China surpasses Japan to become the world's largest auto exporter, new energy vehicles are indispensable, but there are still obstacles and long roads?

The column "E-Army Rises and Falls" focuses on the rise of China's new energy vehicles and related industries, inviting high-quality creators, field experts and industry practitioners to analyze and explain relevant development history, important nodes, cutting-edge technologies and industry trends.

Core Ideas:

• From November to April, the export volume of domestic new energy vehicles increased by 1.7 times year-on-year, and in terms of intelligence and functionality, China's new energy vehicles have formed a certain exclusive personality label, which is effectively gaining overseas fans.
• 2 Compared with the low-end models that are currently the most popular overseas, the average transaction price of pure electric vehicles overseas has exceeded 25,000 US dollars, and the export of Chinese automobiles has not only increased in quantity, but also raised the audience of products to a higher level.
• 3 The European market is the world's largest electric vehicle market except China, and the opportunities for independent new energy brands in Europe are not small, and winning the European market is a new target for domestic car companies.
• 4 Domestic new forces cannot play due to their product advantages and operation models limited by the local marketing environment, and there are still many places that need to be supplemented in order to truly gain a foothold overseas.

In recent years, China's auto industry has begun to emerge in overseas markets and has made remarkable achievements, once looking down on China's European and Japanese markets, and now the volume of automobile exports has been completely left behind by China.

Data show that China's auto exports have more than tripled in the past decade, surpassing Germany for the first time at the end of last year to become the world's second-largest auto exporter. According to the latest Ministry of Commerce, in the first four months of this year, China's automobile exports reached a staggering 1.494 million units, a year-on-year increase of 76.5%. In the first quarter of this year, China surpassed Japan to become the world's largest auto exporter.

Data source: Ministry of Commerce Cartography: Zhang Fangman

With such a huge progress, new energy vehicles have played a crucial role in it, not only in terms of quantity, but also in terms of average transaction price.

However, although China is now a big car country, it is not an automobile power. In Asia, Africa and Latin America, Chinese cars have gradually occupied a place with cost-effective mass models, but they still need to work hard in the European market.

In addition, due to the lack of a complete logistics system overseas, many Chinese automobile brands, product advantages and operating models still cannot be played overseas, and there are still many places that need to be supplemented in order to truly gain a foothold overseas.

New energy is indispensable

It is undeniable that today's Chinese automobile industry is ushering in the era of going abroad, and the rise in China's automobile exports has also made the status of Chinese automobile brands increasingly enhanced.

According to the spokesperson of the Ministry of Commerce, Shu Hengting, at a regular press conference, in recent years, mainland automobile exports have been stable and improving, and the product structure has continued to be optimized. In 2021 and 2022, the increase in automobile exports was more than 1 million units for two consecutive years. From January to April this year, Continental exported 1.494 million units, a year-on-year increase of 76.5%.

With 4 months approaching the data of 1.5 million units exported, many people may not have a concept. In the first four months of this year, China's average monthly car exports exceeded 370,000 vehicles, and 21 years ago, in 2002, China's annual car exports were only 20,000 vehicles. Today, China's average monthly car exports are 18 times what they were 21 years ago.

Why has China's auto exports made such huge progress? The contribution of new energy vehicles is not small.

The world's leading power battery industry and the perfect and mature supply chain system make China's new energy vehicles have a strong cost advantage, and due to the crazy involution in recent years, in terms of intelligence and functionality, China's new energy vehicles have formed a certain exclusive personality label, and are effectively gaining overseas fans.

According to data from the Ministry of Commerce, from January to April this year, the proportion of new energy vehicles in the overall export value of automobiles increased to 42.9%, contributing 51.6% to the growth of automobile exports.

According to data from the China Association of Automobile Manufacturers, exports of new energy vehicles from January to April this year reached 348,000 units, a year-on-year increase of 1.7 times, and exports exceeded 100,000 new energy vehicles in April.

In the context of last year, in 2022, the mainland's new energy vehicle exports increased to 679,000 units, a year-on-year increase of 1.2 times, accounting for about 22% of the total automobile exports.

What is even more gratifying is that it is compared to low-end models such as MG, which is currently the highest-grossing overseas. The average overseas transaction price of pure electric vehicles also exceeded 25,000 US dollars. This means that the export of Chinese cars has not only increased in volume, but also the audience of products has risen to a higher level.

Challenges remain

However, even if the export results are remarkable, objectively speaking, China cannot be called an automobile power at present.

It can be seen that in recent years, with the growth of the overall scale of going overseas, the European market has gradually become a new target for domestic car companies. Winning the European market is a hurdle that China must pass to become an automobile power.

The European market is currently the world's largest electric vehicle market except China, and due to Europe's aggressive carbon neutrality policy, and the backward automotive industry system in the Nordic region, and the lack of production capacity in Western Europe, the opportunities for independent new energy brands in Europe are not small.

But if you want to eat this mouthful of gold-rich cake, it is not small.

According to the statistics of the China Association of Automobile Manufacturers, in 2022, the top ten vehicle exporters are SAIC, Chery, Tesla, Changan, Dongfeng, Geely, Great Wall, Jiangqi, BAIC and Sinotruk, all of which have a good increase compared with 2021.

But if it is specific to a single car company, the situation often becomes more complicated.

For example, SAIC, the big brother in the domestic auto market, exported 906,000 vehicles last year, with excellent results. However, if you carefully analyze SAIC's product structure overseas, you will find that 480,000 of them are contributed by its brand MG.

As we all know, MG is a British brand acquired by SAIC, and its British pedigree makes it highly accepted in the European market. From this point of view, SAIC's overseas report card is somewhat "moisture".

If SAIC's exports are a little too dependent on MG, a foreign brand that is a British brand, then more brands are the most basic localization still not done well, which is especially reflected in the new forces going to sea.

A typical example is Xpeng Motors. In 2020, Xpeng entered the European market and built the European market system in only one year, setting up a European headquarters in Amsterdam and offices in Denmark, Norway, Sweden and Germany.

However, due to supply chain effects, Xpeng canceled all P5 bookings in Europe last year. After that, Xpeng's overseas business was basically at a standstill. It was not until January this year that Xpeng announced that it would launch two new main models in Europe.

At present, although Xpeng has been in the European market for nearly three years, there is still little progress. Even in Norway, which has the highest penetration rate of electric vehicles in Europe, Xpeng's G3 and P7 performance was not satisfactory.

The reason is that the product advantages and operating models cannot be played locally, which is also a problem that most new forces may encounter in the process of going overseas.

The direct sales model used by the new forces in China has reached the European market, but it cannot be implemented due to the lack of local marketing environment and lack of sales channels, so it must rely on local distributors. This makes the new forces fall into the traditional dilemma of traditional distribution mode, word of mouth and service standards cannot be uniformly controlled.

On the product side, Xpeng and NIO, including the ideal car that is about to go to sea, may also face the problem of not being able to adapt abroad. Europeans like small cars, which will not please NIO and the ideal main model in Europe; Similar to Xpeng Motors' advantageous autonomous driving, due to different road conditions and local regulations, it is impossible to directly transplant the accumulated data.

In addition, self-reliance in Europe is not realistic, one of the best-selling trams in Norway is Tesla, and European users are likely to have established a reputation and sense of security about Tesla's self-driving system.

Of course, there are also logistics shipping costs, tariffs and other issues to consider, each of which shows that it is not long-term to rely on truckload transportation after domestic factory manufacturing. Building factories overseas, establishing a perfect energy replenishment system, and office bases are the answers to the future of automobiles going overseas.