Text | Wang Jingyi, Guo Huaiyi, Li Huangyin
Edit the | Lee Huangyin
2022 has been an extraordinary year. Despite the impact of the Russia-Ukraine conflict, the new crown epidemic, chip shortages, soaring lithium prices and other events, China's automotive industry still shows strong resilience and vitality.
According to the China Association of Automobile Manufacturers, China's automobile sales in 2022 will reach 26.864 million units, a year-on-year increase of 2.1%, continuing the growth trend of the previous year. Among them, the sales of new energy vehicles reached 6.887 million units, a year-on-year increase of 93.4%, and the market share has reached 25.6%.
China has secured the top spot in the world for new energy vehicles. According to data released by Japan's Mark Lines, in the global new energy field, the sales of new energy models made in China account for 40% of the world, the United States is 30%, the sum of European countries is about 20%, and Japan, as one of the world's top two automobile countries, accounts for less than 5%.
Among them, the market share of independent brands is nearly half, the penetration rate of new energy vehicles is nearly 30%, and other data are new highs, marking that China's automobile industry has completed a phased task - with the help of new energy, it has broken the price ceiling, taken away the traditional customers of joint ventures and even luxury brands, and achieved a breakthrough in brand upward mobility.
However, after two years of rapid progress, Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, told Caijingqiche (ID: caijingqiche) that new energy vehicles will continue to grow in 2023, but the growth rate will slow down significantly, and the general growth rate in the industry will fall from 100% to about 30%.
▲ Source: China Association of Automobile Manufacturers, compiled by reporter Wang Jingyi
Tabulation: Yan Bin
After the bright sales figures, there is still a sobering industry reality: the newly invested production capacity has encountered a shrinking increase, superimposed on the continuous influx of new electric products, there is a risk of imbalance between supply and demand. For joint venture brands with declining popularity in the new energy automobile industry, it is necessary to accelerate innovation and catch up with the wave of change of the times; For the huge new energy vehicle companies, the new year must seize the pursuit of profits, no longer lose money to make money, and let the enterprises develop sustainable development as soon as possible.
01
Independent brands continue to rise by taking advantage of the momentum
Since China's auto industry entered the era of joint ventures in the 80s of the 20th century, independent brands have never won the sales champion of China's passenger car market for more than 30 years. But in 2022, that history is finally being rewritten.
According to data from the Passenger Vehicle Market Information Joint Conference, in 2022, BYD will beat FAW-Volkswagen (including Volkswagen, Audi and Jetta brands) with 1.804 million units, winning the sales champion of China's auto market in 2022.
According to statistics from the China Association of Automobile Manufacturers, the share of China's own brands in the passenger car market reached 49.9% in 2022, a record high in recent years.
It is worth mentioning that the biggest contribution to BYD is new energy vehicles. For BYD, the sales of fuel vehicles are already negligible. In March 2022, BYD became the first traditional automobile company in the world to announce the official discontinuation of the production of fuel vehicles, focusing on EV pure electric and DM plug-in hybrid models.
Cui Dongshu, secretary general of the Passenger Association, told Caijingqiche (ID: caijingqiche) that high oil prices in 2022 are also one of the drivers of the outbreak of China's new energy vehicle market.
According to data from the Passenger Association, among the 15 car companies that sold the most new energy vehicles in 2022, 11 self-owned brand car companies made the list. Among them, BYD, Geely Automobile, GAC AION, Chery Automobile, and Changan Automobile all have annual sales of more than 200,000 units, doubling the year-on-year growth rate. Among the remaining four companies, SAIC-GM-Wuling, FAW-Volkswagen and SAIC Volkswagen are joint venture automakers, and Tesla is a wholly foreign-owned automaker.
Specifically, from the perspective of models, independent brands also occupy an absolute advantage. According to data provided by the China Auto Finance and Value Retention Rate Research Council to Caijingqiche (ID: caijingqiche), among the 15 new energy vehicles with the highest risk volume in the first 11 months of 2022, their own brands occupied 13 seats, and Tesla's Model Y and Model 3 took the remaining two.
Independent brands not only occupy the advantage of "quantity", but also improve "quality" compared with 2021.
One characteristic is the decrease in the number of low-priced micro-electric vehicles among the hot-selling models. Among the top 15 in 2021, 5 micro electric vehicles were shortlisted. In 2022, there are only 3 models, and in addition to the Wuling Hongguang MINI EV, which still occupies the top spot, the sales of the remaining two shortlisted models, Changan Benben EV and Chery eQ, have increased significantly, but both have significantly declined in the rankings.
Replacing micro-electric vehicles is a range of more expensive pure electric products. As the biggest winner in the new energy vehicle market, BYD's shortlisted models have increased from 4 seats in 2021 to 6 seats, and the price of vehicles is concentrated in the mainstream price range of 150,000 to 300,000 yuan, and the price of BYD Han is even as high as 331,800 yuan.
According to data from market research agency Jelan Road, BYD's average bicycle transaction price in 2022 rose to 167,000 yuan, which has exceeded the 162,000 yuan of the Volkswagen brand.
In the high-end market of more than 300,000 yuan, independent brands hold new energy vehicles, attracting the attention of fuel vehicle owners of luxury brands. According to statistics, among the additional purchase users of Zeekr 001, users from Mercedes-Benz, BMW and Audi brands accounted for 32%.
Zhang Yongwei, vice chairman and secretary general of the China Electric Vehicle 100 Association, told Caijingqiche (ID: caijingqiche) that the price range of 150,000-300,000 yuan in the future will become the main battlefield of new energy vehicles. In 2023, the structure of China's new energy vehicle market will further change from dumbbell-shaped to spindle-shaped.
New energy vehicles not only help independent brands achieve brand improvement in the Chinese market, but also benefit Chinese automobile exports.
"Since 2021, the unit price of China's exports of vehicles has been rising, especially in the field of new energy vehicles, as far as I know, the unit price of China's new energy vehicle exports has been maintained at about 30,000 US dollars per vehicle." Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, told Caijingqiche (ID: caijingqiche).
02
Joint venture car companies want to kill back the horse gun
In the process of continuous growth of the new energy vehicle market, independent brands are making rapid progress, and joint venture car companies seem to be collectively absent from this feast.
Taking the Volkswagen Group, which is a bull in the era of fuel vehicles, as an example, although it has continuously invested huge financial, material and human resources in China's new energy vehicle market in recent years, its market share is far from reaching the previous height. In the list of new energy vehicles in the first 11 months of 2022, none of the models from Volkswagen's joint venture in China made the list.
Why did the halo of joint venture car companies suddenly disappear in the new energy era?
Gong Min, head of automotive industry research at UBS China, told Caijingqiche (ID: caijingqiche) that the pure electric models of the joint venture are not bad and the price is reasonable, but the brand premium in the era of fuel vehicles has not been translated to electric vehicles. Moreover, from the perspective of the launch time, the speed of joint venture car companies is relatively slow. At present, mainstream joint venture car companies are in the most unfavorable position in terms of electric vehicle launch and brand recognition.
"China's EV market is very different from the world." Qin Peiji, president of Volvo Cars Greater China Sales Company, said frankly that the price of cars in the United States can also rise with inflation, in contrast, the price of electric vehicles in China is too rolled. Nowadays, it seems that traditional luxury brands have not seriously studied the Chinese market, copied global experience, and natural product and service systems will encounter unsatisfactory conditions.
Although independent brands occupy the vast majority of China's new energy vehicle market, it does not mean that traditional joint venture car companies represented by Volkswagen have no opportunities.
In 2022, almost all joint venture automakers are launching the latest pure electric models in the Chinese market. In 2023, the new energy product offensive of joint venture car companies will become more and more obvious.
In January 2023, the Volkswagen Group officially unveiled the ID.7, the first pure electric car of the ID. family, at the National Consumer Electronics Show (CES) in the United States. Also in 2023, SAIC-GM will launch 4 new models using the Autoneng pure electric platform; Beijing Hyundai will also launch exclusive new energy models; BMW plans to launch innovative BMW iX1, Rolls-Royce SPECTRE and other pure electric models, which are expected to cover all market segments within the year. It is worth mentioning that BMW recently unveiled the BMW i Digital Emotional Interaction Concept Car (DEE), which strengthens the driving experience of passengers on the basis of electrification with mixed reality interaction interface and human-machine emotional interaction module outside the car.
Not only that, but the reform of organizational structure and marketing channels has also been put on the agenda.
SAIC Volkswagen has reorganized its marketing and sales departments and set up a separate model group department dedicated to the ID. series of electric vehicles, which has significantly boosted sales. SAIC Volkswagen told Caijing Auto (ID: caijingqiche) that SAIC Volkswagen's organizational structure and dealer network reform will continue to deepen in 2023.
Similar reforms have emerged at SAIC-GM. SAIC-GM has adjusted the new energy sales channel policy of the Cadillac brand, and it is expected that more than 200 Cadillac IQ new energy zones will be put into operation in 2023. Buick pure electric city showrooms are expected to reach 58, and Buick New Energy Zone will exceed 600. Volvo will open 29 new city center stores. Mercedes-Benz also said that it will launch exclusive integrated service products for pure electric models in 2023 and build its own high-power charging network.
On the one hand, the introduction of new products into the Chinese market is accelerated, and on the other hand, the organizational structure and channel construction are closer to the Chinese market. According to Zhang Yichao, partner of EY-Bozhilong strategic consulting, when traditional brands begin to lay a large number of directly-operated stores and improve services, and new forces penetrate the sinking market, the crossover between the two sides in channels will slowly increase, and the competition will become more extensive.
Zhang Junyi, managing partner of Oliver Wyman, told Caijingqiche (ID: caijingqiche): "At present, most fuel vehicle consumers are still relatively conservative, they have not considered pure electric vehicles, and many car owners have brand loyalty, and expect traditional car companies to come up with pure electric vehicles with product power." When the original users begin to consider buying pure electric vehicles, if the traditional car companies can replace them in this process, there is still a chance to turn defeat into victory. ”
After improving the sales channel, the pure electric product offensive of the joint venture brand is coming, and in 2023, the game between the stronger joint venture brand and the independent brand will be more glued.
▲ Source: Passenger Association
▲ Source: China Auto Finance and Value Retention Rate Research Committee
03
The increase slowed down and the knockout accelerated
According to data from the China Association of Automobile Manufacturers, in 2022, automobile production and sales reached 27.021 million units and 26.864 million units, respectively, up 3.4% and 2.1% y/y. Among them, new energy vehicles continued to grow explosively, with production and sales reaching 7.058 million units and 6.887 million units, respectively, up 96.9% and 93.4% y/y, and a market share of 25.6%.
New energy vehicles have gradually become the mainstream of passenger car consumption, and are not just the sole favor of big cities. McKinsey pointed out in the report "Driving to 2030 - Automotive Industry Race" that the market penetration rate of pure electric vehicles is not only limited to first- and second-tier cities, but also in third- and fourth-tier cities and below, and has also made significant progress; Moreover, in third- and fourth-tier cities and below, it is not the stereotypical small and micro pure electric vehicles that are sold, and the consumer demand for compact, medium-sized, medium-large and large pure electric vehicles is also gradually expanding.
However, after doubling in 2021 and 2022, major institutions expect China's new energy vehicle market to continue to grow in 2023, but due to the previous sales growth rate is too hot, this year's sales growth will decline.
The China Association of Automobile Manufacturers (CAAM) expects that China's new energy vehicle sales in 2023 will be 9 million units, a year-on-year increase of 35%. The figure given by the passenger association is 8.4 million vehicles, a year-on-year increase of 30%. Zhang Yongwei is more optimistic, he told Caijing Auto (ID: caijingqiche) that without the impact of the black swan event, China's new energy vehicle sales are expected to exceed 10 million for the first time this year, with penetration and growth rates approaching 40%.
With more and more new entrants, the market competition is becoming more intense.
In 2022, there are 147 car brands in the Chinese auto market, and 60% (116 models) of the new cars launched are new energy vehicles, and a total of 372 new energy vehicles are currently on sale. Zhu Huarong, chairman of Changan Automobile, said bluntly: "In addition to luxury brands, ordinary models sell less than 10,000 per month, and it is difficult to survive and make a profit." According to the current market capacity, 100 models are saturated. ”
"If a car brand, the market share is below 1% for a long time, falling below the life and death line of 1%, it will rarely be able to get up again." Guan Mingyu, global managing partner of McKinsey and head of McKinsey's automotive consulting business in China, told Caijingqiche (ID: caijingqiche) that there will be more and more car brands that cannot keep up with technological changes, model changes, market rhythms and consumer demand, and face the situation of gradual elimination.
Even so, the enthusiasm of car companies to innovate is unabated. CSC Investment Research Report pointed out that China has an average of 65-80 new energy models on the market every year, contributing 35%-47% of sales, and the speed of new launches and sales contribution have significantly caught up with fuel vehicles, which is the main factor for sales growth.
Gong Min, head of automotive industry research at UBS China, told Caijingqiche (ID: caijingqiche) that China dominates 60% of the world's electric vehicles, 70% of batteries and 80% of battery materials, and is very competitive overall. However, the strength of the overall market does not mean the strength of specific enterprises, and it is not clear which electric vehicle companies have a deeper moat and more stable expectations.
Combined with the planning of various enterprises, the current capacity planning is relatively positive, and it is expected that the capacity growth rate in 2023 will be 40%-50%, which is likely to be faster than the growth rate of demand.
In this regard, there are also concerns about overcapacity and price wars in the industry. A fund manager of an asset management company told Caijing Auto (ID: caijingqiche) that the new energy automobile industry has been booming for two or three years, and now the growth rate has slowed down, but some of the original "aggressive" production capacity has been put into production, which may lead to overcapacity.
At the capital market level, although the stock price of the new energy vehicle sector rose sharply in mid-2022, after multiple rounds of adjustment, the performance of the whole year was relatively weak, and the CSI New Energy Vehicle Index has fallen by more than 20%, deviating from the fundamentals of the industry.
A number of securities firms have judged that looking at A-shares in 2023, new energy vehicles are still one of the fastest growing growth industries, with long-term investment value, among which scarce links such as batteries, lithium resources, and separators are more worthy of attention.
The aforementioned fund manager believes that the new energy sector will no longer rise in 2023, and the stock prices of different companies will also diverge significantly: companies that can continue to take the new energy vehicle consumption scale to expand the hitchhiker are expected to keep up with the average growth rate of the industry. However, if it is a traditional new energy vehicle-related company that provides a single product, has limited competitiveness, and is difficult to integrate into the intelligent territory, it may invest in downside.
04
No more "losing money and making money"
"The cost of power batteries has accounted for 40%-50% or even 60% of new energy vehicles, so am I not working for CATL (a leading power battery company)?" Zeng Qinghong, chairman of GAC Group, made a public statement.
Although a variety of new models are emerging and various sales targets are blooming, behind the glossy surface of car companies is the fact that profitability is not high.
In the case of BYD, the sales champion, in the first three quarters of 2022, the cumulative sales of new energy vehicles exceeded 1.18 million units, corresponding to revenue of 267.69 billion yuan and net profit of 9.31 billion yuan - BYD's bicycle revenue was 167,400 yuan, and the net profit of bicycles was 09,900 yuan, a record high.
Although sales lag behind BYD, Tesla's profit is 7 times that of BYD. Tesla delivered 908,600 vehicles in the first three quarters of 2022, with cumulative revenue of US$57.14 billion (about 388.84 billion yuan), net profit of US$8.87 billion (about 60.36 billion yuan), and an average net profit of about US$10,000 (about 68,000 yuan) per vehicle.
When Tesla found that since the second half of 2022, when sales were sluggish, it began to actively reduce the price and exchange price for volume. In the face of this price war, it is not easy for Chinese car companies, which are already weak in profitability, to recruit.
The profitability of BYD's bicycle of 0.99 million yuan is already second to none among its own brands. For example, Great Wall Motor, which has also just reached the best level in history, has a net profit of 80,000 yuan per vehicle in the third quarter of 2022. As the largest car company in China, SAIC's net profit per bicycle was 30,000 yuan, falling for three consecutive years, while Changan Automobile's net profit per bicycle was 0.23 million yuan.
Many new brands are still losing money in large numbers. According to the sales volume of the same period corresponding to the net loss, Lantu Auto and WM Motor lost more than 100,000 yuan per car sold, and the net profit of leaders such as NIO, Li Auto and Xpeng Motors was always negative.
"Did the independent brand beat Tesla? To answer this question, we must not only look at sales, but also see how much Tesla earns and how much its own brands make. Some car companies subsidize consumers to sell cars, gross profit is still negative, Tesla is making money to sell cars. If you say that the independent brand won Tesla, it is blind optimism. Gong Min pointed out to Caijingqiche (ID: caijingqiche).
Seeing that sales are not profitable, this is a problem that car companies must face up to and are solving.
"Affected by the 'lack of cores and expensive electricity', the cost of Changan Automobile's new energy models increased by 5,000-35,000 yuan." Zhu Huarong pointed out that the "lack of cores" has led to an increase in chip prices, an increase in procurement costs for OEMs, uncontrollable supply, and a phenomenon of "a large number of semi-finished products off the line and a large number of semi-finished products in inventory". The price of lithium carbonate raw materials has risen from more than 50,000 yuan per ton in 2021 to 600,000 yuan per ton, and the battery price cost exceeds more than 40% of the whole vehicle, and even some enterprises are as high as 50%, which causes great fluctuations in the operation of enterprises.
Car companies that are no longer willing to "work for the Ningde era" are already developing their own batteries. "Smart electric car companies, you can't make money without batteries. In the long run, we want to do it 70% ourselves and 30% externally. NIO President Qin Lihong told Caijingqiche (ID: caijingqiche).
Through self-developed key technologies and wringing out the water on cost, NIO is not the only one doing this. "I'm not afraid of price wars", Zhu Jiangming, founder and chairman of Leapmotor, told Caijingqiche (ID: caijingqiche) that since its inception, Leap has insisted on making all core components self-made, which can save the gross profit difference compared to procurement, which also improves cost competitiveness; Moreover, the more cars are sold, the lower the production cost and the more R&D costs can be shared. The cost savings allow Zerorun to introduce new technologies, improve product configuration, and enhance competitiveness in the same class.
Automotive companies need to improve their control over the supply chain and the degree of independent research and development of core technologies to ensure long-term profitability. Gui Lingfeng, director of A.T. Kearney Management Consulting Greater China, analyzed to Caijingqiche (ID: caijingqiche) that if car companies choose the forward research and development of core components from the beginning, the initial investment may be higher, but the long-term voice will be correspondingly higher. Collaboration with suppliers on R&D was also seen as a trade-off, with the ability to spread procurement costs while ensuring a high degree of supply resilience.
With the popularization of new energy vehicle consumption, more and more car companies are constantly launching new automobile brands according to different users and usage scenarios. However, in Gui Lingfeng's view, this seemingly "more children are good to fight", may actually ignore the profit space corresponding to the positioning of each brand, and car companies need to adjust their product portfolio based on profit prototypes in the future. Avoid internal friction, open source and reduce costs, in order to make enterprise development more sustainable.
It is also dangerous not to increase brand value. In Qin Peiji's view, you can't sell trams below 100,000 yuan, and if you buy one and lose one, it will definitely be a high-end car with a greater profit.
(Our reporters Guo Yu, Zhao Cheng and intern Li Hongxi also contributed to this article)
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Editor-in-charge | Zhao Cheng