(Report Producer/Author: Hualong Securities, Zhan Yunming, Ji Zhiqi)
1. The sales volume of new energy vehicles showed a leap forward growth, and the penetration rate increased significantly
Global sales of new energy vehicles have increased significantly, and the proportion of pure electric vehicles has gradually increased. In 2021, global sales of new energy vehicles were 6.75 million units, an increase of 108% year-on-year, and the penetration rate reached 8.3%, an increase of 4.1 percentage points. Among them, the global sales of pure electric models were 4.793 million units, an increase of 111.3% year-on-year, accounting for 71% of new energy vehicles, an increase of 1 percentage point. According to the sales data of new energy vehicles in the European and American markets, the total sales volume in Europe reached 2.263 million units, an increase of 65.7% year-on-year, and the penetration rate reached 19.2%, an increase of 7.8 percentage points. Pure electric models sold 1.218 million units, an increase of 63.3% year-on-year, accounting for 53.8% of new energy vehicles. By region, the United Kingdom 305,000 units, up 74.1% year-on-year, Germany 682,000 units, up 72.7% year-on-year, France 303,000 units, up 63.2% year-on-year, ranking among the top sales of new energy vehicles in Europe. In the United States, new energy vehicles sold 670,000 units in 2021, an increase of 101.3% year-on-year. The penetration rate reached 4.3%, an increase of 2.1 percentage points. Among them, pure electric vehicles contributed 490,000 units, an increase of 88.4% year-on-year, accounting for 73.2%.
The European Union passed the Fit For 55 act, proposing that carbon emission standards from 2030 will be reduced by 55% from 2021 and by 100% from 2035, that is, zero emissions of vehicles will be achieved from 2035 and a comprehensive transformation of vehicle electrification will be realized. In August 2021, Biden signed the Executive Order on Strengthening U.S. Leadership in Clean Cars and Trucks, which sets a target of 50% of U.S. emission-free vehicle sales by 2030, which will significantly stimulate the U.S. new energy vehicle market into the fast lane. In this process, the share of new energy electric vehicles in the European and American markets will gradually increase, according to ACEA forecast data, in 2022, the sales of new energy vehicles in the European and American markets are expected to reach 4 million, global sales are expected to reach 10 million, and the penetration rate is expected to exceed double digits.
China's new energy vehicle sales lead the world, and the pace of automobile transformation to new energy has accelerated significantly. According to the China Association of Automobile Manufacturers, China's total automobile sales in 2021 were 26.275 million units, an increase of 3.8% year-on-year; new energy vehicle sales were 3.521 million units, an increase of 1.59 times year-on-year, and new energy vehicles contributed 9 percentage points to the year-on-year growth rate of passenger cars. Among them, the pure electric model China also led the world with nearly 3 million units in sales, an increase of 172% year-on-year. In terms of penetration rate, the penetration rate of new energy passenger cars continued to increase, with the penetration of new energy vehicles reaching 13.4% in 2021 and exceeding 20% in September, while the penetration rate in 2020 was only 5.4%. China's new energy vehicle sales account for 50% of the global new energy vehicle market, new energy vehicles have achieved a substitution effect on the fuel vehicle market, and pulled the pace of automobile acceleration to new energy transformation, the industry as a whole showed a rapid development trend. According to the "New Energy Vehicle Industry Development Plan", it is expected that by 2025, the proportion of new energy vehicles will reach 20%, and we expect that the annual sales of new energy vehicles in 2022 will be expected to exceed 5 million, and the penetration rate is expected to reach 20%.
According to data from the Association of Passenger Vehicles, the wholesale sales of new energy passenger vehicles reached 412,000 units in January 2022, an increase of 141.4% year-on-year and a decrease of 18.5% month-on-month. Among them, pure electric vehicle sales were 333,000 units, an increase of 130.4% year-on-year. The main reason for the continuation of growth in January is demand-driven, Tesla, BYD, Shangtong Wuling and other high-quality electric vehicle models continue to increase, while because traditional fuel vehicles are affected by chip shortages and most car companies give priority to ensuring the supply of new energy vehicle chips, so that new energy vehicle sales remain. The reason for the month-on-month decline was mainly due to the repeated impact of the Spring Festival holiday and the epidemic.
From the perspective of wholesale data of car companies, there were 11 companies with wholesale sales of more than 10,000 vehicles in January, a significant increase of 6 over the same period, of which: BYD 93,000, Tesla China 60,000, SAIC-GM-Wuling 40,000, Chery Automobile 21,000 vehicles, Geely, GAC Eian, SAIC Passenger Cars, Great Wall Motors, Xiaopeng Motors, Ideal Cars, Nezha Motors and other monthly sales also exceeded 10,000. In January, the wholesale penetration rate of new energy vehicle manufacturers reached 19.0%, of which the penetration rate of new energy vehicles among independent brands was 32.0%, far higher than the 2.7% of mainstream joint venture brands. While the sales volume of new energy vehicles in China is leading the world, the penetration rate of new energy vehicles of independent brands has shown a significant increase, and the substitution effect on traditional energy vehicles is significant, indicating that the head enterprises of independent brands have performed strongly, their competitive advantages have been further optimized, and they have obtained significant incremental market share in the new energy market.
Dealer inventory levels are at a low level, the inventory coefficient is still below the warning line, and the inventory warning index continues to fall. The China Automobile Dealers Association released the results of the January 2022 "Auto Dealer Inventory" survey: the comprehensive inventory coefficient of auto dealers in January was 1.46, down 4.6% year-on-year and up 2.1% month-on-month. Due to the easing of chip shortages, dealer inventory levels have rebounded, but the inventory coefficient is still below the warning line. According to the latest issue of the "China Auto Dealer Inventory Alert Index" VIA (VehicleInventory Alert Index), the Inventory Alert Index of Chinese auto dealers in February 2022 was 56.1%, up 3.9 percentage points year-on-year and down 2.2 percentage points month-on-month. In terms of the overall influencing factors of inventory level, the main reason is caused by the shortage of chips on the supply side, the impact of the superimposed scattered epidemic and the spring festival homecoming tide car purchase is inhibited by the local New Year policy, and the post-holiday sales off-season leads to a decline in the flow of customers entering the store. However, as dealers increase their efforts to replenish their warehouses, and the impact of the backlog of orders in January and the purchase of cars in the back of school season, as well as the write-off activities at the beginning of the year, the market has played a supporting role.
The installed capacity of power batteries in the new energy vehicle industry chain continues to grow, and China, the world's top ten leading enterprises, occupies 6 seats. In 2021, the global installed power battery capacity reached 296.8GWh, an increase of 102.2% year-on-year. In 2021, the installed capacity of domestic power batteries reached 154.5GWh, an increase of 142.8% year-on-year, accounting for more than 52% of the global share. Among them, CATL ranked first in the installed capacity of global power battery companies, reaching 96.7GWh, an increase of 167.5% year-on-year. From the perspective of domestic power battery material output in 2021, the total output of ternary cathode materials was 398,000 tons, an increase of 89.5% year-on-year; the total output of lithium iron phosphate was 43. 80,000 tons, an increase of 2.08.5% year-on-year; the total output of anode materials was 679,000 tons, an increase of 83.0%; the total output of diaphragm materials was 7.61 billion square meters, an increase of 145.5% year-on-year; and the total output of electrolytes was 441,000 tons, an increase of 80.7%. Under the current trend of automobile electrification, the sales volume of new energy vehicles continues to grow, and the domestic power battery material enterprises in the new energy automobile industry chain have formed a global competitiveness of product technology research and development and cost reduction capabilities after years of hard work, the installed capacity has increased significantly, the market size has continued to expand, with the acceleration of the electrification process, the major global share participants in the industrial chain will benefit from a new round of growth opportunities. According to the forecast of the Institute of High Industry (GGII), by 2025, the global penetration rate of new energy vehicles will increase to more than 20%, and the shipment of power batteries will reach 1100GWh.
For the development of the domestic new energy vehicle market, we believe that with the addition of new domestic car-making forces, the competitive advantage of independent brands has gradually emerged and new models have been listed, the shortcomings of car-making technology have gradually been made up, the new energy automobile industry with scientific and technological consumption attributes and high barriers to product technology will have medium- and long-term development opportunities, and new energy automobile industry chain enterprises will also have high profit growth expectations. In addition, the general trend of domestic carbon neutrality has been determined, the new energy consumption policy continues to land, the purchase preferential policy continues, and the double credit policy becomes stricter, which will create a more effective development environment for the development of new energy vehicles. However, in terms of the main influencing factors of the short-term and short-term development of the new energy vehicle industry, we believe that it mainly comes from four aspects: the decline of subsidy policies, the continuation of the price increase trend of new energy vehicles, the carbon neutrality policy and the new energy vehicle consumption support policy, and the impact of the industrial chain. Moreover, in the short and medium term, there is great uncertainty in the impact from the supply side of the industrial chain, which is the most important influencing factor facing new energy vehicles at present, and it is also a key factor that should be considered and evaluated in the investment logic of the new energy vehicle sector.
First, the subsidy policy has declined. According to the Notice on the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles in 2022, the subsidy standard for new energy vehicles in 2022 will be reduced by 30% on the basis of 2021 and will be completely cancelled before the end of the year. We believe that the new energy vehicle market has shifted from policy-driven to market-driven, and the subsidy decline has certain clear expectations for car companies and consumers, or will temporarily affect consumer sentiment, but the impact on the overall market growth of new energy vehicles is limited, and the impact on new energy vehicle sales is limited. Moreover, new energy vehicles have a good momentum of development under the stimulation of other industrial policies and consumption policies, and in the future, car companies will maintain market scale growth by focusing on the improvement of vehicle safety, performance and quality.
Second, the supply and demand of carbon neutral policies and new energy vehicle consumption policies are driven by both ends. On the one hand, the "Carbon Peak Action Plan before 2030" proposes that "by 2030, the proportion of new new energy and clean energy powered vehicles will reach about 40%", the strict carbon dioxide emission target, as well as the capital market's favor for electrification development investment, and the ban on the sale of fuel vehicles in some regions, are encouraging automakers to expand the production scale of pure electric vehicles. On the other hand, the "Government Work Report" of March 5, 2022 mentioned that continuing to support the consumption of new energy vehicles, expanding the support of the new energy vehicle market, accelerating the construction of supporting infrastructure such as new energy vehicle charging and replacement, and promoting the purchase subsidy, exemption from purchase tax, right of way and other policies will further open up the development space of new energy vehicles and promote the sustained growth of production and sales.
Third, the price increase trend of new energy vehicles is obvious, or it has a certain impact on sales. The price increase of new energy vehicles has become the trend of the times. From the end of 2021, major new energy brands began to release price increase signals. 2021/12/31 Domestic Tesla quotation increased, Model 3 quotation increased by 10,000 yuan to 266,000 yuan after subsidy, Model Y quotation increased by 21,000 yuan to 302,000 yuan, ModelY quotation after the increase in the whole series no longer enjoy subsidies. 2022/1/21 BYD announced the increase in the official guidance price of the Dynasty series and the ocean series of electric vehicles, ranging from 1000-7000 yuan, we think it is mainly for two major reasons: one is the subsidy decline in 2022, there is cost transfer; the second is the continuous pressure of raw materials, battery price increases and chip supply tension in the upstream of the battery, which has been transmitted to the whole vehicle. Fourth, the impact of the industrial chain level accelerates the transmission of supply-side pressure to the demand side. On the one hand, the global epidemic continues, and the impact of the domestic epidemic scattered outbreak on both sides of supply and demand; on the other hand, the Russian-Ukrainian conflict further aggravates the tension in the global automobile manufacturing supply chain. Including: commodities, such as oil, natural gas, metals, wheat and other price increases brought about by the impact of inflation and cost increases; the impact of some intermediate production links in the industrial chain or the impact of key raw materials required for production, including automotive chips, metal materials, parts, etc., which further push up costs, such as palladium for automotive exhaust catalysts (Russia's palladium exports account for 26% of global trade), and neon gas required for semiconductors (supplying 90% of the United States). The above semiconductor grade neon gas comes from Ukraine), etc.; due to supply shortages, several automakers around the world announced a temporary suspension of work, as well as the suspension of some operations in Russia, including the production and sales of automobiles in Russia.
2. Short-term global supply chain tension intensified, long-term new energy strategic layout accelerated
On February 24, 2022, the Russian-Ukrainian conflict broke out, which had a great impact on the global economy and supply chain. On the basis of the impact of the epidemic, the problem of global demand surplus and insufficient supply has once again deteriorated, thus further pushing up the global inflation level, highlighting the pressure of global economic growth, and increasing the uncertainty of the crisis. We believe that there are mainly four ways of influencing the world: first, risk appetite and changes in capital flows, including gold, energy, agricultural products, metals, dollar indexes, US Treasury bonds and other large types of assets, while the global stock market fluctuated sharply, the Russian stock market, the ruble, the European market led the world; the second is that the global supply chain disturbance continues to deepen, including upstream material price increases to further promote inflation levels and monetary policy changes, and will be transmitted to the cost side, the intensity and duration of the impact can still not be confirmed. However, the factual disturbance has emerged, if the intensity is deepened or the time is extended, it will inevitably trigger a chain reaction and evolve into a serious economic crisis, and its uncertainty risk cannot be underestimated; third, the risk uncertainty of the financial system is increased, and the sanctions alliance led by the United States has formulated a package of sanctions plan for Russia, including financial sanctions that the United States is good at, such as kicking out the SWIFT system of "financial nuclear bomb" level sanctions, which not only affect the supply chain in trade with Russia, but also seriously hit Russia's finance. If the risk exposure is enlarged, the outbreak of debt defaults and other outbreaks will very likely cause systemic liquidity risks, affecting more financial institutions and non-financial sectors around the world (Russia's overall sector debt accounts for 25% of GDP, banks (except the central bank) are still large in the amount of debt claims against Russia, Russia has decided to stop paying interest on foreign investors' government bonds, etc.); Fourth, trade routes will be affected, especially commodities with large trade volumes related to Russia and Ukraine will be significantly affected. (Source: Future Think Tank)
2.1 The structure of Russian-Ukrainian export trade determines the main areas of influence in the global supply chain
From the perspective of the correlation between the position of the global industrial chain in Russia and Ukraine, the impact in the fields of energy (oil, gas), fertilizers, agriculture, metals, noble gases and so on is crucial. In Russia's exports, fossil fuels such as oil, natural gas, coal, etc. account for more than half of all resource exports, metals and minerals are Russia's second largest export resources, trading partners are mainly the European Union and China, according to 2021 data, EU countries trade with Russia about 283.4 billion US dollars, accounting for 35.9% of Russia's foreign trade. Ukraine's exports are mainly based on agricultural products and metal products, and the largest export trading partners are also the EU and China, accounting for 40% of foreign trade to the EU and 15.8% of China.
In the energy industry chain, Russia is the world's second largest energy exporter. According to BP data, at the end of 2020, OPEC, the United States, and Russia accounted for 35.2%, 18.6%, and 12.1% of global crude oil production, respectively, and were the three largest crude oil producers. Natural gas production accounts for about 16% of the world's total. The US-led sanctions package against Russia will directly affect the global energy supply, stimulate a sharp rise in global energy prices, trigger the acceleration of PPI transmission to CPI, and promote high inflation levels. The main impact path includes: first, transportation interruptions, the United States, Britain, Canada and other countries to russian ships to close ports, suspend Russian business; second, the suspension of transactions, due to fear of Russian oil supply disruptions, commodity traders are reluctant to buy Russian crude oil; third, the threat of energy sanctions, especially the United States and other countries on Russia's energy bans, making the crude oil market full of uncertainty due to the direction of conflict, sanctions and other factors. We believe that in the short term, due to the more restrictions on Russian crude oil transportation and trading, there will be a certain reduction, and in the case of the United States and OPEC difficult to fill the gap, it will further push up oil prices. Brent crude oil futures rose to 139.13 at one point, and natural gas prices pushed to $3800 per thousand cubic meters.
In the agricultural products and fertilizer industry chain, Russia is the world's largest fertilizer export economy, accounting for 12.6% of the share, of which Brazil 20.83%, China 9%, the United States 7.08%, India 7.04%, the dependence on Russian fertilizer imports is in the forefront. In terms of agricultural exports, China 14.39, Egypt 13.31, Turkey 11.73, south Korea 3.23, in the forefront of imports. Ukraine is also a major global food producer and exporter, with mainland corn accounting for 29% of total imports and barley accounting for 26% of China's total imports in 2021. The conflict has led to higher prices of agricultural products, and high natural gas prices will also push up the price of fertilizers, mainly urea, which will indirectly push up the price of food products.
In the non-ferrous metals and mineral industry chain, China, the United States and Europe are highly dependent on the import of Russian metals, mainly focusing on non-ferrous metals such as chromium, nickel and lead. Exports to the UK accounted for 27.01%, China 12.95%, Turkey 6.62%, the United States 5.16%, Germany 4.20%, the Netherlands 3.35%, Japan 3.13%. Xenon is an important noble gas in steel manufacturing, and the production of xenon in Russia is then procured and purified by specialized companies in Ukraine. In terms of use, xenon can be used in the production of laser tubes and LED lamps. In addition, Russia is also a major producer of C4F6, several suppliers in the United States purchased C4F6 from Russia after purification, and then used for advanced node logic device etching and chip production advanced lithography process. In addition, Russia and South Africa are major suppliers of palladium, accounting for nearly 33% of global palladium demand. Palladium can be used in sensors and emerging memory MRAM and can be used as an electroplated material for packaging technology. Therefore, the deterioration of the supply of metal materials and specialty gases will have a direct impact on the automotive and technology industries.
After summarizing and analyzing, we found that the situation in Russia and Ukraine will affect the global economy through trade channels, bring serious inflation expectations to the global economic development, and is transmitting the real economy (US inflation has reached the highest level in 40 years), and the pressure on economic growth is gradually emerging. Major countries' exposure to Russian imports is concentrated in agriculture, forestry, animal husbandry and fisheries, minerals and extractive industries, chemical and non-metallic mineral products, base metals and metal products, water, electricity and gas, and construction, including oil and gas minerals and extractive industries, chemical and non-metallic mineral products, base metals and metal products. European countries' energy supplies and metal minerals have been greatly affected. Some intermediate production links, as well as semi-finished products and raw materials, will have a greater impact on the global industrial chain, such as the automotive industry will be due to upstream metal materials, noble gases, etc. caused by the shortage of automotive chip supply and so on.
2.2 Energy security demands and cost-effective advantages to promote the accelerated development of the industry
The escalation of the situation in Russia and Ukraine and the triggering of Western sanctions against Russia have further exacerbated global supply chain tensions and affected the huge auto manufacturing industry. We believe that the impact of the situation in Russia and Ukraine on the automotive industry is mainly presented in two aspects: first, the impact on automotive chips, metal materials, parts, rare gas supply, etc., forcing the automobile manufacturing industry to partially stop production, and making the cost of the industrial chain rise significantly; second, the import and export of Russian-Ukrainian automobiles, and the impact on russian vehicle manufacturing and parts manufacturing. Mainly embodied in:
The supply of special gases such as neon, which relies heavily on Ukraine, has been blocked, resulting in a shortage of automotive chips. Techcet's report shows that many semiconductor manufacturers around the world are more dependent on some materials from Russia and Ukraine, and in semiconductor manufacturing, special gases such as neon, krypton, and xenon are the second largest consumables after silicon wafers (cost accounting for 13%), which are excimer laser gas, KrF lithography process, etching important materials. Ukraine, on the other hand, is the main supplier of semiconductor raw gases, accounting for 70% of the world's neon production (used to produce lasers, Ukraine supplies 90% of the neon demand of the US chip manufacturing industry), 40% of the krypton production and 30% of the production of xenon. Observing available inventory and supply in the semiconductor industry is no longer sufficient to meet current demand levels. The Russian-Ukrainian conflict has exacerbated concerns about the decline in production capacity in the chip industry, and generally new suppliers who have joined the neon supply chain system usually need a verification period of 2 to 3 years, and the Russian-Ukrainian war has led to insufficient supply of neon, which in turn has pushed up the price of semiconductor wafers and exacerbated the shortage of chips.
From the current situation, the short-term impact of neon supply on the mainland automotive chip industry is limited. Inert gases such as neon gas and xenon gas are actually by-products of the steel industry and can be separated and produced by air separation equipment. China is a big producer of steel, the domestic purification technology for these rare gases has achieved a breakthrough, the production process is relatively mature, can produce 99.99% of the content of high-purity neon. Even if the relevant supply chain is interrupted, China can organize emergency production to ensure domestic supply.
As far as the mainland's trade with Russia in the whole vehicle is concerned, the volume is relatively small and the impact is limited. According to the data of the Federation of Passenger Vehicles, China will export 123,000 vehicles to Russia in 2021, accounting for 7% of Russia's passenger car share, corresponding to revenue of 12.4 billion yuan. Among them, Haval/ Chery / Geely sold 39/3.7/ 25,000 units in Russia, ranking 12th/13/17th in Russian automobile sales respectively. However, in the short term, due to the financial sanctions imposed by the United States, the ruble exchange rate has depreciated sharply, and Chinese auto exporters are exposed to the risk of depreciation of the ruble, as well as the decline in consumer willingness.
A number of automakers around the world announced a temporary suspension of work and the suspension of some operations in Russia, including the production and sales of cars in Russia. The Russian automobile consumption market is relatively stable, with sales of 1.67 million units in 2021, of which Korean and European cars account for a relatively large proportion, ranking 2nd and 3rd in The Russian automobile sales ranking. At the same time, Russia is one of the world's important automobile manufacturing bases, including Stellantis, Renault, Volkswagen, Toyota, Nissan, Hyundai, Great Wall and other car manufacturers, all of which have factories in the local area. The Russian-Ukrainian conflict itself and the escalation of sanctions will affect the manufacture and trade of automobiles in Russia. For example, Volkswagen of Germany announced that due to the impact of the supply chain, the Leipzig plant was shut down, 2,500 employees were on standby, the main base in Wolfsfurt was shut down, and the state of Saxony was facing difficulties due to the shortage of cables mainly from Ukraine; bmw group announced that due to supply delays, European manufacturing plants were affected and was already assessing the impact of the shutdown; Japan's Mitsubishi, Land Rover, General Motors, Volvo, etc. announced the suspension of automobile production and sales operations in Russia; Finnish tire company Nokian has transferred key production lines in Russia Daimlerka suspended its operations in Russia, including cooperation with Russian truck manufacturer Kamaz; South Korea's Hyundai Motor suspended operations at its auto assembly plant in St. Petersburg, Russia; on the wiring harness industry chain, Aptiv, Sumitomo and other factories in Ukraine have withdrawn relevant personnel; 8% of the core profit of Renault in the United States comes from Russia, which has been seriously affected.
Chip shortages remain a major factor in mainland auto production. As the world's largest automobile producer, China's automobile production will be reduced by 2 million units in 2021 due to the shortage of chip supply. According to previous predictions, chip supply can return to normal in the second half of 2022, but at present, it seems that the evolution of the situation in Russia and Ukraine is still the key.
Overall, the situation in Russia and Ukraine, economic sanctions will to a large extent create global economic fluctuations, the global automotive industry chain will also be greatly affected. Even if the supply share of the Russian-Ukrainian automobile industry chain is weakened, it still takes a certain time cycle to seek multi-channel upstream material supply. Moreover, the situation in Russia and Ukraine is still uncertain, and the outcome of the multinational game is unpredictable. In the short term, from the level of trade supply chain and the level of comprehensive economic sanctions, the pressure on automobile banks is still continuing. However, in the medium and long term, in the context of global carbon neutrality, and the Russian-Ukrainian conflict may cause countries around the world to strengthen the layout of new energy development policies and plans, the development of the new energy industry is expected to develop beyond expectations, and the new energy automobile industry is expected to further expand its market share on the basis of a significant increase in sales penetration. Moreover, from the perspective of cost performance and energy security, the war has improved the safe supply of traditional energy and the sharp price increase, indirectly improving the cost performance of new energy, whether from the supply stability and price advantage of new energy, or from the aspect of climate and environmental protection. Therefore, compared with fuel vehicles, the cost performance of new energy vehicles has been further improved. At the same time, the trend of electrification and intelligent upgrading of the automotive industry will still not change, and the short-term impact from the price increase of traditional energy and the shortage of supply chain (most car companies give priority to ensuring the supply of new energy vehicle chips) factors may become a booster to stimulate the accelerated development of new energy vehicles.
3. Mainland new energy vehicles have entered a new period of development, and the industry boom continues
3.1 New energy vehicles are moving from the era of electrification 1.0 to the era of networking and intelligent 2.0
Today, China has become the world's largest market for the production and sales of new energy vehicles. The rapid rise of independent brands, the number of new energy automobile enterprises continues to grow. Up to now, there are about 200 new energy automobile enterprises in China, of which 150 were born in the past 3 years. Among them, there are not only fawc hongqi, Dongfeng Lantu, Changan Avita, BAIC Jihu, SAIC-GM-Wuling, GAC E-An, BYD, Great Wall Euler, Geely Krypton and other traditional car companies' new energy vehicle brands, but also new car-making forces such as Weilai, Xiaopeng, Ideal, Nezha and other new car-making forces have grown rapidly, and the monthly sales of head enterprises have exceeded 10,000 vehicles. So far, independent brand new energy vehicles not only occupy the main market share in China, but also become a force that has attracted much attention in the global market. In the top 20 sales of new energy passenger car companies in the world, Chinese car companies account for nearly half. BYD, SAIC-GM-Wuling and SAIC Passenger Cars entered the top 5, while Great Wall, GAC, Dongfeng, Xiaopeng, Weilai and Changan ranked among the top 20. Since 2015, China's new energy vehicle production and sales have ranked first in the world for seven consecutive years, accounting for more than 10% of the global market.
In terms of industrial policy, since the 1990s, the mainland has established sustainable development as a national strategy, coupled with the global energy crisis and the challenge of environmental protection, driven by the "double carbon" goal, China has vigorously promoted the development of new energy vehicles, and change and innovation have become the main theme of development. Among them, the development of new energy vehicles has been successively written into the mainland's "Twelfth Five-Year Plan", "Thirteenth Five-Year Plan" and "Fourteenth Five-Year Plan". Based on the domestic market, the mainland has promoted international and domestic double circulation and promoted high-quality development, and has successively introduced special policies, such as the "Energy Conservation and New Energy Vehicle Industry Development Plan (2012-2020)" issued by the State Council in 2012; the "Guiding Opinions on Accelerating the Promotion and Application of New Energy Vehicles" issued by the General Office of the State Council in 2014; and the "New Energy Vehicle Industry Development Plan (2021-2035)" issued by the General Office of the State Council in 2020. At the same time, local governments have also introduced relevant policies and measures, forming a policy system and synergy for the development of new energy vehicles. The power of the policy promotes new energy vehicles to build their own brands and improve the international competitiveness of products.
In terms of core technology, Chinese brands have achieved comprehensive transcendence, new energy vehicle batteries, motors, electronic control "three electricity" and other key technologies continue to innovate, the power battery industry has risen rapidly, and the technical level ranks among the forefront of the world. At present, there are not only mainstream ternary lithium batteries, lithium iron phosphate batteries, but also lithium titanate batteries, hydrogen fuel cells, etc., as well as advanced lithium iron phosphate blade batteries, semi-solid-state batteries, jelly batteries, cobalt-free batteries, sodium-ion batteries, metal sulfur batteries, etc., all-solid-state batteries are also actively developed. Ningde times, Guoxuan hi-tech, Yiwei lithium energy and other enterprises have expanded production, the current domestic power battery production capacity has also ranked in the forefront of the world, with strong competitiveness. For example, Extreme Kr ZEEKR 001, WEILAI's ET7, ET5, etc. will incorporate 700+km endurance into the program, and increase the 1000km endurance research and development; 800V high-voltage charging, AI chips independently developed by Chinese brands, domestic lidar with 1000TOPS computing power and other technologies are under development or have landed, so that new energy vehicles have been able to exceed the value of fuel vehicles in terms of intelligence. For example, in 2021, with the blessing of core technologies such as blade batteries, DM-i super hybrids and e-platform 3.0, BYD will directly reduce the price of new energy vehicles to the same level as joint venture brand fuel vehicles.
In terms of market consumption, electric vehicles have entered the stage of positive Pk with conventional fuel vehicles. Nowadays, from first- and second-tier cities to fifth- and sixth-tier cities, the sales of new energy vehicles have increased significantly, and the sales growth rate of new energy vehicles in small and medium-sized cities has exceeded that of large and medium-sized cities with purchase restrictions, which reflects that the endogenous driving force of new energy vehicle sales growth no longer relies on policies and subsidies, but relies more on the market competitiveness of new energy vehicles themselves. The characteristics of the domestic new energy vehicle market show that: First, the growth of private consumer purchase is strong, whether it is urban sales or new energy vehicles in recent years, private consumer purchase has become the main driving force of the new energy vehicle market; second, from the perspective of models, close to consumers, especially new energy vehicle sales that meet the needs of young people have been high, like MINIEV and other hot-selling models, sales have repeatedly achieved good results since the listing, becoming the main force of sales; third, independent brands gradually occupy the mainstream, relying on electrification, Technological leading edges such as intelligence, new marketing models, etc. are gradually expanding market share. In 2021, there were 2.95 million newly registered new energy vehicles nationwide, accounting for 11.25% of the total number of newly registered vehicles, an increase of 1.78 million units compared with the previous year, an increase of 151.61%. In the past five years, the number of newly registered new energy vehicles has increased from 650,000 in 2017 to 2.95 million in 2021, showing a rapid growth trend. It is estimated that in 2022, the production and sales of new energy vehicles in the mainland may be expected to exceed 5 million; in 2025, the penetration rate of new energy vehicles in the mainland is expected to reach 40%.
3.2 Technology, demand and capital resonance drive the industry into a new stage of development
Looking back at the development of the new energy automobile industry in mainland China, the initial stage of industrial development was mainly guided by policy guidance, and has now entered a market-driven period, and its development process can be roughly divided into three periods: the budding period (2009 to 2013), the growth period (2014 to 2018), and the adjustment period (2019 to 2020).
Embryonic period: National policies focus on enterprise-side guidance and encouragement and local government support. In 2009, the Ministry of Science and Technology, the National Development and Reform Commission, and the Ministry of Industry and Information Technology released the "Ten Cities and Thousands of Energy-saving and New Energy Vehicle Demonstration and Application Project". In the same year, the Ministry of Finance and the Ministry of Science and Technology jointly issued the "Interim Measures for the Management of Financial Subsidy Funds for the Demonstration and Promotion of Energy-saving and New Energy Vehicles", which gives a one-time fixed subsidy for the purchase of new energy vehicles (hybrid, pure electric and fuel cells) in pilot cities. In 2010, the State Council incorporated the new energy automobile industry into the national strategic emerging industries and further promoted the implementation of incentive subsidy policies. The characteristics of this stage are mainly policy guidance, encouragement, subsidies and other fiscal policies are gradually introduced, the results of policy encouragement are gradually emerging, technology and market are in the cultivation stage, and the enthusiasm of capital participation is gradually improved.
Growth period: Policy encouragement and consumption guidance are synchronized, and subsidy behavior penetrates from the enterprise side to the private consumption end. In August 2014, the Ministry of Finance and other departments jointly issued the Announcement on Exemption from New Energy Vehicle Purchase Tax, and at the end of 2017, the period of exemption from new energy vehicle purchase tax was extended to the end of 2020. At this level, the new energy vehicle market side shows a rapid growth trend, the willingness to consume is further stimulated by the high purchase subsidy policy, the growth rate of R&D and investment in new energy vehicles on the enterprise side is accelerating, most Internet companies have joined the new energy caused force, the capital investment has grown significantly, and the sales volume has grown rapidly.
Adjustment period: Financial subsidies have entered a period of decline, and on the basis of the endowments supporting the development of new energy vehicles such as technology, demand, and capital investment scale reaching a certain level of maturity, policy-oriented guided development has truly shifted to market-driven development. On December 31, 2021, the Ministry of Finance issued the Notice on Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles, requiring that the subsidy standard for new energy vehicles in 2022 should be reduced by 30% compared with 2021; the subsidy policy for the purchase of new energy vehicles in 2022 was terminated on December 31, 2022, and vehicles licensed after December 31, 2022 would no longer be subsidized. At this stage, the new energy vehicle industry chain and business model tend to develop from mature to high-quality development, the industrial scale has expanded significantly, corporate profits have increased significantly, and the integration and development of intelligent, networked and electrified technologies have been formed, laying the foundation for the transition from policy-driven to market-driven, the market has entered a period of stable development, and the penetration rate has steadily increased.
In 2021, China's new energy vehicle market will fully enter a period of market-driven growth. The key influencing factors for the development of new energy vehicles at this stage come more from the improvement of technology (including self-driving technology, power battery endurance technology, vehicle-to-things network technology, charging time, etc.), the improvement of demand experience (including the supply-guided consumption concept, appearance, performance and other elements that highlight cost-effective advantages, etc.), the further improvement of supporting facilities (including charging stations, community charging piles, road facilities suitable for automatic driving and scene support, etc.), and the industrial policy to support the high-quality development of the industry.
In the future, the development trend of new energy vehicles in the mainland is relatively clear, and the long-term development plan is mainly based on the "New Energy Vehicle Industry Development Plan (2021-2035)" issued by the General Office of the State Council on November 2, 2020. Among them, the main planning mentions: First, by 2025, the average electricity consumption of new pure electric passenger cars will drop to 12.0kWh/100km; the sales volume of new energy vehicles will reach about 20% of the total sales of new vehicles; highly autonomous vehicles will achieve commercial applications in limited areas and specific scenarios; improve the construction of charging and replacing, hydrogenation infrastructure; relax market access and improve the double integration policy. The second is to strive to become the mainstream of new sales vehicles by 2035, and fully electrify public vehicles; realize commercial application of fuel cell vehicles, and achieve large-scale application of highly autonomous vehicles; convenient and efficient charging and replacement service networks, and the construction of hydrogen fuel supply system is steadily advancing, effectively promoting the level of energy conservation and emission reduction and the improvement of social operation efficiency. On the basis of this plan, we believe that there are five major trends in the development of new energy vehicles in China:
Trend 1: Before 2035, the common development of pure electric vehicles and fuel cell vehicles will be the main trend in the development of new energy vehicles in China. Based on the current understanding of new energy technology, we believe that the development process of automobiles will be the gradual reduction of the proportion of the traditional energy vehicle market, hybrid, pure electric, fuel cell vehicles to replace the market share, and hybrid will inevitably become an excessive model, followed by pure electric vehicle models and fuel cell models into a year-on-year competitive development pattern, and eventually pure electric will become the mainstream of the automobile market. At this stage, the penetration rate of pure electric and fuel cell vehicles is gradually increasing, and electricity and hydrogen fuel coexist and complement each other to jointly support the development of the new energy automobile industry. From the perspective of the sales status of new energy vehicles, BEV pure electric vehicles are favored by consumers, sales dominate, and the market share remains at 80%. If we follow the annual growth forecast of 3% to 5%, we believe that by 2035, China's annual automobile sales are expected to reach the current 1.5 to 2 times, about 45 million vehicles, and then superimpose 4 times the penetration growth space, it is expected that by 2035, new energy vehicle sales still have 6 to 8 times the growth space, and the development prospects are very broad. According to the forecast analysis of the new energy vehicle market size model, by 2030, the production and sales of pure electric vehicles in the Chinese market will exceed 15 million units, accounting for 90% of the total sales of new energy, while plug-in hybrid vehicles will account for only 10%.
Trend two: the penetration rate of new energy vehicles from 1% to nearly 20%, new energy vehicles have completed the process of quantitative change, and at present, intelligence, networking and humanization will become the core competitiveness of products, and it is also the key to qualitative change, and the market share will gradually expand. With the continuous development of battery technology and the continuous improvement of energy density, the mileage of electric vehicles is an inevitable trend. According to the survey data, 60% of high-end car owners and 89% of low-end car owners believe that pure electric vehicles with a cruising range of more than 400km can meet their daily use needs. Therefore, the current power battery endurance technology can basically meet the needs of consumers, and is no longer the biggest constraint in the development process of new energy vehicles. In the future, in addition to the technical transition of power batteries and the substantial improvement of the cruising range, charging technology solutions, shortening charging time, and improving convenience will become more important and urgent technical demands, including charging time, power exchange mode, mobile charging services, and one-stop charging solutions that integrate a large number of charging facility operators.
Trend three: the new sales service model is the most effective way for new energy vehicles to rapidly expand the market scale, and it is also an inevitable choice when the competition between new energy vehicles and traditional fuel vehicles intensifies. Finding the best balance between user service experience and cost efficiency is key to a successful transformation. The direct sales model is the biggest change and impact brought by the new forces of Internet car manufacturing to the industry, through the self-built and self-operated new retail formats and services covering the whole life cycle of users, bringing users a new sense of brand experience, solving the traditional dealer model price opacity, poor service experience and many other drawbacks. The change of sales model directly improves the demand experience, which is a key part of service, technology and quality advantages in guiding and attracting consumers, and it is also a key part of maintaining competitive advantage in the process of gradually replacing market share.
Trend four: Chinese and foreign brands, new and old forces, cross-border giants and other multi-party forces compete, and a new market pattern is formed. The domestic automobile consumption potential is huge, foreign brands will still maintain their competitive advantages, and participate in the competition of the new energy vehicle market, and Internet companies will join the new energy automobile industry to participate in the competition by virtue of their technical advantages and capital advantages to form a new competitive pattern in the domestic new energy vehicle market. From the current market share, domestic traditional automobile brands far exceed foreign brands and are in a leading position. 2021 sales data show that the car company end, BYD, SAIC-GM-Wuling, Tesla and other three companies occupy nearly 50% of the market share, while Weilai, Xiaopeng, Ideal and other domestic brand car-making forces performed well, the annual sales ranks were 7th, 8th and 10th respectively; However, with the acceleration of foreign investment, joint ventures and new local car-making forces, China's new energy market will enter an era of comprehensive competition. Local automakers that are currently in a competitive advantage will inevitably further accelerate the expansion of the full chain capability, while local traditional automakers that start late, plan late, and transform slowly can only focus on the production and manufacturing end of the value chain, or will become "foundries".
Trend five: The new energy vehicle industry chain will be greatly extended upstream and downstream, and the travel market and new technologies in the value chain will become a value-added highland. The upstream industrial chain extends to the power battery technology and intelligent technology industry, while the downstream industrial chain extends to the retail, user life cycle service, battery recycling and other businesses in the end consumer market. The evolution of the value chain drives the formation of the industrial ecological chain and the activation of the capital chain, driven by capital, the entry of new car-making enterprises, as well as the layout of various cross-border giants in the new energy automobile industry will make the profit structure of the industrial chain reconstructed, the profits of upstream technology research and development will be transferred to power batteries and intelligent technologies, especially the automatic driving intelligent software will grab greater value, and the profits of the middle and lower reaches will be transferred from vehicle production and sales to the user services in the terminal market. Derivative innovation services covering the whole life cycle of users will become an important value orientation to make up for the decline in profits in vehicle manufacturing, new car sales, traditional after-sales, etc., and is an extension of the industrial chain with more value-added directions, which means that in the future, when the technology is comparable, the main competitive areas and high value-added sources for vehicle manufacturers are the middle and lower reaches of the market. (Source: Future Think Tank)
4. The rapid growth of the industry supports the valuation level
Current valuations are below the near-three-year median
New energy automobile industry 2019.1.4-2022.3.21 The PE valuation range of the entire industry is 46-124 times, the median PE of the industry in the past three years is 82 times, and the pe valuation of 63 times in the current industry is lower than the median level in the past three years. From a relative point of view, the current industry has investment value. The current 63 times PE valuation of the new energy automobile industry has dropped significantly compared with the PE of 124 times the industry high point in August 2020, mainly because the overall performance of the new energy vehicle sector has rebounded greatly, and the performance of the plate has continued to improve, which is still the main driving force for the decline in the valuation of the industry in the coming period. This is also the core factor of the new energy that continues to be optimistic, and the valuation of the entire industry is lowered through the release of performance.
The rapid growth of the industry is conducive to valuation repair
In 2019, the net profit of the new energy automobile industry was 58.94 billion yuan, and in 2020, the new energy automobile industry has achieved greater development, and the net profit of the entire industry has reached 71.09 billion yuan, an increase of 20.6% year-on-year. In 2021, new energy vehicles ushered in a big outbreak, the annual sales penetration rate of new energy vehicles exceeded 13%, the net profit of the entire industry reached 89.46 billion yuan in the first three quarters of 2021, and we expect the net profit growth rate of new energy in 2021 to be 60%-70%. In view of our relatively optimistic estimate of the sales volume of new energy vehicles in 2022, we believe that the industry's profit growth will still maintain high-speed growth, and the high-speed growth of net profit will be conducive to the downward movement of the industry's valuation, and we expect that the valuation of the industry at the end of 2022 is likely to be lower than the level at the beginning of 2019, so the entire industry has a good investment value.
5. Investment analysis
In the context of a clear global carbon neutrality approach, the general trend of policies supporting the development of new energy vehicles in various countries is very obvious, and the sustained and stable growth of global new energy vehicle production, sales and penetration rate is also very convincing evidence, so the development space of new energy vehicles in the medium and long term is huge.
In the short term, under the influence of comprehensive factors such as the epidemic and geopolitics, global commodity prices continue to rise, resulting in a greater impact on the supply chain of the automobile industry, from raw materials, parts and components to the continuous shortage of automotive chip supply and other aspects of the impact or disturbance, as well as the continuous pressure on the cost of vehicles and parts, resulting in most automobile manufacturers having to suspend part of production or reduce production. Although we can not predict the length of time or evolution of the situation in Russia and Ukraine, but from the overall automotive industry chain supply and demand contradictions, more is a short-term pulse impact, with the easing of the situation in Russia and Ukraine, sanctions on Russia are reduced, the industrial supply chain will gradually recover, and more diversified channel supply chains will gradually form. And from another level, in the process of chip supply shortage since last year, most companies in the world are more willing to give priority to the supply of new energy vehicle chips, indicating that whether from a policy perspective or from the perspective of their own development, new energy vehicles have obviously entered a period of comprehensive development, and the penetration rate will gradually increase, constantly replacing the market share of traditional energy vehicles. Moreover, the situation in Russia and Ukraine has led to a sharp rise in the price of traditional energy, and even a direct threat to the level of energy stability and security, which will produce key changes in energy awareness, especially for countries with traditional energy shortages, a large number of imported countries, from the perspective of cost performance and energy security, indirectly improving the cost performance of new energy, whether from the supply stability and price advantage of new energy, or climate and environmental protection have highlighted its superiority. Therefore, it has become a consensus to strategically accelerate the development of new energy sources, and the development of new energy vehicles will also be in the fast lane.
For the development of the domestic new energy vehicle market, although it is facing the impact of the common supply chain in the short term, as well as the impact of subsidy decline and price increases, we believe that with the addition of new domestic car-making forces, the competitive advantage of independent brands has gradually emerged and new models have been listed, the shortcomings of car-making technology have gradually been filled, the new energy automobile industry with scientific and technological consumption attributes and high barriers to product technology will have medium- and long-term development opportunities, and new energy automobile industry chain enterprises will also have high profit growth expectations. Under the promotion of the technological reform of "electrification, networking and intelligence", the vitality of enterprises has still been significantly enhanced, and the market consumer demand continues to show a trend of quality improvement and upgrading. In addition, the trend of domestic carbon neutrality has been determined, the new energy consumption policy continues to land, the purchase tax preferential policy, the right of way policy, and the double credit policy are becoming stricter, which will create a more effective development policy environment for the development of new energy vehicles, and the marketization of new energy vehicles has entered a new stage of explosive growth, and the investment opportunities are remarkable. Moreover, it turns out that once the purchase cost drops to a certain extent, new energy vehicles can form a dimensionality reduction blow to fuel vehicles.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank].