Looking for a new head, who can turn the tide?

Everyone wants to be the iPhone of the automotive world.

New energy is sweeping the entire automobile market with a trend of destruction and decay. With BYD surpassing many traditional car companies and winning the 2022 annual sales crown, the old era of traditional cars is over.

According to data from the Passenger Association, retail sales of fuel vehicles in 2022 will be 14.868 million units, a year-on-year decrease of 2.302 million units, while new energy retail sales will be 5.674 million units, a net increase of 2.687 million units year-on-year.

Although the sales of fuel vehicles are still much higher than the sales of new energy vehicles, today's automobile market has entered the stock stage, the balance of victory has begun to tilt towards new energy vehicles, and consumers of fuel vehicles are gradually flowing to new energy.

In 2023, the overall production volume of the passenger car market will decline by 2.0% y/y and sales will fall by 1.2% y/y, while the new energy passenger vehicle market is expected to rise to about 9.3 million units and a market penetration rate of about 40%.

Sail against the tide, if you do not advance, you will retreat. In this era of fierce collision between the old and new automobiles, who else can take the lead in standing out from the new energy competition and becoming a new head car company?

Image source: Ideal Cars

Dangers abound

Car companies have never lacked a sense of crisis, but in the context of the drastic changes of the current era, many car companies will inevitably be washed away by the torrent of history.

"With the acceleration of new energy vehicles, the competition in China's fuel vehicle market will become more intense, and I think in the next 3-5 years, 80% of Chinese brands will shut down and turn." Changan Automobile Chairman Zhu Huarong said. He Xiaopeng, founder of the new force car company Xpeng Motors, also predicted that in the next 5 to 15 years, the leading automobile companies will be concentrated in the scale of five or six. Li Shufu, chairman of Geely, is even more radical, predicting that only 2-3 companies will survive in the future of domestic cars.

It is not difficult to see from the conclusion of the car company boss that in the future, the competition in the automobile market will be more intense, and only by becoming a head car company can it gain a firm foothold in this era.

Just like the domestic mobile phone industry at the beginning of the 20th century, there were many domestic mobile phone manufacturers at that time, and there were dozens of mobile phone manufacturers called by name, and foreign mobile phone manufacturers Nokia firmly occupied the mobile phone market. However, due to Nokia's paranoid use of the Symbian system, the opportunity was lost in a few years, and although it later developed Android mobile phones, the general trend was gone, and finally it had no choice but to sell the mobile phone business and completely withdraw from the mobile phone market. Today, Apple, Huawei, Xiaomi, OPPO, and vivo occupy more than ninety percent of the domestic mobile phone market.

Car companies seem to be following the old path of mobile phone manufacturers. Powerful as Mercedes-Benz BMW, in the face of Tesla, BYD and other new energy car companies are also helpless, only the qualification to exchange price for quantity. Japanese cars with durability and high retention rate entered a decline channel this year, among which, Toyota declined for the first time in China in ten years, Honda and Nissan fell by more than double digits, and Mazda fell for five consecutive years. German cars, which continue to be in a dominant position in the market, have also lost under the strong offensive of new energy vehicle companies.

According to the statistics of Gasch Automobile, among the top 5 car companies in January sales, independent car companies occupied 4 seats, namely BYD, Changan Automobile, Geely and Chery, and only FAW-Volkswagen, a joint venture automaker, made the list.

Among them, the stimulation of new energy to the sales of car companies is obvious to all. According to the analysis of the Gasch Automotive Research Institute, since 2019, traditional independent car companies have occupied an absolute leading position in the new energy passenger vehicle market. If we subdivide the factions, in recent years, the sales growth rate of traditional independent and independent new forces and foreign new forces brands has been high, and the gap with traditional foreign brands has become larger and larger.

However, it should be pointed out that although the domestic new energy market as a whole is making great strides, there are still obvious advantages and disadvantages in the performance of different brands. In the January sales data, BYD and Tesla are the two, but the new car companies are almost collectively stalled. Among them, only the ideal car has sold more than 10,000. In January 2023, NIO sold just over 8,000 vehicles, down 11% year-on-year. Nezha Automobile, which had previously been claimed to be the new head of a new force car company, did not continue its previous sales growth, with sales of only 6,000 units in January, down nearly half year-on-year; Even worse is Xpeng Motors, with sales of only more than 5,000 units.

If the situation is as predicted by the above-mentioned bigwigs, then there may not be many opportunities left for new forces.

Image source: Xpeng Motors

Which car companies will be the leader?

No one wants to become Nokia, but in the process of competing to be the "Apple" of the automotive industry, the underlying logic is always that the able live there.

In the new energy market, the development of car companies and the development of mobile phone manufacturers have similarities. Earlier, both independent car companies and multinational car companies stuck to the share of fuel vehicles, resulting in missed development opportunities, which also gave Tesla and domestic new car companies the opportunity to grow. Subsequently, under the promotion of policies and the change of consumer thinking, independent car companies began to increase the field of new energy, while multinational car companies were too large and involved in many people, and it was difficult to turn around in time. For example, since 2018, the former Volkswagen Group CEO Diess and the labor union have had a fierce conflict over the issue of electrification transformation, which ended with Diess withdrawing.

In fact, there are many more car companies like this. However, the fact that the new energy market has risen rapidly in the past two years is like a head-on drink, forcing the joint venture brand to start its own electrification transformation process.

At this stage, independent car companies have achieved corner overtaking in a short period of time by virtue of the first-mover advantage accumulated in the field of new energy. According to the research of the Gasch Automotive Research Institute, the electrification penetration rate of independent car companies is significantly higher than that of foreign car companies, BYD has achieved comprehensive electrification transformation, BAIC, GAC, Dongfeng, Wuling and other car companies have exceeded 40%, and Changan and Great Wall, which are relatively backward in electrification, have an average of more than 15%. Among foreign car companies, only GM's electrification level exceeds 40%, but mainly based on weak hybrid technology, Japanese "Shuangtian" maintains a leading position in the electrification level of foreign car companies with hybrid, Mercedes-Benz, BMW and other luxury brands maintain the electrification level between 15-30%, Ford and Volkswagen hover in single digits.

In addition, on the list of global best-selling electric vehicles in 2022 compiled by Gasch Automobile, 14 of the top 20 models are Chinese brand models.

The offensive and defensive trend has changed, which car companies have the opportunity to become the head car companies in the future? Among the new forces, at present, NIO, Xiaopeng, Ideal and Nezha can be called the "four small strong", these car companies have certain supporters because of the first-mover advantage, and although sales have risen and fallen, but overall it is on the rise.

Among the independent traditional car companies, BYD and GAC AION are the leaders of many car companies. Among them, BYD's cumulative sales of new energy vehicles in 2022 reached 1.8635 million units, a year-on-year increase of 208.64%, and even brought down Tesla, which had won the global new energy vehicle sales championship for three consecutive years.

The Gasch Automotive Research Institute predicts that the domestic new energy vehicle market will achieve annual sales of 9.36 million units in 2023, of which BYD will contribute nearly one-third of the sales figure. In other words, BYD will get annual sales of about 3 million vehicles.

In the domestic new energy vehicle sales ranking in 2022, GAC AION ranked third with an annual sales volume of 271,000 units. GAC AION has also set a future development plan, saying that its sales target is to maintain 500,000 units in 2023 and challenge 600,000 units, and aim to reach 1 million units (including exports) in 2025 and 1.5 million units in 2030. To this end, GAC AION expects to launch no less than two new models per year.

In addition, Xiaomi cars and Jidu cars, which are backed by Internet giants, are also worth paying attention to. The research and development of new energy vehicles needs money the most, how many new force car companies have died due to lack of money, multinational car companies are also saving food and clothing for transformation, and the above car companies are backed by Jinshan, Xiaomi Lei Jun has said to invest 10 billion US dollars in the next ten years, 10 billion yuan in the early stage. According to reports, last year, Xiaomi Automobile and other new businesses invested a total of more than 3 billion yuan, with a research and development team of more than 2,300 people, and the investment in the start-up stage reached more than 3 times that of many automobile manufacturers.

Jidu Auto is not only backed by Baidu and Geely Automobile, but has also received $700 million in financing since its establishment. At present, Jidu Auto has appeared in two models, which are expected to be launched this year.

Image source: BYD

The second half of the decisive match

Although some domestic car companies have a first-mover advantage and have small achievements, history tells us that there is no eternal king, more is a flash in the pan.

For new energy vehicle companies, 2023 may no longer be an era when hard work pays off. On the one hand, with the official withdrawal of the national supplement for new energy vehicles in 2023, the new energy vehicle market has begun to shift from policy-driven to market-driven. On the other hand, the domestic market has entered the stage from the incremental market to the stock market, and finally the most direct problem of independent car companies at this stage, the close pursuit of multinational car companies, and Tesla's crazy encirclement with a large price cut.

In the face of such a dilemma, car companies can only be forced to respond with price reductions, which also makes the already loss-making car companies enter a vicious circle. Previously, among the new energy vehicle companies, in addition to Tesla and BYD can make profits, other car companies are basically in huge losses.

Despite this, car companies still dare not reduce investment in research and development. NIO plans to maintain R&D investment at RMB 3 billion per quarter, or RMB 12 billion for the whole year; Xpeng Motors plans to continue to invest in high-intensity R&D in the five years after 2023, with an annual R&D investment of more than 6 billion yuan. Li Auto expects the annual R&D investment to reach between 10 billion and 12 billion. For the whole year of 2021, Wei Xiaoli's R&D investment was 4.59 billion yuan, 4.1 billion yuan and 3.29 billion yuan respectively.

In order to cope with the expansion and encroachment of competitors, the new car companies can not only frantically "throw money" and create technical barriers, but also carry out internal reforms to deal with the "big company disease". The failure of Xpeng Motors' G9 model was more like a straw that killed the camel, leading to a series of problems that were disjointed in technology, products, and markets, and later He Xiaopeng carried out drastic internal reforms, and also recruited former Great Wall Motor executive Wang Fengying to sit; In order to prepare for the scale of revenue of hundreds of billions and trillions, Li Auto is upgrading from the management mode of vertical functional organizations to matrix organizations; As NIO, who once struggled from the line of life and death, NIO founder Li Bin also issued an internal letter on the first day of the new year, stating the serious problems NIO faces and intending to reform the company.

Autonomous car companies are also desperately catching up. The GAC Group has approved 279 projects (including those under construction), with a total planned investment of CNY 77.38 billion, and CNY 20.78 billion in 2023, a year-on-year increase of 6%. Changan Automobile expects to invest more than 80 billion yuan in key areas such as new energy, intelligence, and digital transformation by 2025.

However, at present, although it is difficult for multinational car companies to reverse their decline in a short period of time because they are too slow to turn around and miss the development opportunity, their strong brand appeal and marketing channels are still their advantages. According to the analysis of the Gascar Research Institute, in the short term, Tesla will maintain relatively rapid growth in the domestic new energy vehicle market, but the incremental space of traditional foreign brands is relatively limited. Who can win in the end is not only related to the technical content of its new energy vehicles, but also closely related to product positioning and marketing strategy. On the basis of doing a good job in the above links, if you can successfully anchor a potential market segment, you may also be able to quickly open a market breakthrough.

Image source: Honda Motors

Summary: Building a car is always full of hardships. Autonomous car companies were once crowned as plagiarism and low-end hats, and now BYD has become the king of new energy vehicles, and Geely and Chery have also laid a foundation. At the beginning of the construction of new car companies, the voices of doubts faced by the new forces are also one after another, some say that PPT makes cars, some say that they copy foreign technology, but nevertheless, there are car companies like Wei Xiaoli who have successfully advanced by strength. So, time is the best proof, let's wait and see who can be the new head in the future.