Polar Daily Original
Author | Yang Chengchun
Editor-in-Chief | Luan Crane
On April 3, BYD announced that according to the needs of strategic development, BYD Automobile will stop the production of fuel vehicles from March 2022. In the future, BYD will focus on pure electric and plug-in hybrid vehicles in the automotive segment.
As soon as the news came out, the market response was enthusiastic, BYD's stock price rose sharply, and many major automobile brands at home and abroad have successively announced the suspension of fuel vehicles, and the remarks that new energy electric vehicles are about to replace fuel vehicles are emerging.
In fact, BYD is only a special case, this decision is based on its own product structure, can not be used as a confirmation of the trend." Although the proportion of new energy in the future will most likely catch up with fuel vehicles and eventually form an overwhelming advantage, this is not evidenced and reinforced by BYD's decision. Qiu Chen, a senior researcher in the field of ESG and vice president of China Light Power Investment Asset Management Co., Ltd., told Jipai Daily.
01
BYD's "stop burning": "turn waste into treasure" successful public relations
In March this year, BYD's passenger fuel vehicle sales were zero; in contrast, BYD's sales of new energy vehicles exceeded 100,000, exceeding 95% of overall sales.
BYD announced the suspension of sales of the "ancient" pure fuel vehicle product line, which accounts for less than 5% of its sales. BYD's pure fuel vehicles are "fortune" products, which have made great contributions to its success. However, the product technology platform of the 1990s was outdated, did not have the conditions to continuously meet consumer needs, and has entered the end of the product life cycle.
After years of development, BYD has completed the "dynasty change" of new energy, especially the DM and DM-i plug-and-mix series, and has become a leader in the industry.
DM and DMI are based on large-capacity batteries and high-power motors, vehicles in the normal driving process, relying on high-power motors for driving, only a few need more power will be directly driven, and is working with the motor to reduce the load. DM and DMI are more effective at reducing energy consumption than traditional hybrid technologies that rely on engine characteristics.
BYD's pure electric series, the EV, also performed well. AMONG BYD's total sales in March, the DM series sold 51,000 units, up 615.2% year-on-year, and the EV series sold 54,000 units, up 229.2% year-on-year. Both set new energy monthly sales records of car companies.
It can be seen that BYD's development focus and profit source have been completely concentrated in the pure electric + plug and mix plate.
According to BYD's 2021 financial report, BYD's cumulative sales of pure electric models exceeded 320,000 vehicles and hybrid models last year, with annual sales of nearly 600,000, which is currently the highest sales of new energy vehicles in China, surpassing Tesla's sales of 480,000 vehicles in the Chinese market and the total of 280,000 vehicles of "Wei Xiaoli".
On the track of new energy vehicles, BYD is already in a very favorable competitive position.
Qiu Chen said that the suspension of the sale of fuel vehicles is not only a natural progression for BYD, but even an urgent one, but also an "appendix" that needs to be discarded in the process of its development and evolution. Old fuel vehicles, not only have no profit value for the company, but also consume the company's fuel consumption points, which is a "burden" that needs to be dealt with urgently.
Recently, oil prices are at a high point, to electric belt oil is experiencing another round of public opinion climax, new energy vehicles are just in the critical period of further seizing the market, BYD announced at this time to stop the combustion, both to optimize the product structure in time, but also a cost-effective positive public relations.
02
Rising costs will not limit the ceiling of new energy vehicles
While BYD announced the cessation of combustion and the full-line bet on new energy, the cost of new energy vehicles is also experiencing historic highs. In particular, the price of lithium carbonate, from January 2021 to the present, has risen from 50,000 / ton to 500,000 / ton.
The sharp rise in the cost of lithium carbonate is mainly caused by the difference in the pace of expansion of upstream and downstream production of automobiles. The new battery production line can be completed in about 9 months, but a mature lithium mine project takes 1-2 years. The upstream can't keep up with the downstream, the supply is in short supply, and the epidemic has further disrupted the rhythm.
Although lithium's rise and growth rate exceeded expectations, the impact on China's new energy market is relatively limited. There are no large lithium mines in the mainland, but there is no shortage of lithium, and most of the world's large lithium mines have Chinese companies in the list of shareholders. China's huge new energy vehicle market gives Chinese companies the confidence to obtain the right to use lithium ore at a high price.
For example, in January 2022, BYD Chile SPA, an affiliate of BYD, obtained a mining license for a lithium mine in Chile for twice as much as its competitors ($61 million) for a period of 20 years and an estimated total mining capacity of 80,000 tons.
China's salt lake lithium reserves are abundant, and the development technology is constantly iterative, and it will gradually move towards mature mass production. If lithium prices continue to rise, then salt lake lithium will be pushed to the forefront.
Moreover, recently lithium carbonate has fallen back to within the 500,000 mark. According to the latest data of Shanghai Nonferrous Metals Network on April 21, the quotation range of lithium carbonate (99.5% battery grade / domestic) is 46.7-48.4 million / ton.
"When car companies buy batteries, most of them have locked the overall price of batteries, and the price of lithium has risen sharply, and it will not interfere too much with the pricing of new energy vehicles." Qiu Chen introduced.
The proportion of lithium in car batteries can be adjusted according to price fluctuations. Lithium batteries are mainly divided into two categories: ternary batteries and lithium iron phosphate batteries. The passenger car market is dominated by ternary batteries.
The cathode material of the ternary battery uses lithium, nickel, cobalt, manganese and other metals, cobalt prices have been high, lithium has experienced a sharp price increase, most companies are trying to increase the proportion of nickel, the ratio of nickel, cobalt, manganese changed to 8: 1: 1, that is, "811 battery". According to this ratio, the demand for precious metals for manufacturing vehicles will decline, which is more conducive to coping with the risks brought about by price increases.
Although the price increase of lithium carbonate is inevitable, and the price of new energy vehicles is inevitable, it is also unstoppable that the rapid and large-scale development of China's entire new energy vehicle market, as well as the high recognition of new energy vehicles by consumers.
Qiu Chen believes that this wave of price increases will not affect the penetration rate of new energy vehicles by more than one in a thousand, and it is mainly concentrated in fourth- and fifth-tier cities.
Guojin Securities pointed out that it is expected that the rising cost of battery materials in this round will have a certain impact on the demand for new energy vehicles, but the impact is within the controllable range. Whether it is weekly high-frequency data or grassroots research, the current demand for new energy vehicles is still relatively strong, basically returning to the level of January or December, especially the plug-in hybrid models.
03
Fifteen years of "gold" has begun
According to the data of the Association, as of 2021, China has ranked first in the world in the production and sales of new energy vehicles for seven consecutive years, with production and sales of 3.545 million and 3.521 million respectively. Last year's new energy penetration rate was 15.7%, which was significantly higher than the 5.8% penetration rate in 2020.
In 2022, sales of new energy passenger vehicles will reach more than 5.5 million units, with a penetration rate of about 25%. In 2025, by the end of the 14th Five-Year Plan period, the new energy penetration rate of Chinese automobiles will be close to 30%, which has become the consensus of the industry.
Behind the rapid growth of new energy vehicles, there is also a long process from silence to outbreak. In 2009, the mainland policy proposed to reach the operation scale of new energy vehicles accounting for 10% of the automobile market share in 2012, but in fact, this figure was only cashed in in 2019. However, from 2019 to now, in just two or three years, it has doubled from 10% to 20%. The golden age of new energy vehicles has arrived.
According to the information on the official website of the Association of Automobile Associations, domestic vehicles have accounted for 48.3% of the total market, of which new energy vehicles account for 25.1%, all of which are historical data. It is expected that by 2035, there is still 6-8 times the room for growth.
Not only BYD, but also domestic car companies have also announced the date of suspension of fuel vehicles, BAIC Group, Changan Automobile, Nissan Automobile will fully stop selling fuel vehicles in 2025, and overseas car companies will stop selling time between 2035 and 2040.
The plan is flexible, and this schedule is not absolutely accurate, but it is enough to reflect the determination of major car companies to develop new energy vehicles.
In the future, charging will no longer become a shackle: from April last year to March this year, the mainland public charging piles have added an average of 32,000 units per month, and according to this trend, the charging problem will be solved at an accelerated pace.
According to the forecast of the Association of Passenger Vehicles, in June this year, the global new energy vehicle ownership is expected to exceed 20 million, of which China accounts for 46%, Europe 34%, and North America 15%. Qiu Chen believes that China is not only the absolute largest new energy vehicle market, but also has sufficient conditions to export (especially to third world countries) the standards and underlying logic of new energy vehicles. In the field of new energy vehicles, China has the most complete industrial system in the world and the most developed power grid system.
Breakthroughs in quantity will also drive the progress of new energy vehicles in functionalization and intelligence. The current new energy vehicles have been surprised by software, such as automatic driving, automatic learning to park in place, voice control steering wheel, etc.
Qiu Chen said that the future of the automobile is consumer electronics. The changes brought about by new energy vehicles are not only in technology and production, but also in concepts and lifestyles. Confidence in the future development of new energy vehicles stems from the confidence in the genes of human beings who can constantly innovate themselves.
*Captions and illustrations are from Visual China.
*Disclaimer: In no event shall the information herein or the opinions expressed herein constitute investment advice to any person.