New energy vehicle capacity, excess or shortage?

Author: Li Junxia, Industry Analyst before the rain consultancy

At present, more than 15 traditional car companies have clarified the timetable for the suspension of fuel vehicles, and the production capacity of BYD new energy vehicles will be expanded from 1.1 million to 4.05 million in two years, and Great Wall Motors has successively merged the Linyi production base of Zotye Automobile and the first phase of Hanteng Automobile's factory.

However, at the same time, the National Development and Reform Commission has clearly stated that it requires that the existing base of new energy vehicles reach a reasonable scale and no new production capacity will be added.

On the one hand, the traditional fuel vehicle manufacturers have pressed the "lane change" acceleration button, on the other hand, the state strictly controls the rapid expansion of production capacity, behind the seemingly "contradictory" phenomenon, what kind of industry development logic is hidden?

Is there excess capacity for new energy vehicles? If there is excess, what is the overcapacity, and if it is in short supply, how big is the capacity gap?

Nearly 90% of the production capacity is idle

As the focus and direction of future development, it is an inevitable trend for new energy vehicles to accelerate development and growth and gradually replace traditional fuel vehicles.

Under the blessing of policies and the enthusiasm of capital, the main body of the mainland new energy vehicle market has increased rapidly, and there are currently more than 40,000 vehicle manufacturers (enterprise check data). The production capacity of new energy vehicles has also expanded rapidly, with a total production capacity of about 37 million new energy vehicles already and planned by the end of 2021.

In 2021, the output of new energy vehicles in mainland China will be 3.545 million units, and according to this calculation, the capacity utilization rate is only about 10%. This means that nearly 90% of the production capacity is idle.

From the perspective of industry development, the overcapacity of new energy vehicles is structural. The gap between the capacity utilization rate between different car companies is huge, showing a polarized trend of high capacity utilization rate of sales and low capacity utilization rate of sales volume.

For example, BYD, Wuling, Xiaopeng and other leading new energy vehicle companies are facing a shortage of supply, while some weaker car companies are either extremely small in production or have not yet reached the step of mass production.

Waste of resources is a concern

This not only leads to overcapacity in the new energy automobile industry, but also causes too much waste of resources.

Taking Zhidou Automobile as an example, in the heyday of 2015-2017, the car company has announced the landing capacity in Ninghai, Lanzhou, Linyi, Nanjing and other cities, of which the planned annual output of Ninghai, Lanzhou and Nanjing alone will reach 350,000 vehicles, exceeding its highest annual sales of about 300,000 vehicles.

Blind expansion and a sharp decline in sales have not only put companies in debt difficulties, but also dragged down local finances. Previously, the assets of Zhidou Automobile's Linyi factory in Shandong Province were sold for 117 million yuan, and the receiver was the Linyi Yinan County Finance Bureau.

This is just a microcosm of the impulse investment in the new energy automobile industry.

According to official data from Jiangsu Province, from 2016 to 2020, the province's automobile capacity utilization rate fell from 78% to 33.03%, and the main reason for the decline in capacity utilization rate of nearly half is that the newly introduced projects in Jiangsu in recent years, including Sailin, Byton, Bo County, etc., have not developed smoothly, resulting in its entire production capacity being more serious.

From the perspective of the entire industry, the current planned production capacity of new energy vehicles has far exceeded the volume of the entire passenger car market.

The gap between supply and demand amounted to 130 million

However, in the long run, the effective production capacity of new energy vehicles is far from enough. It is estimated that in the next ten years, there will still be a gap of about 130 million yuan in the supply and demand of new energy vehicles in the mainland.

According to the forecast data of the Market Economy Research Institute of the Development Research Center of the State Council, the number of cars in the mainland will be about 430 million by 2030. According to the overall penetration rate of new energy vehicles reaching 40% in 2030, the number of new energy vehicles in mainland China will reach 170 million by 2030. By the end of 2021, the total planned production capacity of new energy vehicles in the mainland will be about 37 million units, according to which the new energy vehicles on the mainland will need to increase their production capacity by about 130 million by 2030.

At present, the embarrassment facing the development of the new energy automobile industry is that there is a huge gap in effective production capacity, but inefficient and ineffective production capacity is abnormally excessive.

In order to ensure the high-quality development of the mainland automobile industry, the National Development and Reform Commission has repeatedly asked all localities to investigate the production capacity of new energy vehicles and be vigilant against overcapacity of new energy vehicles. Recently, the National Development and Reform Commission has made it clearer that it will not add new production capacity distribution points until the existing base of new energy vehicles reaches a reasonable scale.

The threshold is raised

The situation of overcapacity is not only in the new energy automobile industry, but also in mature industries such as chips, photovoltaics, wind power, steel, coal chemical industry, etc., which are more or less facing the problem of overcapacity.

So in a sense, overcapacity is also a sign of the maturity of an industry. This also means that the entry threshold of the new energy automobile industry has been raised, and not all players can get a share of it.

Take chips, for example. In the past two years, the "chip shortage" has become an obstacle to the development of many industries, and the urgent shortage of chips has accelerated the pace of setting up and increasing production capacity of chip factories, but at the same time, some inexperienced, unskilled, and talented "three noes" enterprises have also thrown themselves into the project, blindly on the project, low-level repeated construction risks appear, and even some project construction stagnation, plant control, resulting in waste of resources.

To this end, the National Development and Reform Commission has carried out window guidance for the chip industry, strengthened the service and guidance for the construction of major integrated circuit projects, orderly guided and standardized the development order of the integrated circuit industry, and vigorously rectified the mess of chip projects.

Back to the new energy automobile industry, with many traditional car companies invariably turning the rudder, vigorously develop new energy vehicles, it is foreseeable that the new energy automobile industry will gradually change from the blue ocean market to the red sea market, and the new energy automobile industry will also change from extensive to high-quality development. In the process of industry reshuffle, it will be difficult for those new energy automobile enterprises with small development potential and mediocre qualifications to survive.

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