In the era of electrification, the traditional car companies "elephant turn" of high gambling and pain

"The production and sales of new energy vehicles continued the momentum of rapid growth, and the market share reached 19.3%." On April 11, Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, said, "The strategic leading role of new energy vehicles has been further highlighted. "As new energy vehicles become a major trend in the transformation and upgrading of the global automotive industry, traditional car companies have accelerated their electrification transformation.

On April 3, BYD officially announced that it would stop producing fuel vehicles. Volkswagen Group Chief Financial Officer Arno Antlitz also revealed Volkswagen's latest strategy, more than 100 fuel vehicle lineup will be reduced by 60%. In the industry's view, the Volkswagen Group is so "crazy" to change, behind or the radical and helplessness of the elephant turn.

Dong Yang, vice chairman of the China Electric Vehicle 100 Association, believes that BYD's suspension of production of fuel vehicles is a matter of course. However, for traditional car companies, the electrification transformation is facing policy and market pressure. First, Europe and the United States have listed the "ban on combustion" timetable, and 2030 is the last red line. Second, electric vehicles are developing rapidly, and traditional car companies must respond to the general trend.

On the other hand, the transformation of traditional car companies has suffered pains. Internal constraints, transformation costs, technical challenges, industrial chain adjustments, etc. all bring unknowable impacts. Car companies will take the burden on the road, bear the pressure and ensure that the transformation is completed on time. At a time when the passenger car market is growing negatively and electric vehicle companies are still difficult to make a profit, traditional car companies will face a big gamble.

Environmental sinners? Whose interests have been harmed by the transformation

Traditional car companies have accumulated over the past hundred years to form a huge system around the internal combustion engine; and the electrification under this surging tide of change has become unstoppable, whether it comes from the urgency of survival or the urging of supervision, the electrification transformation of traditional car companies is imperative under pressure.

Transformation always has pains and differences, the key is who will bear the pain, how long to bear it, how to resolve the differences, no one can give a "progress bar". Volkswagen and Toyota understand this.

Herbert Diess, CEO of volkswagen group, claims to have led Volkswagen out of the tough situation of "environmental sinners" for 6 years and now has an ambitious electric vehicle strategy that aligns with the Climate Goals of Paris. But the union, which owns nearly half of Volkswagen, doesn't think so.

Reform is the redistribution of interests, which will inevitably hurt the interests of some people. In order to accelerate the pace of transformation, Diess has promoted drastic reforms; through layoffs and other means to reduce costs, to new energy vehicles tilted a lot of resources. At the Volkswagen Group Leadership Summit 2021, Diess invited Tesla CEO Elon Musk to attend and asked him why Tesla is more flexible.

The overly drastic move directly triggered the conflict between Dies and the union. Diess' voice and prestige within the group gradually decreased, and it has faced the crisis of impeachment by the trade union many times. At the end of December 2021, in a new round of personnel changes, Diess retained but his authority was reduced, and the CEO of Volkswagen Brand was removed.

For the Volkswagen Group, which is currently in a critical period of electrification transformation, the retention of Diss is undoubtedly the best outcome. However, this does not mean that the internal constraints of Volkswagen's transformation have completely disappeared, and how to deal with the relationship between traditional business, interest pattern and new energy vehicles is still a big test.

The Volkswagen Group's electrification transformation faces not only internal pressures, but also external competition. In 2021, the sales of volkswagen's ID. series in China did not reach 80,000-100,000 vehicles, and Volkswagen Group CEO Feng Sihan blamed the unsatisfactory sales on the unstable supply of chips and other components. The industry generally believes that the "cold" of the ID. family in the Chinese market is rooted in the fact that the public does not deeply understand the current consumption changes in the Chinese market.

PwC said in the research report that the ID. series is an excellent electric vehicle, but it is not smart enough; the Chinese market is driven by Tesla, Weilai, Xiaopeng and Ideal, and has entered the second stage of electric vehicles, that is, electric vehicles + smart cars; and Europe is still in the first stage, so the ID. series can sell well in Europe, and reflect flat in China.

Unlike volkswagen group's radicalization of electrification, Toyota's electrification transformation is relatively conservative. Toyota head Akio Toyoda, who once "shelled" electric vehicles, said that "electric vehicles are over-hyped" and "electric vehicles are neither environmentally friendly nor economical".

In fact, Toyota Motor is one of the first traditional car companies to enter this new energy track; but Toyota Motor has previously favored the layout of hybrid and hydrogen fuel cell vehicles. Japanese companies are exploring new technologies for hydrogen energy with national strength, and the Japanese government and car companies are more inclined to promote hybrid vehicles, believing that this is a more economical model.

From the perspective of the global automotive market, with the continuous reduction of costs, pure electric vehicles have become the main direction of the transformation and upgrading of the global automotive market.

In the Chinese market, Toyota, which lacks electric vehicle sales, also has to face the pressure of "double integration", and the existing HEV models are not enough to fill the negative points of fuel vehicles; the process of commercialization of pure electric vehicles and the pace of market trends are accelerating, forcing this elephant to turn around quickly.

In December 2021, at a pure electric vehicle exclusive conference, Toyota Motor released 16 pure electric new cars in one go, and further clarified the direction of Toyota Motor's electrification development.

The "fire ban red line" gets off the active and passive of the car companies

In the industry, IT is not surprising that BYD has stopped production of fuel vehicles, and bydir chairman Wang Chuanfu has repeatedly called for a total ban on the sale of fuel vehicles in public.

From the perspective of the domestic market, BAIC Group, Changan Automobile and Haima Automobile also have plans to stop selling fuel vehicles. In 2017 and 2018, the three companies announced that they expected to completely stop selling traditional fuel vehicles by 2025.

From the perspective of the international market, Jaguar Land Rover announced that it will no longer produce fuel vehicles as soon as 2025, Volvo said that it aims to become a pure electric car company by 2030, MINI and Bentley will achieve full electrification in 2030, Fiat expects to stop production of fuel vehicles in 2030, Lexus and General Motors will stop selling fuel vehicles in 2035, and Honda plans to stop selling fuel vehicles in 2040.

Different from the above-mentioned car companies who have completely clarified the full electrification or the year in which they have clearly stopped selling fuel vehicles, the domestic SAIC Group, FAW Group, GAC Group, as well as foreign Volkswagen Group, BMW Group, Audi, Mercedes-Benz, Ford Motor, Toyota Motor and other car companies have not clearly defined the timetable for completely stopping the sale of fuel vehicles, and increasing the proportion of electrification has become a more important layout.

Mei Songlin, a senior analyst in the automotive industry, believes that most models are not clearly banned on the one hand, the long-term development trend of the electric vehicle market is not clear; on the other hand, their own electric vehicle transformation is still in the early stages, and there is still a lack of fist electric vehicle products to replace the current main fuel vehicles. Cui Dongshu, secretary general of the National Passenger Vehicle Market Information Joint Association, told Shell Financial Reporter, "BYD's suspension of fuel vehicles is an independent choice of enterprises, each enterprise has production advantages, at present, ordinary fuel vehicles still have huge market demand, and the suspension of fuel vehicles is only a future choice for some enterprises." ”

Despite the different attitudes towards the ban on combustion, electrification has obviously become the development direction of traditional car companies.

From the perspective of the domestic market, the "New Energy Vehicle Industry Development Plan (2021-2035)" clearly states that by 2025, the sales volume of new energy vehicles will reach about 20% of the total sales of new cars; in addition, the "Carbon Peak Action Plan before 2030" points out that the proportion of new energy and clean energy-powered vehicles planned to increase in 2030 will reach about 40%; new energy vehicles will be further supported; at the same time, under the constraints of the double credit policy, car companies have to accelerate the transformation to new energy.

From the perspective of the international market, Guotai Junan analysis said that the 2030 targets of foreign car companies are mostly based on policy requirements and are subject to the increasingly stringent emission standards of the government.

The "Fit For 55" climate package released by the European Union in July 2021 pointed out that by 2030, the emissions of cars and vans will be reduced by 55% and 50% respectively compared with 2021, achieving "zero-carbon transportation"; in August of the same year, the United States proposed that pure electric vehicles, plug-in hybrid vehicles and fuel cell vehicles should account for half of all newly sold passenger cars in 2030; two months later, the British government announced the official implementation of the "net zero strategy". In 2030, the sale of new gasoline and diesel vehicles will be completely banned; like the United Kingdom, European countries such as Denmark, Iceland, Slovenia, Sweden, and the Netherlands have also proposed regulations or initiatives for the "ban on combustion" in 2030. In addition, the Japanese government has also proposed to stop selling new fuel-powered vehicles in the mid-2930s and fully promote the electrification of vehicles; Tokyo will complete this goal by 2030.

In addition to the constraints of the policy, the electrification layout of car companies is also based on the desire to "earn more". According to PwC research, by 2030, the profit share of traditional car companies in the global automotive industry may drop from 85% to less than 50%; this means that emerging technology areas such as electric vehicles are the main focus of many car companies seeking profitability in the future; the purpose of electrification transformation of major car companies is self-evident.

The elephant turned around by no means accidentally. According to Chiptzer, chairman of the BMW Group, "the success of an innovative technology depends not only on its industrialization under highly complex conditions, but also on the right timing." ”

Breaking the Boat: A Gamble On The Market and Profits

On the track of new energy vehicles, Volkswagen and Toyota motor are typical representatives of traditional car companies.

According to the analysis of the Consulting Research Institute of CuHK, driven by the negative growth of the passenger car market, the continuous penetration of the new energy vehicle business, the pressure on the traditional fuel vehicle business by energy conservation and environmental protection policies, the transformation of consumer demand, and the restructuring of the added value of the supply chain, the transformation has become a must for traditional car companies. In this transformation, the elephant transformation is not smooth sailing, more like a big gamble.

Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, told Shell Financial Reporter that the new forces are completely electrified from the beginning, while traditional car companies may often be too focused on the fuel vehicle business, and the feeling of changing consumer demand for electric vehicles is not so fast; the main pressure of traditional car companies may come from its original mode of thinking, and traditional car companies need to change their thinking concepts.

Mei Songlin believes that "in the era of electrification, technology, products, and business models have undergone drastic changes, and traditional fuel vehicles do not have these new capabilities, and need to change their thinking, re-learn, destroy an old world, and create a new world." He believes that the typical challenges and difficulties of traditional car companies include three electrics, software, intelligent driving and other aspects.

In the era of fuel vehicles, Volkswagen can be called the hegemon; but in the era of electrification, Volkswagen still needs to learn from it. The id.3 was initially delayed due to software issues, and the ID.series failed to achieve the expected sales volume in the domestic market.

Traditional car companies develop new energy models, and the business and historical burdens are too large. "Traditional car companies such as Volkswagen are still dominated by fuel vehicles, with Volkswagen's new energy vehicles accounting for less than 5% and Toyota's pure electric vehicles accounting for less than 0.5%. Fuel vehicles are still the main contributors to revenue and profit, and new energy vehicles account for a low proportion. Zhang Xiang, dean of the New Energy Vehicle Technology Research Institute of Jiangxi New Energy Technology Vocational College, said.

"In fact, traditional car companies do not have to blindly stop selling fuel vehicles early, and fuel vehicles also have a huge market demand, which is also the difficulty of their electrification transformation, that is, the burden of traditional fuel vehicles." Cui Dongshu said.

In the intelligent track, the scientific and technological genes of traditional car companies are also relatively weak. "For traditional car companies, the electrification transformation needs to redevelop a new platform, and traditional car companies also lack core technologies such as battery motors and intelligent software." Zhang Xiang said, "The transformation of traditional car companies to electrify needs to face many risks such as technology cannot keep up, investment can not be fully recovered, etc., such as due to the inability to keep up with the progress of intelligence, Volkswagen ID.4 has not been listed for a long time." ”

In addition, in the transformation of electrification, traditional car companies also need to bear the pressure of cost. Stellantis CEO Carlos Tavares publicly stated at the end of last year that the electrification transformation of traditional car companies will increase costs by 50%, and car companies cannot pass on this 50% additional cost to the final consumer, and the steering pressure faced by traditional car companies may threaten themselves, because the cost growth brought by electrification transformation is beyond the ability of traditional car companies to bear.

In the early stage of electrification, new energy vehicles could not create profits for car companies. In 2021, BYD will not increase revenue, and among the non-recurring revenues, the government subsidies for new energy vehicles have the highest sense of existence, close to 2 times the annual net profit. The difficulty of profitability of new energy vehicles is a common phenomenon in the industry. At present, almost all car companies that only produce new energy vehicles are in a state of loss, and the new force "Wei Xiaoli" is no exception; in 2021, Weilai Automobile lost 4.016 billion yuan, Xiaopeng Automobile lost 4.863 billion yuan; ideal automobile lost 322 million yuan.

Not only that, Mei Songlin believes that "in the electrification transformation, traditional car companies are not attractive to external investors, and transforming a traditional car company requires more patience and time than investing in a new car company." ”

To this end, last year, Honda Automobile publicly stated that in order to accelerate the profitability of electric products as soon as possible, Honda Automobile is willing to form alliances with other car companies. A few days ago, Honda and GM once again officially announced an agreement to deepen cooperation, and GM made it clear that the alliance can further dilute the cost of product research and development.

"The core of the electrification transformation of traditional car companies lies in two aspects, one is to clarify the strategic goals of new energy transformation, and the other is how much money can be invested under the strategic goals." Xu Haidong said, "After having money, we can carry out talent reserves, technology research and development and other layouts. ”

Bulls go hand in hand: There are many roads for new energy

There are still many "roadblocks" in electrification.

BMW Group said that for electrified travel, the key issue is not when the internal combustion engine will be terminated, but when the travel system will be ready to accept pure electric models; it is doomed to be empty and meaningless to talk about the full electrification of vehicles without charging piles, power stations and other infrastructure.

At present, there are still problems in the new energy vehicle market such as charging difficulties and mileage anxiety. According to the China Automobile Association, the current total number of charging piles and substations is only 1.9 million, which is difficult to meet the growing new energy vehicle market. At the same time, geographical factors still have a certain impact on the promotion of pure electric vehicles, for example, very cold areas are not suitable for pure electric vehicles.

Not only that, the current supply chain problems such as the shortage of raw materials are also obstacles on the road to electrification of car companies. Cui Dongshu believes that "whether nickel, cobalt, lithium and other raw materials can effectively guarantee the demand of 10 times and 20 times more in the future is a major issue in the development of new energy vehicles in the world." SNE Research predicts that the demand for power batteries for new energy vehicles is expected to reach 406GWh by 2023, and the supply is expected to be 335GWh, with a gap of about 18%; the supply gap will reach 40% by 2025.

From the perspective of the layout of car companies, electrification does not mean that there is only one technical route of pure electric. Zhang Xiang believes that "the situation of each car company is different, and the basic route chosen by car companies is also different, for example, Volkswagen is aiming at pure electric, Hyundai and Toyota are also laying out hydrogen fuel cell vehicles, and some companies may choose two or three technical routes at the same time." ”

BMW Group said, "In the future, different drive systems will coexist, and hydrogen fuel cell vehicles are an important supplement to the electric drive system." Yan Boyu, president and CEO of Porsche China, said that Porsche will adhere to the "three-pronged" product strategy in the future, that is, the traditional fuel vehicle is continuously optimized, and hybrid models and pure electric sports cars led by the new Taycan will be developed. Toyota China said that Toyota has always adhered to the all-round layout of electrification technology, and laid out four technical routes in HEV, PHEV, EV and FCEV.

The industry believes that in the future, the most suitable power technology routes for different products under different conditions of use will be different. Mei Songlin said that the current technical route of China's new energy vehicle market is obvious, that is, pure electric is the mainstay, plug-in/extended range is supplemented, and hydrogen energy focuses on the commercialization process; at the same time, it is also necessary to see that the technological breakthrough of a certain route and the competitiveness of innovative products can approach or surpass fuel vehicles, which will also promote the development of this technical route.

Guotai Junan analysis said that for traditional car companies, it is too difficult to let them abandon the advantages of the original fuel vehicles, so the focus of traditional car companies in the future may be the first to be placed on 48V light hybrid, hybrid models and so on.

Mei Songlin said that the competitive relationship of various technical routes is conducive to the rapid iteration and evolution of the new energy vehicle industry, and then eventually replaces traditional fuel vehicles.

How the story of electrification will be written and whether the ban on combustion will become a common reality is unknown; but under the tide, the electrification competition of traditional car companies will certainly be more exciting and diverse.

Beijing News shell financial reporter Wang Linlin Editor Xu Chao Proofreading Xue Jingning