New energy to the countryside, how can we tap the potential?

"Consumers in the entire rural market have a high acceptance of electric vehicles, which will release a certain demand for A00-class models." In response to the topic of new energy vehicles going to the countryside, Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, commented on this.

Coinciding with the recent days, the Ministry of Industry and Information Technology said that it will improve a new round of new energy vehicles to the countryside. What is the significance of this move to the car market? What model market is good for? How to solve the new pain points of going to the countryside? Phoenix Auto exclusive interview with Xu Haidong, talk about the issue of new energy vehicles going to the countryside.

What is the potential of the countryside?

Xu Haidong pointed out that in the previous survey, it was found that relying on the experience of using low-speed electric vehicles in the past, consumers in the entire rural market have a high acceptance of electric vehicles.

Statistics in 2021 show that a total of 1.068 million new energy vehicles in the countryside have been sold, an increase of 169.2% year-on-year, which is about 10% higher than the overall growth rate of the new energy vehicle market that year.

In recent years, electrification products such as low-speed electric vehicles in the mainland have developed rapidly in the rural market, and the national ownership of four-wheeled low-speed electric vehicles has exceeded 6 million, indicating that rural consumers have a huge demand for electric vehicles.

As basic means of transportation, A00-class and A0-class models have an alternative effect on low-speed electric vehicles. At present, many local governments have issued strict prohibitions on any enterprise or individual from producing and selling low-speed electric vehicles that do not meet the conditions of national standards, industry standards and other laws and regulations. It is strictly forbidden to drive a low-speed electric vehicle without vehicle registration on the road in violation of the law. Xu Haidong said that he believes that after strengthening management, the rural market will release a certain demand for A00-class models.

In 2021, non-restricted cities contributed about 70% of the sales of new energy vehicles. In non-restricted cities, 58% of users have purchased an A00-class sedan.

However, recently, with the price increase of power batteries, the price of A00-class cars has increased. Will the price increase lead to weak terminal demand?

Xu Haidong believes that the price increase will not have much impact on the market.

"Because the current price of new energy models is generally rising, users who originally had a need to buy a car are unlikely to give up buying because of the price fluctuation of several thousand yuan." However, it is not excluded that some consumers choose to buy low-speed cars because of the high price of A00-class models. ”

From the perspective of spending power, this prediction is also logical.

Statistics show that the annual household income of many county and township users exceeds 50,000 yuan. The budget expenditure for car purchases is generally less than 70,000 yuan, mainly concentrated in about 35,000 yuan. Most of this group travels within 30km per day, rarely more than 100km, daily car purchase is mainly used for migrant workers and pick-up and drop-off children, charging is mainly based on household charging treasures, charging economy is high, and has convenient charging conditions.

Going to the countryside has pain points

However, looking forward to the future car market, from the perspective of demand, the global car market is the largest customer group of A-class cars. The pricing of the main model in the countryside is below 150,000 yuan, which coincides with the pricing of the new energy A-class model. However, from the perspective of use scenarios, A-class car owners in township areas may have higher requirements for battery life, and no model can solve this pain point.

Xu Haidong pointed out that in the past car market, the consumption structure was dominated by dumbbell structure. That is, A00 class and A0 class and B level or above models, as the two ends of the market development is better. The gap in the middle is the Class A car. A large part of this is due to the cost of the battery. Models of grade B or above have greater bargaining space, and the price can also support the cost of long-lasting power batteries.

The outbreak of A-class vehicles is more dependent on the decline in battery costs and whether car companies can reduce overall production costs through the scale of new energy. If the cost comes down, the push for the price-sensitive rural market will be obvious.

Xu Haidong said that this is also the reason why the new energy activities in the countryside in recent years have begun to be distributed to second- and third-tier cities and counties. The more activity sinks, the more likely it is to generate sales for the business.

At present, the income growth of rural residents and consumption expenditure in the country are faster than that of urban residents, especially in some economically more developed areas, the income consumption level of rural residents is close to that of second-tier cities, and their motorized travel needs are urgent, but the overall automobile penetration rate is low. The electrification rate of vehicles used by rural residents is less than 1%, which is only 1/3 of that of urban residents, and there is sufficient room for growth.

It is estimated that by 2030, the number of rural cars per 1,000 people is expected to reach 160, and the total number of vehicles will exceed 70 million, with great potential for electrification.

In this process, the mainland is constantly making efforts to revitalize the countryside, so the rural areas of new energy vehicles are also a way to guide rural residents to travel green and further expand the consumption of automobiles. Whether from the aspect of publicity, activities, policies or enterprises, some preferential policies provided by the activities to the countryside will further stimulate the performance of the rural market.

He believes that going to the countryside by car is a long-term work, the direction of government guidance, and a strategic choice for enterprises. Rural areas have a vast market, and meeting the needs of consumers in this circle must be the direction of the future.

Some optimists estimate that the demand for motorized travel for rural residents will leverage a 500 billion supercar market.

Among them, small economic electric vehicles will become the main new products in the rural market, or will form a scale of tens of millions of vehicles in third- and fourth-tier cities and rural areas, becoming an important driving force for the sustained growth of the domestic economy.

On how to enhance the effect of going to the countryside, Xu Haidong said that in the future, manufacturers can exert efforts in the rural market, further understand the needs of consumers, and develop exclusive models to strive for more increments.

In view of some of the pain points in the current rural activities, Xu Haidong also gave his own thoughts.

First, there is no additional separate central financial subsidy for new energy activities in the countryside, and the attraction to consumers is relatively small.

Second, the cost of activities is high, and it is necessary to enhance the overall sustainable development of new energy activities in the countryside. At present, part of the budget for rural activities comes from various provinces and cities, and the preferential treatment given by the superimposed manufacturers is relatively limited.

Therefore, the sustainable development of the strategy of cars going to the countryside also needs to mobilize enterprises to jointly explore and establish a market-oriented model. Businesses as stakeholders will also benefit from this.

Third, infrastructure such as charging piles in rural areas needs to be further improved. In the activities of going to the countryside, the National Energy Administration and the State Grid of Guodian are actively involved in the layout of charging facilities, and have also done a lot of work in solving rural charging facilities.

At the same time, after-sales maintenance services need to continue to sink. In particular, the maintenance of new energy vehicles relies more on new technologies, and also requires enterprises to lay down the maintenance outlets as much as possible. The opening of more sales and service outlets in townships and rural areas will become one of its important tasks in the next few years.