(Report Producer/Author: Essence Securities, Hu Yang)
1. Core logic: Redefine the penetration rate of new energy vehicles and look forward to the wave of electrification in the largest market
In 2021, the wholesale sales of new energy passenger cars in China will be 3.3 million units, the overall wholesale sales of passenger cars will be 21.07 million units, and the permeability rate of new energy vehicles will be 15.6%; In December 2021, 505,000 new energy vehicles were sold, and the penetration rate of new energy vehicles was 21.3%. In the context of this year's domestic new energy vehicles still determined to increase high, the market has fallen into the "high penetration rate anxiety" of new energy vehicles this year and next year, worried about the decline in the growth center in 2023.
In fact, when we are worried, we need to think about what is the penetration rate of goods? Market penetration = Existing sales volume / Potential demand. This study carefully disassembles the differences between A00 and A00 levels, and looks at the two separately: the penetration of the A00 level is supplemented by incremental market-based + stock substitution, and the core is to grasp the denominator (demand expansion). Penetration outside the A00 level is supplemented by stock substitution + incremental substitution, and the core is to grasp the molecular end (the supply of explosive models drives sales).
We redefine the penetration rate of new energy vehicles: the penetration rate of "15.6%" in the traditional definition is revised into two parts: "11.9%+?". 1. In 2021, the domestic passenger car market outside the A00 class was sold at 20.1 million, and the sales volume of new energy vehicles was 2.4 million, with a penetration rate of 11.9% (15.6% before the correction); The actual penetration rate is actually below 11.9% because there is still an incremental market at the denominator. 2, A00 electric vehicle market core in the expansion of the denominator - expand the market, we roughly calculate the penetration rate of the market in 2021 only 25% -30%.
(1) Why do we look at the A00 market independently? 1. The A00 market is very independent compared to the overall market. Since 2010, the sales volume of this segment has increased from 750,000 to 230,000 to 980,000 last year, and the sales volume has been separated from the growth rate and the overall market, accounting for 6% to 1% and then back to 4.6%, which is almost uncorrelated with the trend of the domestic vehicle market. 2, the difference in the electrification rate of each level is huge. The 2021 A00 electrification rate is 95%+, compared to only 8%-20% in other levels, which is a great contrast. This very different electrification rate result is difficult to explain from the same logical dimension, and we should analyze it in more depth and detail.
(ii) What kind of market is A00? A00 Market Ups and Downs: 2009-2010 Car Rural Policy Pushed the Market to 750,000 (6.6%); Then it fell back to only 230,000 (1%) in 2016; With the advent of the new energy era, A00 EV as the initial subsidy of the industry to promote the rapid release of the most beneficial models, reaching 390,000 units in 2017, occupying 55% of the new energy vehicle market; However, in 2018-2019, when the subsidy declined, it fell back to only 245,000 vehicles; In the past, the A00 was positioned at the low end, but in 2020 we saw the redefinition of the A00 product by the Hongguang Mini EV, and the A00 market reached 980,000 units in 2021, accounting for 4.6%.
In 2022Q1, the A00 EV terminal was insured by 250,000, YOY+69%, far exceeding market expectations, but if you can understand this market, it will not be surprising. 1, A00 low price but product positioning is not low-end: Hongguang Mini macaron version is 10,000-15,000 more expensive than the entry-level version (28,800), but it has always accounted for 75%+. 2, open the "licensed car-free" blue ocean new market: Hongguang Mini rural users accounted for only 2% - urban-oriented, post-90s accounted for 75% - not old man music, women accounted for 78% - tide cool rather than low-end.
Therefore, we put forward a significantly different view from the mainstream cognition of the market: A00's own product positioning improvement, the core is to break through the 140 million "licensed car-free" group of blue ocean market, this year still maintains a high growth rate, if 5 years to complete 5% of the stock substitution, 2025 A00 market is expected to reach the order of 3 million.
(3) Why should we expect the explosion of A-class BEV? 1. A-class cars are the most important segments of domestic passenger cars, accounting for 55%-60%; In 2021, only 29% of the A-class cars in new energy passenger cars, the electrification rate is only 8.4%, and the pure electricity is only 5.7%. 2. The penetration rate of new energy vehicles still has a strong law of opening up the market with large items: the market capacity of the A00 market, driven by Hongguang Mini, has increased from 245,000 in 2019 to 980,000 in 2021, and at the same time, the sales of A00 models such as Euler, Chery, and Changan have risen; In the B-class car market, Tesla Model 3 and Model Y have driven new forces such as Wei Xiaoli to jointly expand the market. At present, the top models in the A00 and B-class markets are pure electric models, and we are very much looking forward to the A-class BEV explosion.
Therefore, we put forward another point of view: the A-class pure electric market needs enough brand influence + product strength + suitable price to create a real hit, to break through the current sales volume of 500,000 vehicles such as Xuanyi, thus bringing about a leap-forward increase in A-level penetration. The explosion will most likely be the $25,000 version of Tesla next year, so 2023-2024 will usher in a rapid increase in the penetration rate of new energy vehicles in the largest market for passenger cars.
(4) Standing in the moment of confusion, we must firmly survive the past. The market will compare this year to 2018 under the downturn,
We think of similarities but different in essence. 1. After more than 2 years of high prosperity in the industry + capital market, entering a new round of production capacity investment period, we must recognize the reality of returning to normal competition in 2022, compared with 2021, there will be a decline in unit profits in many links, and the industrial chain will be differentiated. However, this round of high probability will not be excessive competition, the industry chain head companies mostly reached tens of billions, tens of billions of output value, occupying a higher share of the global supply chain, the pattern is relatively clear. And then the next point, this round of demand is supported. 2, demand is resilient: the essential difference between 2022 and 2018 is the switch of industry drivers. In 2018, subsidies pushed the B-end, the B-end was only 2 million, and the stall situation occurred after the high penetration rate of the B-end, and the rise of the cost side was reflected in the hard decline of subsidies. 2022 is the C-end driven by market demand, and the next year is the time for the largest market penetration to increase; The rise in costs is based on the strong demand choice to the consumer part of the transmission. 3. Price elasticity to sales elasticity smoothly switch. The complete shift in supply and demand in 2018-2019 led to excessive competition + price killing; However, the demand resilience driven by market demand in 2022 avoids the cyclical fluctuations of the industrial chain in the subsidy era, the supply and demand curve is relatively smooth, the rational decline of price elasticity, and the smooth exchange to sales elasticity.
We believe that there is no need for "high penetration anxiety", neutral expectations this year 5.6 million new energy car sales, we define the A00 level of new energy passenger car penetration rate of only 18.7%, pure electricity only 11.6%. There have been pessimistic voices in the market that the permeability rate of new energy vehicles has formed a ceiling at 50%, but in fact, it should be seen that new energy vehicles will expand the vehicle market (incremental market) and complete high substitution (stock market), perhaps the actual sales ceiling is 3 times that of the pessimistic 50% penetration rate expectation.
(5) In the sector has been greatly adjusted, the valuation level has fallen sharply, we think we can be optimistic, do time friends:
The stage of the industrial chain from 0 to 1 has passed, and the process from 1 to 10 is no longer worried about the amount, and the core is the company with barriers to cash in profits. Suggested direction of attention: 1, choose the right company - leader: Ningde times + Enjie shares, the pattern + profit is relatively certain, strong β; 2. Varieties with low valuation and good pattern margin: Huayou Cobalt Industry with three-way integration molding, Zhongke Electric with excellent power layout, etc., which belong to strong α; 3. Select the battery chain expected to be profitable to repair: Ningde era, Yiwei lithium energy, etc.; 4, new technology direction - such as 4680 to drive high nickel ternary chain (Rongbai Technology, Dangsheng Technology, Zhongwei shares, Fangyuan shares, etc.), CNT Tiannai Technology, structural parts Kodali, etc.
2. Redefining the penetration rate of new energy vehicles: "15.6%" vs "11.9%+?"
According to the data of the Federation of Passenger Vehicles, the wholesale sales of new energy passenger cars in China will reach 3.3 million units in 2021, YOY+181%; Wholesale sales of passenger cars in China were 21.07 million units, with YOY+6.6%. The wholesale penetration rate of new energy vehicle manufacturers in 2021 was 15.6%, an increase of nearly 10 percentage points over the penetration rate of 5.9% in 2020.
This report tells us to redefine the penetration rate of new energy vehicles, market penetration = the existing demand for goods / the potential demand for goods: 1. Penetration outside A00 will be supplemented by the replacement of the stock market + incremental market development, and the core of the penetration rate measurement of the market segment is the grasp of the molecular end.
2. The penetration of A00 is supplemented by incremental market development + stock market substitution, and the core of the penetration rate of this segment is the grasp of the denominator.
Therefore, we have revised the penetration rate of "15.6%" in the traditional definition into two parts: "11.9%+?":
1. Domestic passenger car market sales outside the A00 class were 20.1 million, and new energy vehicle sales were 2.4 million, with a penetration rate of 11.9%
(first 15.6% as amended); The actual penetration rate is actually below 11.9% because there is still an incremental market at the denominator.
2, A00 electric vehicle market core in the expansion of the denominator - expand the market, we roughly calculate the penetration rate of the market in 2021 only 25% -30%.
Why do we measure the A00 market independently of the penetration rate of new energy vehicles? Not because the A00 is "low on battery" or "low end", but because:
1, the A00 market is very independent of the vehicle market, sales, growth rate and the fluctuations of the vehicle market are almost uncorrelated, A00 level accounted for from 1% to 6% between the large fluctuations.
2. The electrification rate of more than 90% of the A00 level is in strong contrast with the electrification rate of 8%-20% of other levels, and it is obvious that this very different electrification rate result is difficult to explain from the same logic dimension. Therefore, it is not reasonable to unify these different levels of the market above the penetration rate of domestic new energy passenger cars of 15.6%.
3, the penetration of the market demand is different. Today's A00 is not competing with traditional fuel vehicles to compete with the market: from 2016 to 2019, A00 is a product of the times as a carrier for obtaining subsidies for new energy vehicles; At the beginning of 2020, A00 obtained a new product definition and opened a new market of "licensed car-free" blue ocean.
2.1. Segmentation: The A00 market is very separate from the vehicle market
We will be the domestic overall passenger car and A00 segment of sales & growth rate, A00 market share in the following figure, we can see very obviously A00 market compared to the vehicle market shows a very strong independence, the separation is obvious:
1. Sales: Looking back at the past 15 years, the wholesale sales of domestic passenger cars have climbed rapidly from 5.317 million in 2007 to about 24 million in 2016-2017, and then fluctuated, with 21 million in 2021. The A00 market fell from the trend of 750,000 at the end of the 2010 car to the countryside policy to the 250,000-300,000 range in 2019-2020, until it broke out again in 2021, reaching 980,000.
2. Growth rate: From 2007 to 2010, A00 benefited from the automobile rural policy started in 2009 to promote the development of the vehicle market, and the growth rate was similar to that of the industry; Since 2011, the growth rate of the A00 market has been significantly decoupled from the overall passenger car market, showing a state of separation.
3. Proportion: The proportion of the A00 segment declined from 6% + trend in 2007-2010 to only in 2015-2020
1%-2%, and in 2021 it soared to 4.6%.
After 2011, the sales volume of the A00 market has little correlation with the growth rate and the trend of the vehicle market, and the data is very independent compared with the vehicle market.
2.2. Contrast: A huge gap in electrification rates across levels
In the context of the overall 15.6% electrification rate of domestic passenger cars, the greater difference is the electrification rate of various levels of the market:
1. A00 level thrives. In 2021, the proportion of electric vehicles in the A00 class reached 91.6%, and since the jump in 2017, the proportion of electric vehicles in this class has risen rapidly and remained at 8-9%.
2. Grade B is close behind, with a rapid increase since 2020, reaching 19.7% in 2021, an increase of 12 percentage points over the previous year. The increase in the total market volume + electrification rate at this level stems from the release of high-end electric vehicles represented by Tesla and Wei Xiaoli.
3. The electrification rate of Class A is only 8.4%. This level, as the main segment of domestic passenger cars, has a significantly lower electrification rate than other levels.
In the same period, the electrification rate of more than 90% of the A00 level is in sharp contrast with the electrification rate of 8%-20% of other levels, and it is obvious that this very different electrification rate result is difficult to explain from the same logical dimension. Therefore, it is not reasonable to unify these different levels of the market to the concept of 15.6% domestic new energy passenger car penetration rate.
2.3. Reshaping: Redefining the penetration rate of new energy vehicles in China
What is permeability? Market penetration = existing demand for goods / potential demand for goods. How has the industry defined the penetration rate of new energy vehicles in the past? New energy vehicle penetration rate = new energy vehicle production and sales / overall automobile production and sales.
From the denominator and molecular aspects: 1) Denominator: The A00 market is very independent of the vehicle market, and the amount of A00 subdivision level is not suitable for inclusion in the total denominator. 2) Molecular end: A00 with a motorization rate of more than 90% and other levels of 8%-20% electrification rate form a strong contrast.
In fact, the core of A00's electrification is not the penetration of the stock market, but more of a role in broadening the incremental market: that is, the penetration of the A00 is mainly based on incremental market development + stock market substitution; Penetration outside the A00 will be supplemented by the replacement of the stock market + incremental market development in the future.
In summary, we once again emphasize that this study redefines the penetration rate of new energy vehicles: 1) The penetration of A00 is supplemented by incremental market development + stock market substitution, and the core of the penetration rate measurement of this market segment is the grasp of the denominator. 2) The penetration rate of new energy vehicles in the domestic passenger car market other than A00 is 11.9%, compared to 15.6% before the revision, and this field is expecting changes in the molecular end.
From the general "15.6%" to the "11.9%+?", we can see:
1. The A00 level has reshaped the A00 positioning by Hongguang Mini EV, opening up a new blue ocean market and emphasizing the blue ocean, because the denominator - potential demand is much higher than the market previously expected.
2. The A-class car market, the largest domestic market segment, is in the stage of low penetration rate (8.4% in 2021), and it is very much looking forward to the A-class BEV blockbuster large single product, forming a driving effect such as Mini EV in A00 level and Model 3 in B level when the penetration rate is qualitatively changed. The electrification process of the largest market has not yet arrived, and the market does not need to form a penetration panic, but should be full of expectations.
3, A00 level and A00 level with the electrification to bring more product supply, to meet more diversified demand, so as to hopefully increase the entire market capacity.
3. The A00 market has fluctuated several times, and the Macro Mini EV has reshaped its positioning
Looking back at the development of the domestic A00 market in the past 15 years, there have been several ups and downs:
1. Before 2008, the A00 market relied on the support of star models such as Chery QQ and Changan Benben, and the market share of the A00 was between 6% and 7%.
2. At the beginning of 2009, the policy of cars going to the countryside was introduced. Between 2009 and 2010, the A00 market expanded rapidly, climbing from 360,000 units in 2008 to 750,000 units in 2010.
3. Since 2011, the A00 market has fallen silent after the car went to the countryside. In 2016, A00 passenger car sales were only 234,000, accounting for 1.0%; Among them, there are only 120,000 fuel vehicles.
4. The era of electric vehicles in 2016 is coming. Subsidies drive the emergence of the A00 electric vehicle, pushing the A00 market to 420,000 sales in 2018; But also with the decline of subsidies, the A00 market returned to 250,000 in 2019.
5. In 2020, Hongguang Mini EV reshaped the positioning of A00, A00 is no longer low-end, and opens the "licensed car-free" blue ocean market.
3.1. Car to the Countryside: The Glory and Silence of the A00
3.1.1. The Golden Age of the A00 Fuel Vehicle
From 2009 to 2010, cars went to the countryside to promote domestic automobile consumption. On January 14, 2009, the State Council announced the "Adjustment and Revitalization Plan for the Automotive Industry", proposing that from March 1, 2009 to December 31, 2009, the state will arrange 5 billion yuan to give one-time financial subsidies to farmers to scrap three-wheeled vehicles, exchange light trucks and purchase mini-buses with displacements of less than 1.3 liters. At the beginning of 2010, the implementation of the "car to the countryside" policy was extended by one year to December 31, 2010.
The policy of cars going to the countryside has effectively promoted the development of the A00 market, and has achieved more than doubled growth in two years. In 2008, the domestic A00 passenger car sales were 360,000 units, an increase of 54% in 2009, an increase of 35% in 2010, and reached 750,000 units in the whole year. The A00 market is mainly driven by independent brands, such as Chery QQ and other explosive models to fully enjoy the dividends of the car to the countryside policy.
3.1.2. The end and silence of the times
Looking back at the brilliance of the A00 passenger car in the car to the countryside, then the end and silence of the era. In 2016, the sales of explosive models such as Chery QQ and BYD F0 in the era of cars going to the countryside have fallen by 90%. The market volume fell from 750,000 units in 2010 to just 234,000 units in 2016, of which only 120,000 were A00 fuel vehicles.
Low-end product positioning is difficult to meet the needs of consumption upgrading. A00 initially expanded the market at a low price, but the core of the shrinking market volume is not the change in price, Chery continued to upgrade QQ after 2010, and still has a main version of the price of 30,000 yuan, which is consistent with the car before going to the countryside. However, the low-end positioning that has always been, including cars going to the countryside, has strengthened the low-end location, making it difficult to meet the needs of customers after consumption upgrades.
Supply-side update stagnation + shift to higher-level models. On traditional fuel vehicle platforms, the A00 level has limited updates on the price band of 30,000-50,000, limited to product positioning and upgrade stagnation. In the same period, the independent brand has continuously improved on the higher level of the model, and effectively reduced the cost, especially in the direction of the SUV, greatly enjoying this wave of SUV cycle dividends, and the market for independent A00 fuel vehicles has almost disappeared.
3.2. The Era of New Energy Vehicles: The A00 Electric Vehicle was born in response to the times
3.2.1. A00 benefits the most from the initial promotion of subsidies for new energy vehicles
The A00 electric vehicle is a product of the times spawned in the process of the outbreak of new energy vehicles in China in 2016. The industry is driven by subsidy policies during this period, and A00 products maximize the benefits of subsidy dividends.
In 2016, A00 in the 1:1 ground supplement support, a single kilowatt-hour electricity subsidy of up to 4500 yuan, far more than the battery price; Policy The amount of subsidies accounts for more than 60% of the pre-subsidy pricing. In the same period, the subsidy for a single kilowatt-hour of electricity for A-class vehicles was only 2800 yuan. In 2017, the land subsidy was 50%, and the A00 single kilowatt-hour electricity subsidy was still nearly 3,000 yuan, much higher than the 1,700 yuan of the A-class car. The price of the A00 after subsidies is much lower than that of the A-class car, which is more conducive to downstream digestion.
3.2.2. The A00 electric vehicle was born in response to the times
Review the development process of domestic new energy A00 passenger cars since 2016, and complete the transformation from a product of the times to a blockbuster product.
1. Since 2016, the domestic new energy industry chain has entered the first round of outbreak period driven by subsidy policies, and A00 models such as Zotye, Zhidou and subsequent BAIC EC series and JAC iEV6E have come into being. In 2017, A00-class vehicles accounted for more than 55% of the wholesale sales of new energy passenger cars in China, and exceeded 30% in 2016 and 2018.
2. In 2018-2019, China faced a cliff-like decline in subsidies, and the A00 electric vehicle lost the blessing of subsidies, such as Zotye, Zhidou, Kandi and other models gradually disappeared from the field of vision.
3. In 2020, Wuling Hongguang Mini EV became a hit, and this segment was extremely hot. In 2022, in the face of rising industrial chain costs and general price increases of 10%-20%, it will still maintain strong production and sales.
3.3. Redefinition: Hongguang Mini EV opens up the "licensed car-free" blue ocean market
3.3.1. From the product of the times to the explosive product
A00 Electric vehicles play more of the role of subsidy carriers in the early stage of the development of the new energy vehicle industry, which can be said to be a product of the times. From the perspective of model, we can clearly see that the 2020 Hongguang Mini EV is significantly different from the main A00 model of 2016-2018: 1. From the perspective of sales rhythm: Zotye A00 models from 2016-2017 and BAIC EC series from 2017-2018 all reflect the characteristics of A00's intensive rush at the end of the year. The 2020 Hongguang Mini EV reflects the characteristics of the market's steady upward movement (the Hongguang Mini EV does not have subsidies for new energy vehicles).
2. From the perspective of sales area: Hongguang Mini EV got rid of the shackles of the previous A00 model relying on specific regions (place of origin, place of registration, etc.), and the market was driven to face the national market, with wide coverage and relatively scattered.
3.3.2. Redefine and develop the "licensed car-free" blue ocean market
3.3.2.1. Low price is not low end, product positioning is improved
Jump out of the fixed thinking that the A00 is a low-end model, and we will see something different. In Q1 2022, Hongguang Mini terminal insurance 100,000 units, of which the macaron version with a higher price system accounted for more than 75%:
1. The macaron version with the highest price band accounts for 77%. The 170km endurance macaron at a price of 43,600 yuan accounted for 45.9%; The 120km endurance macaron fashion model priced at 37,600 yuan accounted for 31.2%.
2. The two models with the lowest price system and only 28,800 120km endurance easy models accounted for only 12% of the total. In fact, hongguang Mini's initial impetus included the demand for double points for the group system, but when Hongguang Mini became popular at a price of 28,800 in 2020, it unexpectedly opened a new market. The later marketing positioning of the Macaron version of Leapfrog + makes the Hongguang Mini no longer fully defined by the ultimate price/performance ratio. In April 2021, the Hongguang Mini EV macaron was officially launched, launching two versions of the fashion model and the best enjoyment model, and the official guidance price was 37,600 yuan and 43,600 yuan respectively. From May 2021, the macaron version will account for about 75%-80% of the Hongguang Mini EV terminals.
In the context of rising costs + lower point prices this year, A00 models have raised prices. In March 2022, Hongguang Mini raised the price, the original battery life version was raised by 4K-6K, and launched a higher battery life GameBoy version, while significantly increasing the price. Since the leader of the market is Hongguang Mini EV, Shunshi has become the leader of the price system, so after the price increase of Hongguang, other new brands gradually followed. In the process, we can see that Euler Black Cat / White Cat, Changan Ben National Edition and other suspension of orders, but more is to cancel the low-priced version, in order to better sell the price of the high version of the model, not to abandon the market.
3.3.2.1. Female users? The essence is a "licensed and carless" blue ocean market
Since 2022, A00 products due to the cost of the new energy vehicle industry chain to promote the general price increase of 10%-20%, the traditional sense of the low-end low-price model customer group is very sensitive to price increases, but a deeper understanding of the current A00 after the re-product definition, will find that the market's sensitivity to price is not so strong, influential, but not high. Therefore, we can better understand why the market still maintains a high growth rate after the general price increase of the A00 in 2022. In Q1 2022, from the terminal insurance data, the A00 passenger car insurance reached 250,000 vehicles, an increase of 69.2% over the same period last year, and the growth rate far exceeded market expectations.
Where does the Hongguang Mini EV sell? From the customer portrait, we can see that it is very different from the traditional perception, and we can have a better perception of the repositioning of the A00 level.
Behind the appearance of female users, we believe that the essence is a new blue ocean of "certificate-free cars". After getting rid of the low-end positioning of the traditional A00, A00 redefined the A00 in the process of strong consumer cultivation of the Hongguang Mini EV, redefining the tide, cool, dazzling, etc., to achieve the upgrade of brand tonality. Therefore, in the right price + not Low brand positioning, A00 pure electric can obtain a large number of customers who have a large number of certificates but do not drive in the past (before relying more on family vehicles or public transportation, in the past, the purchase of additional B-level models may require B-level models to reflect social identity, but now there is a cost-effective + brand-ready A00 model choice).
The blue ocean is still wide. We simply measure the size of the "licensed car-free" group by subtracting the number of domestic motor vehicle drivers (cars) announced by the Ministry of Public Security every quarter minus the number of domestic motor vehicles (cars), which is currently as large as 140 million people.
Assuming that the A00 electric vehicle can complete the 5% ownership breakthrough of the above 140 million "carless" blue ocean group in 5 years from 2021 to 2025, it means that about 7 million vehicles will be sold within 5 years. Coupled with the needs of the newly licensed car buyers and the replacement demand after the management of low-speed electric vehicles in the future, we judge that the A00 market is expected to reach the 3 million unit level in 2025.
While the A00 market space continues to develop, it may be 5 years, when the A-class electric vehicle market is more mature and cost-effective, it will gradually carry the replacement demand of today's A00 consumers.
4. Looking forward to the wave of electrification in the largest market, looking forward to the A-class BEV explosion
4.1. Class A is the largest market for passenger cars in China, with an electrification rate of 8.4% in 2021
Review the wholesale sales of domestic passenger cars in 2007-2021, and look at them by level:
1. A-class cars are the most important segment of the domestic passenger car market, accounting for 55%-60%; In 2021, domestic A-class passenger car sales will be 11.6 million, which is still far from the high point of nearly 15 million vehicles in 2016-2017, but it is broader than other levels of market space.
2. The market share of B-class vehicles continues to increase to 23.3% in 2021, with sales reaching 4.92 million units. New energy vehicles such as Tesla Model3, Model Y and Wei Xiaoli are driving continued growth in this area.
3. The market share of A00 level in 2021 is 4.6%, and the sales volume is approaching one million, and the core is still driven by explosive models such as Hongguang Mini.
From the perspective of the new energy market, A00, A and B grades constitute the most important market for new energy vehicles in China:
1. In the initial stage of the outbreak of new energy vehicles in 2016, the A00 level reached the order of 300,000 in 2017, and the A00 class model accounted for more than 55% of the wholesale sales of domestic new energy passenger cars in that year, and exceeded 30% in 2016 and 2018.
2. Class A will enjoy the B-end market procurement dividend during the transition period in 2019, and the sales volume in that year will account for 54%; Sales shrink in 2020; In 2021, the growth rate will continue to be weaker than that of the industry, and the proportion will fall back to less than 30%.
3. The proportion of the B-grade market continues to increase. In 2020, B-class electric vehicles will rapidly expand the market driven by new forces such as Tesla Model 3 and Wei Xiaoli, and will still maintain a growth rate that surpasses the industry in 2022, with sales accounting for nearly 30%.
4.2. Explosive models, incremental supply + incremental market
The penetration rate of new energy vehicles still has a strong law of opening up the market with large single products.
4.2.1. A00 Market: Hongguang Mini opens the market and multi-brand follow-up
When the 2020 Hongguang Mini EV opened the ultimate cost-effective market and redefined the A00, the entire market capacity continued to expand, and the market quickly increased from the order of 200,000 to the million level in 2021. While the Success of the Mini EV, hongguang mini EV also broadened the market for other brand A00 models. The monthly sales of A00 models such as Euler, Chery, and Changan exceeded 10,000 units, while most of the Hongguang Mini hovered 2-3K units in a single month before its launch.
After the success of Hongguang Mini, we can see many brands follow and gradually grow. For example, the Great Wall Euler brand directly positions itself as a "car brand that loves women more"; Chery launched models such as ice cream; In addition, new brands such as Lingbao and punk have emerged. This market reflects the logic of the incremental market, and conversely, the increase in supply further broadens demand.
4.2.2 .B Market: Tesla has a far-reaching influence on the cultivation of the market
The B-class market is also very typical: Tesla Model 3 leads the reshaping of domestic high-end electric vehicle terminals, and is accompanied by products such as Wei Xiaoli, and the electrification rate of the B-class market is significantly better than that of the industry. As we proposed earlier, the market outside the A00 level is supplemented by the substitution of the stock market + the development of the incremental market, but the development of the incremental market in this process cannot be ignored.
In the process of rapid start-up of B-class new energy vehicles, the sales of B-class traditional fuel vehicles have maintained a steady increase, and the total market capacity has expanded significantly. From 2017 to 2021, the B-class passenger car market expanded rapidly from 3.53 million to 4.92 million units: of which new energy vehicles contributed 950,000 increments, and fuel vehicles also contributed 440,000 increments. In 2021, the market electrification rate of this class was 19.7%, second only to the A00 class.
At present, the B-class market relies on explosive electric vehicle models to broaden the market, but it has not yet produced a clear alternative to the traditional B-class market. For example, accords and Camry, which are in the forefront all year round, have maintained sales of about 200,000. The traditional definition of BMW 3 Series, Mercedes-Benz C-Class, Audi A4 and other Tesla Model 3 competitors also maintained high sales, and did not lose the market due to the rapid start of Tesla's domestic Model 3. However, with the completion of consumer education for new energy vehicles in the B-class market, it is expected that with the increase in the proportion of electrification on the supply side in the future, the market will be more concentrated on the substitution of the stock market.
4.3. Expect a Class A BEV explosion to bring about an explosion of new energy penetration
4.3.1. Market cultivation + waiting for supply, the penetration rate of the A-class market is expected to increase
The A-Class is the largest market for passenger cars in Mainland China. From the perspective of models, most of the top 20 models in domestic sales in the past five years are A-class cars, and in 2021, for the first time, there are pure electric models: Hongguang Mini EV and Tesla Model 3, Model Y successfully entered the list. The top A-class cars, such as Xuanyi and Langyi, are in the sales level of 400,000-500,000 all year round.
From the perspective of new energy vehicles, BEV in domestic A-class new energy passenger cars has not yet appeared explosive models, but in the A-class PHEV, BYD Qin DM and Song DM are expected to have a substantial increase in 2022 under the high cost performance.
We believe that the rapid rise of BYD's plug-in and hybrid models will bring good consumer cultivation to the new energy car market, and it is expected that other car companies will continue to make up for the supply of this level of models.
However, for the overall penetration rate of new energy vehicles, the future still needs the explosion of A-class BEV to truly open this market, according to the data released by the Federation of Automobiles, it is estimated that in 2021, the proportion of A-class pure electric vehicles in A-class passenger cars is only 5.7%. Sales of the A-class BEV blockbuster model are expected to exceed 500,000 units, which will lead to a leapfrog increase in A-class penetration.
4.3.2. Who is the blockbuster? Where is it?
For the explosion of the A-class BEV, it may be more worth looking forward to tesla's $25,000 Model 2 (Model Q).
For example, the traditional OEM Volkswagen ID series has tried to achieve a breakthrough in the A-class car, but the results are not satisfactory; The attempts of new power models such as the Xiaopeng P5 are worthy of recognition. But the market needs enough brand influence + product strength + the right price to create a real hit, to break through the sales volume of 500,000. In terms of time, Tesla's $25,000 model is likely to be launched in 2023.
1, manufacturing costs, it is expected that in 2022, the new energy vehicle industry chain will gradually pass the high point of high cost prices, with the ushering in a new round of production capacity release cycle, including Tesla's self-built car factory, battery factory to further reduce costs, supply chain costs will be significantly reduced in 2023, to help the launch of A-class models.
2, intelligent, in 2023 such a point in time, Tesla can have enough Model 3, Model Y to accumulate automatic driving data and experience, dilute the cost, and continue to make meaningful attempts in intelligence.
3. In terms of the price system, first of all, we should understand that electric vehicles do not take parity as the main goal, but need a reasonable price after the balance between electrification and intelligence. If Tesla is launched at $25,000, the price of 160,000 will consider the purchase tax concession (no subsidies anymore), and directly cut into the price band of Ruxuanyi (120,000-150,000); Tesla's price system will make the price system of other A-class BEV followers lower than 160,000, and the price is also highly competitive.
5. Stand in the moment of confusion and persevere
5.1. There is no need to worry about "high penetration"
5.1.1. Base 2021 remains low, with "new" pure electric penetration of only 9%
As of the end of 2021, we look at the penetration rate of models outside the A00 in December 2021, and the penetration rate of pure electric vehicles is only 12.6%; Among them, the electrification rate of A-class vehicles is only 11.5%, and the pure electrification rate is only 8.3%. For the whole year, according to our redefinition of the "new penetration rate", the penetration rate of new energy vehicles other than A00 in 2021 is only 11.9%, and pure electricity is only 9.1%; In the case of incremental markets (increasing denominators), the actual penetration rate is lower.
Hope to be able to pay attention to the growth rate, because the "apparent high penetration rate" caused by the growth rate stall concerns are actually invalid. The so-called "second derivative" fails because there is a problem with the logic of the calculation of the penetration rate itself, so we redefine it. There have been pessimistic voices in the market that the penetration rate of electric vehicles may reach the ceiling at 50%, and the denominator of this penetration rate concept is tentatively defined as 1, but we should see that the electric vehicle market is constantly expanding the incremental market, the future denominator may be broadened to 1.5, and the penetration rate of the original 1 is only at 50%, but there is still an increase of 0.5, which means that the market forward space is also 1 times higher than the pessimistic expectation. In fact, we believe that the penetration rate of the original 1 is possible to reach 100%.
5.1.2. Assume that after the high increase in 2022, the penetration rate of "new" pure electricity is still only 10%-12%
In 2022, the industrial chain is facing the impact of uncertainty of the epidemic + the rise of raw materials to push the price system upward, but after considering these two parts, according to the sales targets of various types of car companies, we still judge that the neutral production and sales of domestic new energy vehicles this year are 606/5.61 million units, an increase of 71%/73% year-on-year. If there are no multiple disturbances, domestic new energy vehicle sales are expected to exceed 6 million units this year.
Assuming that the domestic passenger car sales in 2022 will be 22 million units, according to the above annual new energy vehicle sales assumptions, our neutral forecast for this year's A00 level sales are expected to reach 1.5 million units, and the sales of new energy passenger cars outside the A00 class are 3.83 million units, with a corresponding penetration rate of 18.7%; Sales of all-electric passenger cars outside the A00 class were 2.38 million units, corresponding to a penetration rate of only 11.6%.
At the end of 2021, the number of new energy vehicles in China was 7.84 million, accounting for 2.60% of the total number of vehicles, while Li Yizhong, former minister of the Ministry of Industry and Information Technology and president of the China Federation of Industrial Economics, said at the 2022 China Electric Vehicle 100 Forum that the proportion of new energy vehicles in 2030 is expected to reach 20%. We expect that in the next 5 years, when the proportion of ownership reaches 10%, industrial penetration will generate new chemical reactions.
5.2. It's not the same as 2018
5.2.1. The present moment is familiar with 2018
Why does the market think of 2018? Indeed we can see déjà vu:
1. After the high boom, there is a capacity release cycle: concerns about intensified competition. 2018 experienced the continuous outbreak of new energy passenger car relay buses in 2016-2017, and also experienced the bull market of new energy in 2016-2017; After the policy landed in early February 2018 to April, the sector rebounded significantly, but the Q1 performance of the head enterprise in April was lower than expected, which led to the market's disillusionment of the logic of volume supplement, and the plate quickly turned downward. The essential feedback is after the capital bull market + industrial bull market. Standing in 2022, we have also just experienced more than two years of high prosperity in the industry + capital market, so the market is worried about the intensification of competition: the price competition of the industrial chain + the locking of floating capital.
2. Worry about demand: high penetration rate anxiety + rising costs of the industrial chain. In essence, the new energy vehicle industry chain in 2018 relies on policies, and the core in the B-end market, the policy can support only 2 million vehicles, at that time, it has reached the high penetration rate of the B-end, and there is no model emerging at the C-end. The cost increase in 2018 is essentially a subsidy decline. In 2022, the same market is caught in the anxiety of high penetration + concerns about the impact of rising costs on demand.
3. Price elasticity to sales elasticity: the plunge of price elastic varieties. In 2018, the prices of lithium, cobalt, and 6F all plummeted under the influence of the last supply and demand relationship, and the stock prices of related companies plummeted. In 2022, the price of upstream varieties is relatively firm, but the U-turn of midstream price elastic varieties has emerged. For example, VC, 6F, etc.
5.2.1. The essence is not the same as 2018
Competition is inevitable, but this round of high probability will not be excessively competitive. First of all, the industry will not be like the significant shortage of supply in 2021, to recognize the reality of returning to normal competition in 2022, the unit profit of many links will face a decline, we really need to rationally correct the EPS. But secondly, this round will most likely not be over-competitive. In 2018, the competitive situation of many links is not yet clear, and the size of each company is limited, it is possible to be completely replaced by other companies, and some links make price wars in order to obtain shares, until they lose money. Most of the leading companies in the current round of industrial chain have reached tens of billions and tens of billions of output values, occupying a relatively high share of the global supply chain and the pattern is relatively clear. And then the next point, this round of demand is supported.
Concerns about demand: The essential difference between 2022 and 2018 is a shift in industry drivers. In 2018, subsidies drove the B-side, and in 2022, the market demand drove the C-side. The new energy vehicle industry chain in 2018 relies on policies, the core is in the B-end market, and the policy can support only 2 million vehicles, which is indeed a high penetration rate at the B-end. However, in 2022, our current penetration rate refers to the C-end market, and this report is to tell the market that there is no need for "high penetration anxiety", and the supply and demand of the industrial chain are booming. In terms of cost increases, the decline of subsidies in 2018 is rigid, and the rise in costs in 2022 is based on the strong demand choice to partially transmit to consumers.
The price elasticity is smoothly switched to the sales elasticity. 2018 and 2019 are facing a stall in sales, so the complete shift between supply and demand leads to excessive competition + price killing; However, the demand resilience driven by market demand in 2022 avoids the cyclical fluctuations of the industrial chain in the subsidy era, the supply and demand curve is relatively flat, we will see the rational decline of price elasticity, and the steady upward sales trend of 2022 is still full of confidence and expectation for the change of industrial trends.
5.3. Long slopes are thick with snow, and barriers are king
The stage of the industrial chain from 0 to 1 has passed, and the process from 1 to 10 is no longer worried about the amount, and the core is the company with barriers to cash in profits. After a long period of adjustment of the plate for more than half a year, the leading companies generally fell by 40%-50%, many companies above the outlet last year have fallen by 60%-70%, the valuation level of the plate has been adjusted to the level of 2018-2019, the midstream leader has been adjusted to 25-30 times that year, and the head enterprise has been adjusted to 20-35 times. Standing in the confused moment, we must firmly survive the past, be friends in the time, choose a good company, and enjoy the growth dividends of long slopes and thick snow.
(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].