Shanghai's auto industry may resume work, but the supply chain is still full of obstacles
Author | Wei Yuqi
Edited by | Zhao Jinjie
Source | Box Lunch Finance (ID:daxiongfan)
After He Xiaopeng and Yu Chengdong stood up and shouted, the production crisis in the automotive industry showed signs that it might be alleviated.
On April 16, the Shanghai Municipal Commission of Economy and Information Technology issued guidelines for the prevention and control of the epidemic in industrial enterprises to resume work and production, and will concentrate resources to ensure that some enterprises will give priority to the resumption of work and production, including integrated circuits and automobile manufacturing. According to media reports, Tesla's Shanghai factory is ready to resume production on April 18, and Tesla has notified employees in Shanghai to prepare for the resumption of work.
According to Song Xiaohui, deputy director of the Department of Industry and Information Technology of Jilin Province, the main engine factory, including Hongqi, has prepared to resume work in advance and will resume production in an orderly manner.
With the resumption of work and production of OEMs and suppliers, the supply shortage in the automotive industry is expected to be alleviated. However, considering the globalization of the automotive supply chain, the long industrial chain and the uncontrollable epidemic situation, the automotive industry is still unable to completely solve the problem of tight supply.
As early as 2020, the supply chain of the automotive industry showed a tense situation, and the price of upstream raw materials also soared. The current round of the epidemic has undoubtedly exacerbated the tension in the supply chain.
This wave of production suspension crisis not only occurs at home, but also in overseas markets. According to CCTV Financial Reports, Mitsubishi, Mazda and other factories in Japan have also recently announced the suspension of production.
According to Box Lunch Finance, the current production plans of various car companies have been affected by supply chain tension to varying degrees. As for the specific problem stuck in that link, car companies have expressed inconvenience to disclose.
After Weilai Automobile announced on April 9 that it would suspend vehicle production due to the impact of the epidemic, its founder Li Bin once explained to the outside world: "A car without a part cannot be produced." Affected by the epidemic in Changchun and Hebei, we had parts and components in mid-March, and we barely supported it until last week. Recently, there have been epidemics in Shanghai, Jiangsu and other places, and many partners cannot supply goods and can only suspend production. ”
Weilai Automobile's parts supply crisis was mentioned by Li Bin in the earnings call in the fourth quarter of last year, when Li Bin said that There were fluctuations in the supply of CHIPS in Weilai, specifically, the supply of high-end chips, such as NVIDIA and Qualcomm, did not fluctuate much, and the main problem was some basic chips, such as chips provided by Infineon.
Infineon's flagship products are MCUs (microcontrollers) and IGBTs (bipolar, silicon-based power semiconductors), which are key components of automotive manufacturing.
Chen Jun, a middle-level manager in the field of integrated circuits, told Bentan Finance that the current supply of MCU chips in the industry can be described as "very lacking", "The current domestic ones are not very up to standard, and they have to use foreign ones." Bentan Finance learned from dealers that at present, Infineon's MCU models are "generally in short supply", and other brands of MCUs are also out of stock.
Fang Jing, chief analyst of the electronics industry of Cinda Securities, pointed out in the research report last year that the shortage of automotive MCUs is the main reason for the cliff-like shortage of automobiles.
Infineon has also publicly responded to the problem of tight supply. Peter Schiefer, global president of Infineon's automotive electronics division, said in an interview in January that the supply problem would not be resolved until 2023.
The reason for the tight supply of Infineon chips comes from the unexpected suspension of production at the factory base, such as the local power outage crisis caused by a blizzard in Texas last April, Samsung's fab was shut down, and Infineon's factory was also affected. In addition, Infineon's Malaysia plant was also shut down due to the epidemic.
On the other hand, according to Chen Jun's analysis, the lack of production capacity in the fab manufacturer is also one of the reasons for the tight supply of Infineon chips. Infineon said in a survey in February this year that the current demand situation in the automotive industry far exceeds the supply of production capacity, especially in the pursuit of new energy vehicles, the number of chips on board has increased several times the demand for fuel vehicles, and the fabs in the industrial chain, such as TSMC and SMIC, have not had enough capacity to cope with the outbreak of demand from car companies.
According to IHS data, foreign companies such as Infineon occupy an absolute dominant position in China's MCU market, with the market share of domestic MCU companies accounting for less than 10% in 2020.
Although domestic enterprises such as Zhongying Electronics and Gigabit Innovation have begun to make continuous efforts, due to the high quality requirements of in-vehicle chips, it is difficult to pass various safety certifications, and Chinese companies are still in the catch-up stage.
In the case that foreign brands occupy most of the market share, the MCU chips of Chinese companies have invisibly lost a lot of opportunities for practical exercises, and they cannot find enough application scenarios to carry out product iterative upgrades, and it is easy to fall into a vicious circle, "insufficient technology accumulation, more investment, long cycle, and the most critical thing is that the risk is relatively large." Chen Jun sighed.
Taking Infineon's main product, MCU, as an example, it has a wide range of applications in automobiles, including body powertrain, body control, communication and entertainment systems, and safety assisted driving.
ACCORDING TO CITIC Securities data, a traditional fuel vehicle will use 70 MCUs, luxury fuel vehicles more, at about 150, new energy vehicles to use 300.
Specific to Infineon, the semiconductor division of the Siemens Group, which was developed independently in 1999. Infineon's earnings report shows that its inventory reached its lowest level in nearly three years in Q2 2021, with only 101 days of inventory turnover.
Infineon's customers include Tier1 manufacturers such as Bosch, Continental, and Aptiv, as well as car companies such as Nio Motors. At the same time, nearly 40% of Infineon's revenue comes from Greater China.
In order to get the order products one step ahead, many car companies will try their best to build a good relationship with supply chain manufacturers, such as Weilai Automobile reached a cooperative relationship with Infineon as early as 2016, which set up a team in Silicon Valley to meet the needs of new energy vehicles.
Before Nio, other car companies had already been forced to stop production due to the tight supply of Infineon.
In 2021, Volkswagen was facing some model discontinuations due to the shortage of ESP (Electronic Stability Program System) and ECU (Electronic Control Unit), and the MCU supplier of these two modules was Infineon.
Great Wall and Geely's sales fell by 20.5% and 46% year-on-year, respectively, in February this year, due to insufficient supply of Bosch ESP (Body Electronic Stability System). Just recently, Aptiv, China's largest wire harness factory, also announced the suspension of production.
According to Box Lunch Finance, there are two types of car companies that are less affected in this round of the epidemic.
First, the epidemic situation in the factory location is relatively mild, and zero-run cars belong to this category. Its factory is located in Jinhua, Zhejiang Province, where there have been no large-scale containment measures. Wang Feng, a zero-run automobile engineer, told Box Lunch Finance that it is now about 3 months to place an order for zero-run C11, and this cycle is not slow at the moment.
Second, brands that originally had small sales scale, such as BAIC's high-end new energy brand "Jihu".
"Originally, sales were not large, and there was too much inventory, so the impact of the epidemic on us was limited," said Chen Yang, a sales officer at Jihu in Jinzhong, Shanxi.
As for the reasons for the tight supply, many practitioners believe that the unconventional phenomena caused by the epidemic are the main reasons.
On the one hand, the impact of the epidemic on production and logistics has led to damage to the output of upstream suppliers. At the same time, the impact of the epidemic on automobile sales has also made car companies make mistakes in their judgment of sales, which has increased the demand for parts.
According to the China Business Daily, TSMC had reminded customers in the automotive field that after cutting orders and then adding orders, it was difficult to transfer production capacity in a short period of time, but in the end it failed to stop the cutting action. More than 60% of the world's automotive-grade chip wafers are foundry by TSMC, while the proportion of automotive chips in TSMC's revenue in the second quarter of 2020 fell from 5% to 6% to 2% to 3%.
On the other hand, the "inventory-free production method" commonly used by car companies has caused the demand for parts to soar.
This method was pioneered by Toyota and widely adopted in the industry, aiming to eliminate inventory, optimize production logistics and reduce waste through multi-variety, low-batch, short-cycle production methods.
Under the influence of the epidemic, upstream production capacity has been damaged, and car companies themselves have limited inventory, in order to hedge the uncertainty of the future, car companies have generally increased their procurement efforts.
This is also reflected in Infineon's earnings report. Its order-to-shipment ratio of 2.4 in Q3 of FY21 2021 is the highest in three years, meaning that Infineon received 2.4 times more orders than it actually fulfilled.
The suspension of production by car companies has trapped many prospective owners of new energy vehicles in the order cycle of extended delivery.
As an important city in China's auto industry, after the outbreak of the epidemic in Jilin and Shanghai, the order delivery crisis of the entire Chinese automotive industry has been further aggravated.
In 2021, the national automobile production was 26.528 million units, and according to the proportion, Shanghai Automobile production accounted for 10.68% of the share, and a total of 2.8332 million units were produced. Jilin Province's automobile production was 2.4241 million units, accounting for 9.14%, ranking third in the country. In other words, the current round of the epidemic has directly affected nearly one-fifth of the country's automobile production capacity.
After entering April, Tesla's Shanghai Gigafactory continued to postpone the resumption date due to changes in epidemic prevention policies.
In 2021, the Shanghai Gigafactory produced 484,000 cars for Tesla, accounting for 51.7% of Tesla's total global deliveries in 2021, and its shutdown means that Tesla may lose half of its production capacity, and prospective owners will have to pay longer wait times.
Based on the 2021 output of the Shanghai plant, Tesla's production orders for nearly 16,000 units have been affected in the nearly three weeks of shutdown.
The suspension of the Shanghai Gigafactory will also have an impact on Tesla's exports. According to the official data released, the export volume of Tesla's Shanghai factory in January and February was 40,500 and 33,315 vehicles, respectively, while the export volume in March plummeted to 60 vehicles.
According to Bento Finance, other new car-making forces have been delayed to varying degrees. Among them, the waiting time of Xiaopeng Automobile according to different models is also different, and a Xiaopeng Automobile salesman said that the entire Xiaopeng P5 series needs to wait for 4-5 months.
A car owner who placed an order for THE BYD Song Plus Dmi said in the BYD APP that it had waited 152 days as of April 13. Another owner who has booked a BYD Dolphin Fashion Orange has been waiting since March and has not picked up the car. Other products of the BYD Dynasty series also have the situation that the owner has waited for months and has not yet delivered.
In addition to the delay in delivery of orders, due to the price increase of lithium batteries and chips in the upstream of the supply chain, new energy vehicles have increased prices to varying degrees.
Tesla has created three consecutive moves in a week, and Xiaopeng and Ideal have also followed up with price increases. Weilai, which once insisted that it would not increase prices, also began to resist the pressure.
On April 10, NIO announced through the official APP that it will increase prices from May 10, 2022, and the starting price of ES8, ES6 and EC6 models currently on sale will be raised by 10,000 yuan.
Li Bin left a message on the post announcing the price increase in the Weilai APP, saying that the raw materials, especially the battery raw materials, had risen too much, and "the epidemic was even more unbearable." ”
Liu Ming is one of the tesla car owners affected by this wave. He had previously ordered a Model 3 high-performance version, and the indicators in his hands expired in April this year. Although he could postpone the indicator in other ways, the continuous increase in the selling price made Liu Ming start to hesitate.
After the price increase, Liu Ming could only buy at a price of nearly 370,000 yuan, spending 30,000 yuan more than the original, and needed to wait for another 4-5 months. "Some are not cost-effective." Liu Ming thinks.
As a member of The Car Buying Army in Beijing, after some comparison, Li Peng narrowed the scope of choice to Xiaopeng and Tesla, and paid deposits to these two companies respectively. Now, his balance began to tilt toward Xiao Peng.
Li Peng admitted to Box Lunch Finance that although both companies need to wait, and are increasing prices, but after comparison, tesla prices are too frequent, he identified Xiaopeng car as the final option, Tesla's order has been hung on the idle fish.
The severity of a series of problems transmitted from the tight supply of upstream has also made some car company leaders publicly ask for help. At the 2022 China Electric Vehicle 100 People's Conference, Wang Chuanfu suggested comprehensively combing the layout and production capacity of resources such as lithium carbonate, increasing mining and importation, maintaining supply and demand, stabilizing prices, and promoting the health and safety of the industry. Li Bin called for long-term interests to be taken into account in the fourth quarter of fiscal 2021 and try to avoid speculative price increases.
At present, the suggestions of the two car companies have not eased the tension, and a large number of order scalpers have been further derived from the market.
According to Bento Finance, when the consumer places an order for Tesla and pays a deposit, this order can be transferred before he picks up the car, and the closer the pick-up date, the more popular it is. This gives scalpers room to operate. Scalpers can buy orders from car owners at a higher price and then sell them at a high price to consumers who want to buy a car but don't want to wait for a long time.
Taking Tesla's 2022 Model Y after-drive version as an example, the guidance price of 291,000 yuan in December last year has now risen to 316,900 yuan. Box Lunch Finance learned that the unit price of the Model Y after-drive version is about 5,000-8,000 yuan, even if you spend 8,000 yuan from the scalper to buy orders, it can be nearly 18,000 yuan lower than the official guidance price.
When communicating with car owners, Bento Finance found that some car owners are also members of the scalper army. After the price increase, some car owners think that the cost of buying a car has become higher, and they want to sell the order in their hands and earn the difference.
There are a large number of order transfer transactions of tesla, "Wei Xiaoli" and other brands in second-hand websites such as Idle Fish and major automobile websites, of which the proportion of second-hand cars is not high, and the proportion of new car and new car orders is relatively high.
Tight upstream supply chains are the root cause of all of these problems, and sudden outbreaks have made this supply shortage more difficult to control. Fortunately, with the resumption of work and restart of the automotive industry chain in Shanghai, Jilin and other places, the tense pressure hanging over the heads of all auto practitioners may be released.
(Chen Jun, Wang Feng, Liu Ming, and Li Peng are pseudonyms)