At the end of the year and the beginning of the year, each Auto chatted with seven industry insiders to feel where the wind will blow in the automotive industry in 2023.
In 2022, BYD's annual sales exceeded 1.8 million units, surpassing Tesla (1.31 million units) to become the global champion in new energy vehicle sales. What is more noteworthy is that BYD took over the baton of SAIC Volkswagen and became the first sales of domestic car companies. The significance of this matter is that this year, the prelude to the handover of new energy vehicles and fuel vehicles has finally begun.
With models such as Song, Qin and Han, BYD won six places in the 2022 new energy model sales TOP10 list, and interestingly, the core selling point of these hot-selling models is not intelligent factors. On the contrary, intelligent cockpit and automatic driving have always been BYD's much-criticized slots. Zhang Junyi, managing partner of Oliver Wyman, believes that it can be seen that at least at this stage, intelligence is not the primary factor affecting consumers' car purchase decisions.
Because of this, the autonomous driving industry will usher in a cold wave in 2022, and even star companies such as Argo AI and Aurora are difficult to sustain. Compared with the far away landing in the passenger car market, an industry insider responsible for research and development in an automotive electronics company believes that commercial vehicle autonomous driving may usher in a concentrated outbreak in 2023.
From the price segment, the price of BYD's main sales models is about 100,000-200,000 yuan, and its sales performance in 2022 shows that new energy vehicles have entered the mainstream consumer market, and Lei Xinbin, an expert in the intelligent network industry, predicts that the 200,000 yuan range in 2023 will become the main battlefield of intelligent electric vehicles.
With high cost performance, BYD will continue to maintain its competitive advantage. Not to be outdone, Tesla said in the fourth quarter of 2022 earnings call, Tesla said that it is accelerating the study of the cost reduction roadmap in the near future. That is to say, in 2023, Tesla will continue to raise the banner of price reduction in response to BYD's crazy attack.
In such a competitive background, Wei Xiaoli's situation is more dangerous. On the one hand, the gross profit level is much lower than Tesla, and in the face of the latter's successive price cuts, it is difficult for Wei Xiaoli to have room to keep up; On the other hand, in the main battlefield of about 200,000, NIO and Ideal do not have corresponding models to seize the market, and under the internal worries, it is unknown how much dividends Xiaopeng can share in the main battlefield. Zhang Junyi believes that if less than 200,000 vehicles are sold in 2023, Wei Xiaoli's life may be very difficult.
BYD "killed" red eyes, on the other hand, the once powerful joint venture brand opened the curtain of delisting. Dongfeng Renault, GAC FCA, and Acura have been delisted one after another, and even the joint venture brands of Honda and Toyota in China have collapsed across the board, and Toyota's sales in 2022 even fell year-on-year in China for the first time in a decade. An Cicada, who works in a power battery company, told everyone Auto that a Korean joint venture car company was even insolvent, and the owner lost 6,000 yuan selling a model.
In 2023, new energy vehicle companies will continue to launch a fierce attack. Some analysts believe that BYD's sales are expected to hit 3.5 million vehicles; Musk thinks Tesla has the potential to sell 2 million new cars.
In troubled times, the reshuffle will be further intensified.
The 200,000 zone will become the main battlefield
In the field of Internet of Vehicles, I am an old man, and the first contact with this industry was in 2010, exactly 12 years ago. In this cycle, my career trajectory covers the upstream and downstream of the intelligent automotive industry, and I can see the ups and downs of the industry relatively clearly.
2022 is the year of the inflection point. This year, the penetration rate of new energy passenger vehicles exceeded 27%, and sales reached nearly 6.5 million units. Recalling that at the end of 2021, when I attended an industry conference held by the China Association of Automobile Manufacturers, experts at the time estimated that sales of new energy vehicles would exceed 5 million units in 2022, and a guest from BYD said, "Let's be radical, 5.2 million units." But now, the sales scale in 2022 has far exceeded everyone's imagination a year ago.
The inflection point has arrived, what kind of play should new energy vehicle companies adopt?
A few years ago, when an entrepreneur crossed the border into the automotive field, he mentioned the phrase "respect for tradition", which is actually very applicable today. If the word "smart electric vehicle" is taken apart, "smart" and "electric" are adjectives, and "car" is the essence, which means that the new car must conform to the development law of the automotive industry after all. Step by step, I have experienced the upheaval in the industry and become more and more convinced of this. Car manufacturing must first ensure the quality and design of the vehicle, put electrification and intelligence in place, and gradually reduce costs through large-scale production, so as to form a virtuous business cycle.
Clarify this point, and then find a suitable market segment in the industry. For example, NIO focuses on the luxury market, ideally focusing on home and large space. First do the brand, then do the scale, order is very important.
In 2023, I still feel that the automotive field is a very imaginative track.
In the past year, we often said "driving and parking integration", followed by the trinity of high-speed navigation, urban navigation and parking assistance, with the iteration of technology, consumers will use high-end assisted driving in more urban areas.
At the same time, intelligent cockpit and intelligent driving have been trying to better integrate, such as the integration of driving domain and cockpit domain computing unit. There will be a long time before the popularization of L4 and higher autonomous driving, and I believe that 2023 will see more interesting attempts.
More high-end technology will sink. For example, the air suspension gradually sinks to about 300,000 models, and in the cockpit, technologies such as AR-HUD (augmented reality head-up display) even sink to 200,000 models. In the future, UWB (ultra-wideband) technology will be more widely used in cockpits and human-computer interaction systems.
Looking at the entire new energy vehicle market, there is still a lot of room for development. The China Passenger Association predicts that sales of new energy passenger vehicles will exceed 8.5 million units in 2023. Combined with the economic situation, I think the scale will be 9 million vehicles.
It is worth noting that the main battlefield of electric vehicles will be concentrated in the market of about 200,000 yuan.
On the one hand, a smart electric vehicle must maintain a basic sense of quality (good intelligent performance and endurance level), but also ensure a gross profit of about 20%, which falls just within the price range of 200,000+. On the other hand, consumers want to buy a car with good driving experience and interior space, and the budget will fall to the range of 200,000+.
At the beginning of 2023, Tesla took the lead in rolling up. Model 3 dropped to 230,000, Model Y dropped to 260,000, Xpeng P7 also followed, down to about 220,000, and the M5 also dropped to 260,000. It can be seen that the competition in the range of 200,000 (200,000-250,000 yuan) is already full of gunpowder, and this market will be very lively this year.
▲ Tesla price reduction. Photo / Tesla official
With less than 200,000 units sold in 2023, Wei Xiaoli will have a hard time living
In 2022, the competitive landscape of the new energy market has become clear. BYD sprang up, selling more than 200,000 vehicles a month, surpassing Volkswagen for the first time in annual sales, leading the way with Tesla; Wei Xiaoli barely ranked among the top 10 in the new energy track; SAIC, Great Wall and Geely have incubated new energy brands, and some brands are gradually getting better; Enterprises such as WM and Niuchuang are obviously left behind and full of uncertainty.
There are many reasons why BYD sells well, the most important of which is that its supply chain is self-consistent, and when other car companies are affected by the epidemic, BYD can still produce normally.
At the same time, BYD's shortcomings are also obvious - intelligence is relatively weak, in the era of intelligent networking, Wei Xiaoli is talking about automatic driving, intelligent cockpit, but BYD is obviously lagging behind. But back to the sales level, this does not affect BYD's sales are rising.
▲ BYD Auto will sell 1868543 units in 2022. Photo / BYD Auto's official Weibo
We found an interesting phenomenon - autonomous driving is valuable, but the value is not so great at this stage. Therefore, we see that in 2022, many star autonomous driving companies are difficult to sustain, such as the Argo AI that is backed by Volkswagen and Ford, and Aurora is exposed to business difficulties and has to cut back on food and clothing.
The rapid development of BYD and Tesla has brought great impact to Wei Xiaoli, and Wei Xiaoli feels pressure in terms of scale and supply chain costs. If it cannot exceed the scale of 200,000 vehicles and 500,000 vehicles in the medium and long term in 2023, Wei Xiaoli will be struggling.
Next, whether Wei Xiaoli will have a blockbuster, whether it can increase the scale of sales, reduce costs, and put forward gross profit and net profit, which is the core problem they face together. Relying solely on so-called Internet thinking will not solve these problems. New forces survive by breaking the game in the early financing stage, and many Internet people enter the automotive industry across borders; Entering the operation stage, people with traditional car company backgrounds at the senior management are revealed. New forces need to learn the mature processes and methods of traditional car companies.
In 2023, when it comes to the finals, the situation will be more complicated.
With enough orders, the head car companies can continue to survive, and other car companies may be acquired or die. Raw material prices continue to be high. Two or three years ago, lithium carbonate was 40,000 yuan / ton, in 2022 it was 600,000 yuan / ton, and even if there is a slight correction in 2023, everyone expects it to be 400,000-500,000 yuan / ton. Therefore, controlling costs is still the most important thing for car companies.
Their anxiety has been evident in communicating with people in the automotive industry over the past year. Near the end of the year, some enterprises are under pressure to collect debts, empty orders and no cash, and have to lose money to operate. The new year is forced to reduce prices again, so it will be difficult, very difficult. Statistics show that the average life cycle of marketing executives in car companies is only one and a half years, which can also roughly understand how anxious the industry is.
Investment opportunities lie in the field of anode materials
Jingwei Venture Capital has a very early layout in the field of intelligent electric vehicles, and invested in two new forces, Lili and Xiaopeng, as well as battery manufacturing company Rongbai.
In the past year, Jingwei has been increasing its investment in the new energy and smart electric vehicle industry chain. In the field of new energy, it has invested in companies such as Haichen Energy Storage, Pilot Film, and Daosheng TRW, and in the field of intelligent electric vehicles, it has invested in companies such as Guangyi Technology and Daoyuan Electronics. We have always followed the principle of investment ecology, first investing in "base area" projects in the core links of the industrial chain, and then extending them up and down, so that various investment fields converge into an ecology.
Jingwei has always been optimistic about the smart electric vehicle track, and frankly speaking, there is considerable uncertainty for vehicle investment companies. However, the advantage is that OEMs have a better understanding of future consumer needs, can define products, can also explore consumer needs, and further determine what standards need to be achieved at the technical level. Therefore, we invested in two vehicle companies to understand the pain points and needs of automotive chips, automotive radar, intelligent cockpits, automatic driving and other links earlier, as well as the future direction.
At the same time, we firmly believe that the general trend of intelligence and electrification will surely bring considerable returns to the layout of upstream core components. No matter which new car-making force comes out first, as long as it is in the new energy track, it needs to purchase batteries, and it will definitely benefit raw materials. These are relatively certain opportunities, so we also invested in the head companies of batteries and upstream core components.
In 2022, the new energy industry is obviously in a high-speed sprint stage, because the cost of new energy power generation is rapidly reduced, the proportion of power generation is rapidly increasing, as a new application scenario, the energy storage field is also one of the fastest growing industries. Due to the imperfection of the overseas lithium iron phosphate industry chain, Chinese companies occupy an absolute leading position in the field of energy storage batteries. In the path of new energy storage technology, electrochemical energy storage is the brightest star and one of our most optimistic energy storage methods. The most commercialized potential in electrochemical energy storage is lithium-ion batteries. Based on this, we invested in Haichen Energy Storage, a company engaged in the research and development, production and sales of lithium battery core materials, lithium iron phosphate energy storage batteries and systems.
We tend to look at this trend at a longer time latitude. For example, in the past five years, the rapid spread of high nickel and the rapid application of new materials, such as new silicon-carbon anodes, silicon-oxygen anodes, electrolyte additives, and new binders, these changes are beyond our imagination.
At the cathode material end, it is difficult to find innovation opportunities in the short term, and if any, it is also in the field of high nickelation and lithium manganese phosphate. The two technical routes of ternary and lithium iron phosphate have basically been determined. In contrast, there are some opportunities for innovation in the negative electrode. For example, everyone knows that the next development trend is silicon, silicon carbon and silicon oxygen are the mainstream entrepreneurial direction.
For investors, to lower expectations, in the field of power batteries, can no longer expect to invest a trillion market value in the short term of the Ningde era. Therefore, lowering the standard and focusing on some segments, such as investing in some battery non-main materials or next-generation battery materials, there is still a chance to invest in a tens of billions of dollars company.
Over the past year, we've become more demanding of our founders and teams. Pay more attention to the founder's technical and comprehensive capabilities, and the reliability of the team's past resume. The verification cycle of the project is also lengthening, and the meticulousness of the investor's work and the granularity of the research are also increasing.
In 2023, we believe that the reshaping of the energy structure will further drive industrial innovation and upgrading, and new scenarios and new needs will give birth to new innovation opportunities, including battery structure system innovation and material innovation. With the gradual growth of new business models such as charging and swapping, fast charging, lithium battery recycling, and industrial and commercial energy storage, there is still no shortage of innovation opportunities.
We continue to be optimistic about the overall upgrade of China's electric vehicle industry and the supply chain system behind it, and optimistic about the transformation opportunities of the second- and third-tier supply chains. In all key links, there will be large companies that stand out. In the future, China has the opportunity to have the strongest supply chain system in the electric vehicle industry.
▲ New energy vehicle charging. Photo / Visual China
The state supplement withdrew, and car companies rose and fell secretly
I have been working in the field of automobile sales for more than 7 years, and I used to be in sales at traditional car companies, mainly responsible for luxury brands. Over the years, seeing that luxury brands are becoming more and more difficult to sell, dealers are under great pressure on inventory. In the past three years, new energy vehicles have continued to impact traditional fuel vehicles, and I had the idea of changing tracks. In June 2022, under the introduction of a friend, he jumped to a newly listed new force brand as a store manager.
However, the new energy vehicle did not sell as well as expected, and I could only complete 50% of the target.
Because it is a new brand, the sales base is relatively low, but the evaluation standard for model sales in the store is mainly compared with competing products. The newly launched car sold more than 7,000 units from September to November last year, but the BYD Seal sold the best among the competitors, selling more than 30,000 units, and the Xpeng P7 also sold more than 10,000 units.
In this evaluation system, we are naturally under a lot of pressure. The management organizes a meeting in two or three days, and the theme is always how to increase sales, and our breakthrough point is to increase the test drive rate. New energy brands are very optimistic about the retrial driving rate, because the penetration rate of new energy vehicles in life scenes is not high, and we are still in the stage of development and publicity, and we need to convince consumers to experience it for themselves.
Fortunately, the confidence conveyed by the market is sufficient, and consumers' acceptance of new energy vehicles has increased significantly. Those who sell at luxury brands told me that more and more people are now asking if there are electric models.
Personas are also changing. Now young people buy cars, the first one may choose new energy vehicles.
Entering 2023, the national supplement withdrew, but everyone did not dare to increase the price, or the increase was also a clear rise and a real fall. For example, the price of BYD's whole series has increased by 3,000-6,000 yuan, and the official guidance price has increased, but the preferential range launched by the terminal has increased, and the actual transaction price is slightly lower. Tesla also carried out a round of sharp price cuts in the New Year, and the number of orders rose significantly, proving that there is consumption power, and car companies need to stimulate consumption.
If there are new forces that make a profit this year, I think NIO has a better chance. NIO focuses on the price range of more than 350,000, the higher the price of luxury models, the stronger the profitability, the profitability below 250,000 will be weaker, the range of 150,000-200,000 is worse, and so on, which is why we are weakening a 100,000 yuan model internally.
▲ Vehicle delivery. Photo / Visual China
Luxury brands push explosive electric vehicles, and they have to wait two years
I managed a second-tier luxury brand 4S store in the southwest region and worked in this store for nearly 8 years. 2022 was my worst year for sales since I started in the industry. In previous years, we were able to achieve the sales KPIs issued by car companies, but in 2022, 4 of the first 11 months did not meet the target.
The pandemic was a major factor affecting sales, with supply chains suffering setbacks, with vehicle production bearing the brunt. The economy is not good, and everyone is not willing to spend money. This can be seen from the transaction rate, in previous years our transaction rate can reach 25%, but in 2022 it is good to reach 20%. Customers come to see the car, but they just don't buy it, and they are more cautious in making purchasing decisions.
New energy vehicles also have a great impact on us. It turns out that consumers have a budget of 300,000 yuan to buy a car, but in fact, the optional space is very limited, which is nothing more than BBA and second-tier luxury brands. But now there are many competitors, ideal, NIO... Users have a lot more options.
It is already difficult to sell cars, but in the new year, automakers have set high sales targets, requiring sales to be about 20% higher than in 2022.
In 2022, a change in customer behavior is clearly perceived. For example, the average transaction cycle is getting longer, from the first time the user comes to the store, to the final order, the whole cycle is generally 10-15 days, but in 2022 it will take almost 20 days to complete. The customer base is also changing, in previous years, there were many loans to buy cars, and this year many people bought cars in full. The group of young people in their 20s has basically disappeared, and the age of buying a car is about 30.
In fact, our brand also has several new energy vehicles, manufacturers try to adopt a direct sales model, the store does not directly collect money, customers directly pay the sales company of the main engine factory, and the main engine factory sales company invoices. This car will sell 3 or 4 units per month in the first half of 2022. But later, the order was sent to the brand side, there was no follow-up, the car could not be handed over, and the customer returned the order. The sales of laborious sales did not get a commission, so we stopped introducing new energy vehicles to customers.
When I was anxious, I also went to other stores and saw some new energy vehicles. For example, ideally, the screen is large and the sense of technology is very strong. NIO's user operation is also good, they have developed their own ecosystem, and generate strong user stickiness through Haidilao-style services. It makes sense that they can fire.
Entering 2023, it is expected that the probability of second-tier luxury brands in the first half of the year will still be relatively difficult, and if the economic situation improves in the second half of the year, there may be a turnaround.
Most of the century-old traditional car companies are more cautious, they pay attention to brand reputation, and require that every product is not wrong. To develop a car, what level of sales must be reached in order to achieve breakeven, there are considerations. These factors limit the reluctance of traditional brands to move too fast in the pace of transformation, and it will take two years for our brand to launch explosive electric models.
Car companies' self-developed batteries have no advantages
I have worked in the power battery industry for 6 years, and now a battery manufacturing company is responsible for the supply chain, the company belongs to the supplier of the main engine factory, and the role is Party B.
In the battery industry, to be honest, there is not much pressure. In the face of automakers to negotiate the list, our initiative is very obvious. At first, the car company desperately bargained, but later found that it was useless. We do not lack customers, we are afraid that suppliers will not be able to keep up, when the production capacity is tight, whoever gives me a high price, I will produce whose list first. The people in charge of purchasing in car companies often can't figure it out, and they have to send senior leaders to urge goods. The Ningde era is more arrogant, and many automakers are "begging" it to supply, and they give money to give goods, and there is no credit period.
In the past year, the price of battery raw materials has risen sharply, and battery prices have also risen with the tide. Batteries are expensive, and OEMs want to build their own. But to be honest, car companies have no advantage at all in building their own batteries. They underestimated the technical difficulty of making batteries, and it is not clear how advanced our head battery manufacturers are in technology. In the existing mainstream technology route, it is impossible to catch up, they need to find a third disruptive technology route to overtake, but the current new technology that is mature enough and ready to go on the road is still rare.
On the other hand, self-developed battery funds are a big problem, battery R&D investment starts at least 300 million yuan, self-built production lines at least 1 billion. Starting from a five-year payback cycle is a big expense for new forces that have not yet begun to make profits.
We are also observing whether the battery project of the OEM is progressing smoothly. If the self-developed battery is not carried on its own mass production vehicle within two years, it can basically be judged as "difficult to produce".
In 2023, we are worried about how many orders new energy vehicle companies still have to consume batteries. The new energy market is stable and improving, but it may not reach the breakthrough growth in 2022.
If you look at the market segment from the price range, it is even more brutal. Tesla's penetration rate in the second- and third-tier markets cannot be underestimated, coupled with the decline of national subsidies, new forces and joint venture brands are facing a double strangle. If Tesla rushes into the price range of 150,000, not only the new forces will be impacted, but all models in the range will be under great pressure.
Looking at the entire automotive industry, it can be described as a change of dynasty. In the past year, many joint venture brands have fallen, including but not limited to Renault, Fiat, Acura and so on. There is also a Korean joint venture car company, which is still maintaining on the surface, but in fact, it is already insolvent. The best-selling car of this car company lost 6,000 yuan when it sold one. In this way, the industry reshuffle will further intensify in 2023.
Commercial autonomous driving or concentrated outbreaks
I am doing R&D in an autonomous driving company, including perception controllers, autonomous driving controllers, etc., mainly adapted to new energy trucks or by-wire chassis provided by automakers, and at the same time equipped with the company's supporting autonomous driving systems.
More specifically, we are making self-driving trucks, which are mainly used in smart ports to transport goods. These ports have a large number of containers that require truck drivers to transport them from the yard to the transfer station. Drivers need to work two shifts to keep the port running 24 hours a day, and the traditional mode of transportation has a high labor cost.
In a closed scenario such as a port, the vehicle operation route is simple and controllable, as long as it is planned in advance, it is an excellent autonomous driving application scenario. At present, the price of self-driving trucks is about three or four million yuan, and selling 25 units is hundreds of millions, with considerable income and relatively high profit margins.
▲ Self-driving trucks driving on the road. Photo / Visual China
But in the field of passenger cars, the business model of autonomous driving fails.
At this stage, mass-produced passenger cars are basically in the L2 autonomous driving stage, that is, assisted driving. Reaching above L3 is currently far away.
Because the use case of passenger cars is too complicated. Just to ensure that the car does not crash, there are many perception devices needed, and the integration of equipment such as lidar, millimeter wave radar, and cameras is very high.
Autonomous driving requires software and hardware cooperation, and autonomous driving is more likely to break through innovation at the hardware level than software and algorithms. For example, the controller of the intelligent driving domain will be more integrated and the cost will be reduced. The unit price of perception equipment is reduced, more equipment can be installed on a vehicle, and there is no dead angle coverage, and the possibility of unmanned landing will be greater.
In 2022, there have been many cases of assisted driving out of control, which should not only be a problem of a car company, but a common problem in car companies.
When an electric vehicle has an accident, it seems to be a problem with a certain component, but it may be the "pot" of the vehicle's electronic control system. Electric vehicles rely more on software control, requiring both hardware and software to be functionally safe. For example, when the brakes are pressed, the system sends a signal, transmits, and commands the corresponding part to execute. If there is a problem with the controller chip, the signal transmission fails, and the vehicle is out of control.
The easiest way to ensure functional safety is redundancy, one controller may fail, then use two, but the cost is also multiplied. Therefore, functional safety is one of the core technologies that electric vehicles need to break through.
In the first two years, the autonomous driving industry has hired a large number of people, and many projects have been invested. But after doing it for so long, everyone knows that theoretical algorithms cannot guarantee travel safety. As a result, the autonomous driving industry has fallen into a cold winter in 2022. Many companies are transitioning to commercial vehicles, not only ports, but also mines, borders and other freight fields. As long as there is policy support, 2023 will be the year of autonomous driving in the field of commercial vehicles.
The article is original by Auto, and infringement must be investigated. Text | Feng Yingxing Xie Yunli, Editor | Li Huanhuan, Illustration | Wayne, Operation | Jingru