of traditional car companies is faster (such as Volkswagen), it is more likely to make a profit than the new forces.
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