In 2023, China's new energy vehicles will continue to grow rapidly. According to the data, in November, the domestic sales of new energy vehicles were 841,000, a year-on-year increase of 39.8%, a month-on-month increase of 8.9%, and the penetration rate exceeded 40%, hitting a record high.
New energy vehicles have become one of the key elements of global sustainable development. It has become a new growth pole for urban economic development. Relevant data show that in the next 10-15 years, new energy vehicles will develop into a large industry of 10 trillion yuan.
In 2023, the new energy vehicle war will not only be launched in major enterprises, but also in many cities.
Researchers from The Paper Research Institute sorted out the main major events in the field of urban new energy vehicles in 2023 (20 things, 11 cities). Chen Ling, associate professor of the School of Public Policy and Management of Tsinghua University and director of the Research Center for Industrial Development and Environmental Governance, was invited to make comments and prospects.
Big events in 2023
Consumer
In January, Beijing implemented a car purchase restriction policy, fuel vehicle license plates need to be lottery, and new energy vehicle license plates need to be queued in order of application. In 2023, Beijing plans to issue 100,000 passenger car licenses, including 30,000 fuel vehicle licenses and 70,000 new energy vehicle licenses. Due to the small number of new car purchases, Beijing's auto market is dominated by stock replacement.
In April, Shenzhen issued the "Shenzhen Port Automobile Export Subsidy Plan (Draft for Comments)", which intends to subsidize cars exported through Shenzhen Port by sea, with subsidies of 800-1200 yuan and 600-1000 yuan per vehicle in 2023 and 2024 respectively.
In September, Shanghai continued to implement the subsidy policy for the replacement of new energy vehicles. The policy stipulates that individual users who scrap or transfer non-commercial passenger cars registered in the city and purchase pure electric passenger cars at automobile sales agencies registered in Shanghai can receive a one-time car purchase subsidy of 10,000 yuan.
In December, the "Implementation Measures for Encouraging the Purchase and Use of New Energy Vehicles in Shanghai" was released, and the threshold for applying for free license plates for new energy vehicles in Shanghai was raised: no new energy vehicles or fuel vehicles were required under the name.
(For details, see The Paper 10% Company's "Shanghai New Energy Vehicle Free License Application Threshold Raised: No New Energy Vehicles or Fuel Vehicles in the Name" related reports)
Production end
In February, Huawei and JAC officially established a joint construction of a new energy vehicle gigafactory in Feixi, Hefei.
(For details, see the relevant report of The Paper 10% Company's "Huawei and JAC Cooperate to Build Cars? Yu Chengdong's Exclusive Response: Huawei Doesn't Build Cars Himself, Or Smart Mode")
In April, Tesla announced that it would increase its investment in Shanghai and build a new energy storage gigafactory.
In July, the Volkswagen Group signed a technical cooperation framework agreement with Xpeng Motors to register a company in Hefei, Anhui Province, to jointly develop two Volkswagen-branded electric models for the Chinese mid-size car market.
In August, BYD's 5 million new energy vehicles officially rolled off the assembly line in Shenzhen.
In November, Xiaomi's new energy vehicles (SU7 and SU7 Max) were launched in Beijing. The Ministry of Industry and Information Technology issued the "Announcement on Road Motor Vehicle Manufacturers and Products", and two Xiaomi brand cars were officially unveiled.
(For details, see the relevant report of The Paper 10% Company's "Xiaomi Automobile "Borrows" BAIC Production Qualification? Will Be Produced by Xiaomi Group in Xiaomi Factory")
In November, Changan Automobile and Huawei signed a Memorandum of Understanding (MOU) to establish a company engaged in the research and development, design, production, sales and service of automotive intelligent systems and component solutions. Changan Automobile and its affiliates plan to invest no more than 40% of the equity of the target company. Chongqing has a long history of cooperation with Huawei in the field of automobile manufacturing. Celis has always been recognized as the partner with the earliest cooperation, the most investment, deeper accumulation, and the largest number of product models with Huawei.
In November, the "Several Measures for Promoting the High-quality Development of New Energy Vehicles and Intelligent Connected Vehicles Industry in Shenzhen" was released, providing up to 10 million yuan for the research and development of key technologies and components, and up to 30 million yuan for supporting the research of core technologies such as vehicle-grade chips and automotive operating systems.
In November, the "Implementation Plan for the Transformation and Development of the Automobile Industry in Hubei Province (2023-2025)" mentioned that Wuhan, Xiangyang, Shiyan, Suizhou and other cities will be supported to participate in the demonstration application of fuel cell vehicles and create a national fuel cell vehicle demonstration application city cluster. By 2025, the province will promote more than 3,000 hydrogen fuel cell new energy vehicles.
(For details, see the relevant report of the surging Hubei "33 key tasks in five categories, Hubei issued the implementation plan for the transformation and development of the automobile industry")
In December, Volkswagen's Hefei plant in Anhui Province officially started production, and the first electric vehicle will be exported to Europe.
infrastructure
In January, the notice of the Ministry of Finance on issuing the 2023 energy conservation and emission reduction subsidy fund budget in advance pointed out that a total of 18.99 billion yuan of subsidy funds were issued for the promotion and application of new energy vehicles and the construction of charging infrastructure. Among them, the highest amount of subsidies is Shanghai, which can get 2.46 billion yuan of funds, and the subsidized car companies are SAIC Group's enterprises and Tesla, and Guangdong, Anhui, Zhejiang, Shaanxi, Beijing, and Chongqing can get more than 1 billion yuan of subsidy funds.
From June 2022 to August 2023, a reward of 3,000 yuan/kWh will be given to the construction of charging facilities within the unit, 600 yuan/kWh and 1,240 yuan/kWh will be given to the pilot project of "unified construction and unified service", and a reward of 2,400 yuan per month will be given to each mobile charging facility.
In April, Tesla officially announced that it officially opened charging stations in Chinese mainland for some non-Tesla brand new energy vehicles. Among the first batch of charging stations to be opened on a pilot basis, there are 10 super charging stations and 120 destination charging stations, supporting 37 models. Destination charging piles are distributed in more than 50 cities and regions such as Beijing, Shanghai, Guangdong, and Jiangsu.
In May, Shenyang BMW Tiexi Plant Lida Plant officially launched the operation of the green elevator energy storage project.
In June, the Xi'an Bureau of Industry and Information Technology issued a document stating that it would apply for the liquidation of the central financial subsidy funds for the promotion and application of new energy vehicles that meet the declaration requirements in 2020-2022 for BYD Auto Co., Ltd. The subsidy amount is as high as 6.666 billion yuan.
In June, Beijing regulators expanded the scope of approval for advanced driver assistance maps. Xpeng moved quickly and announced on June 15 that it would open its advanced driver assistance features in the Beijing metropolitan area.
In November, BMW, Mercedes-Benz and Zhiji Automobile have won conditional L3 autonomous driving road test licenses in Beijing and Shanghai. Up to now, three cities in China, Beijing, Shanghai and Chongqing, have opened L3 autonomous driving road tests, and a total of 6 brands have obtained test licenses.
2023: Local policies will increase and boost, and the international influence of new energy vehicles will expand
Based on the combing of major events in the field of new energy vehicles in 2023, researchers from The Paper Research Institute found that the development of China's new energy vehicle industry presents the following characteristics:
First, urban industrial policies have played a key role in promoting the development of the new energy vehicle industry. Taking BYD's base camp as an example, Shenzhen has given all-round support to the development of new energy vehicles in terms of R&D, production, promotion and export.
Shenzhen's funding for the research and development of key technologies for new energy vehicles shows the local government's investment in the upstream links of the industrial chain, which will further strengthen its competitiveness in the national and global new energy vehicle industry. BYD's net profit in the first three quarters of 2023 was 21.367 billion yuan, a year-on-year increase of 129.47%. In the first three quarters of 2023, the company received government subsidies of 2.728 billion yuan, of which 939 million yuan was included in the third quarter.
In terms of the promotion of new energy vehicles, as a pilot city for the full electrification of vehicles in the public sector, as of January 2023, Shenzhen has invested a total of 15,896 pure electric buses on more than 900 bus routes, achieving 100% pure electric buses. At the same time, Shenzhen still has local financial subsidies for residents to purchase new energy vehicles, with subsidies ranging from 0.5 to 10,000 yuan per car.
In terms of the export of new energy vehicles, on April 1, 2023, the Shenzhen Municipal Transportation Bureau issued the "Proposal for Public Solicitation of Shenzhen Port Automobile Export Subsidies (Draft for Comments)", taking the vehicle sea freight subsidy as an example, from 2023 to 2024, each vehicle will be subsidized with 800-1200 yuan and 600-1000 yuan respectively. The car transportation of a single shipping enterprise should be more than 20,000 vehicles (inclusive).
Second, the new energy vehicle industry has a significant pulling effect on the urban economy. If a city has a mature new energy vehicle industry chain, the latter can not only drive the extension of related industries, but also drive more related industries.
The cities we have sorted out above are not only first-tier cities, but also second-, third- and fourth-tier cities. Although these cities have regional and economic aggregate differences, they have a general development logic. Once the city's new energy vehicle industry rises, it will first bring direct employment opportunities and tax revenue to the local area. Taking BYD as an example, the 2022 corporate annual report shows that the company's various direct taxes totaled 4.326 billion yuan. The total number of employees in the current period was 570,000, of which 76,000 had bachelor's degree or above. The total salary of 570,000 BYD employees is 59.7 billion yuan, so the average annual salary of these employees is 104,700. These employees will have demand for both real estate and business, which reflects the "fiscal spillover effect" of the manufacturing industry on the development of the local service industry.
Third, with the improvement of China's new energy industry chain and the strong support of cities for new energy vehicles, the competitiveness of China's new energy vehicles in the international market has been significantly enhanced, and its international influence will be expanded in 2023. For example, its own brands Nezha Automobile, BYD and Changan Automobile have entered the markets of many countries and regions, showing that China's new energy vehicle companies are accelerating their global layout. At the same time, due to the low cost and complete industrial chain, well-known foreign car companies, including Tesla, Volkswagen, and BMW, will further strengthen the layout of the industrial chain in China in 2023, further highlighting the advantages of China's new energy vehicles.
Finally, we often say that China's economy has great potential, is resilient, has a complete industrial chain, and has a broad market, and the growth momentum of the new energy vehicle industry in 2023 can further confirm this assertion.
2024: Some companies will be eliminated in the "fierce battle", and power batteries and intelligent driving are worth looking forward to
The Paper: How do you view the development of China's new energy vehicle industry in 2023?
Chen Ling: Overall, 2023 has laid the foundation for the trend of "mainstreaming" of new energy vehicles. This year is the first year after the subsidy for new energy vehicles has been reduced, and the "oil and electricity war" between fuel vehicles and new energy vehicles has officially kicked off. In the absence of subsidies, domestic new energy vehicle sales still soared by 36% over the previous year, and the penetration rate of new energy vehicles was as high as 30% (that is, 30% of the car sales in that year were new energy vehicles), which is a sign that new energy vehicles have risen to the mainstream choice.
At the same time, the new energy vehicle industry has entered a stage of fierce market competition, with leading companies such as Tesla and BYD crossing the break-even point and starting to make profits, new power companies such as Ideal, Xiaopeng and Weilai continue to launch new models, and ecological palace companies such as Huawei and Xiaomi have entered the new energy vehicle market. Due to the extremely significant economies of scale in the automotive industry, only a small number of companies will be able to survive the fierce competition and become the leading players in the industry in the future.
The new energy vehicle industry will also face more fierce overseas competition. In 2023, China's new energy vehicle exports will exceed one million units, with a growth rate of 80%, and at the same time, the European Union will launch a countervailing investigation against China, France will adjust its new energy vehicle subsidy policy to exclude models produced in China, and Germany will cancel the new energy vehicle subsidy one year ahead of schedule, which indicates that the overseas competition of new energy vehicles is more intense.
The new energy vehicle manufacturing industry is a well-deserved pillar industry for any city, but there are only a few cities that can land leading car companies. Cities should focus on optimizing their environment for the application and innovation of new energy vehicles.
Specifically, first of all, the urban pattern of the domestic new energy vehicle industry has undergone significant evolution. First-tier cities such as Beijing, Shanghai and Shenzhen continue to lead the R&D and marketing of new energy vehicles due to their policy support, consumption capacity and technological advantages. These first-tier cities are not only R&D centers for industries, but also the largest new energy consumer markets.
At the same time, some emerging cities, such as Ningde City in Fujian Province, have become important towns for battery manufacturing due to the rapid rise of CATL, and Tongxiang City in Zhejiang Province has become a new star of new energy vehicles due to the local development of Nezha Automobile. The complementarity and competition between cities have accelerated the maturity and technological iteration of the new energy vehicle industry chain.
Secondly, the competition between cities also provides impetus for the development of the new energy vehicle industry. Key cities have promoted the formation of industrial clusters by introducing enterprises, building industrial parks, and promoting the use of new energy vehicles. This competition not only promotes the growth of the local economy, but also promotes the rapid development and innovation of new energy vehicle technology.
On the whole, the development of China's new energy vehicle industry in 2023 is not only reflected in the growth of sales, but more importantly, the optimization of industrial layout, the improvement of technical level, and the establishment of inter-city cooperation and competition mechanisms. Together, these factors have created a strong momentum for the development of China's new energy vehicle industry and laid a solid foundation for its sustainable development in the future.
The Paper: Although the national subsidy for new energy vehicles has been withdrawn, many local governments will still introduce policies on subsidies for the purchase of new energy vehicles in 2023. Basically, the current subsidy policy in major cities in China is mainly trade-in and direct one-time subsidy (the amount is between 5,000 and 10,000), what do you think of the current policy?
Chen Ling: The subsidy amount is actually not too large. It turns out that the subsidy policy for the earliest purchase of new energy vehicles is a maximum subsidy of 120,000, for example, to buy a 300,000 pure electric vehicle, the state subsidizes 60,000, and the local government subsidizes 60,000, almost a car can be subsidized to 120,000. According to the previous Notice of the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and the Development and Reform Commission on Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles, the 13-year new energy vehicle purchase subsidy policy will be terminated on December 31, 2022, and vehicles licensed after December 31, 2022 will no longer be subsidized.
The preferential policy at the national level also retains a vehicle purchase tax exemption, which is extended until the end of 2027. This purchase tax can save about 10,000 yuan or 20,000 yuan. The subsidy method of some local governments is basically focused on replacement, that is, the original oil car is replaced by an electric car, and the local government gives a subsidy of 5,000-10,000 yuan to the vehicle buyer. But these are relatively small subsidies.
Subsidy decline is a general trend, mainly because the cost of new energy vehicles is now close to that of fuel vehicles, which is competitive in the market. Everyone now buys new energy vehicles not more about subsidies, but about their performance and experience.
Part of the reason for the popularity of new energy vehicles is that they are less expensive to use, especially compared to traditional combustion vehicles. However, the potential cost of battery degradation may not be widely recognized. In addition, new energy vehicles attract consumers with their stylish and high-tech features, such as advanced electronic interactive systems and intelligent driving functions. At the same time, compared with fuel vehicles, the licensing process of new energy vehicles is usually more convenient. Together, these factors are driving the growth of the new energy vehicle market.
The Paper: In the process of reviewing the subsidy policies for the purchase of new energy vehicles in various places, we have noticed that northern cities such as Beijing, Baoding and Shijiazhuang, central cities such as Hefei and Wuhan, and southern cities such as Shanghai and Shenzhen have shown high enthusiasm in formulating subsidy policies. How to understand the policy bias of this regional distribution?
Chen Ling: These regions are not only the production bases of new energy vehicles, but also the pioneers of the early pilot of China's new energy vehicle industry. Their development has benefited from the active promotion and support of local governments. Preferential policies, financial subsidies and infrastructure construction have effectively promoted the maturity and market expansion of the new energy vehicle industry chain.
For example, Beijing, Shanghai, Shenzhen and other cities are not only the pioneers of the new energy vehicle industry, but also have a complete industrial chain, providing a good development environment for new energy vehicles. Hefei and Hebei have attracted investment from well-known enterprises such as Huawei and NIO, accelerating the development of the local new energy industry. These local governments have promoted the development of upstream and downstream industrial chains by providing land, tax incentives, subsidies, etc., and have had a significant impact on local economic growth.
Another example is Yibin, Sichuan, which has attracted investment from companies such as CATL due to its abundant hydropower resources, which has greatly reduced the carbon footprint of its products, and the local government has provided preferential policies and support for it, demonstrating the effective interaction between local governments and enterprises.
These cases also reflect the successful model of combining China's new energy vehicle industry policy with local economic development.
The Paper: When sorting out the subsidy policies for the construction of charging piles in major cities in China, we observed that local governments have also invested quite a lot in this infrastructure. What are the factors that drive these local governments to adopt such investment strategies?
Chen Ling: With the popularity of electric vehicles, building adequate charging infrastructure is key. For the residential structure of residential buildings in China, most car owners do not have fixed parking spaces, so charging facilities in public areas require more government investment. Local governments encourage the construction of charging piles on roadsides, workplaces, and public areas. Local governments have introduced policies to support the establishment of charging infrastructure in residential areas and provide subsidies for private parking space owners.
In addition, the development of intelligent and connected vehicle technology has brought new convenience to electric vehicles, and China has an advantage in this regard. The rapid progress of power battery technology, especially in terms of energy density, indicates that batteries will be lighter and more efficient in the future, although the challenge of temperature adaptability still needs to be solved. All of this is increasing the demand for electrification.
Hainan, for example, is much higher than other regions in terms of acceptance of new energy vehicles, thanks to its early implementation of fuel tax reforms. The island's roads are exempt from highway tolls, but are subsidized by higher fuel taxes, so the oil price in Hainan is relatively expensive, and the energy price advantage of new energy vehicles is more prominent. The temperature in Hainan is relatively stable throughout the year, which is more friendly to battery performance. These conditions have promoted the popularization of new energy vehicles, and the acceptance of electric vehicles by Hainan residents has increased significantly.
In general, the reason why the government vigorously subsidizes the construction of charging piles is because it is a key factor in promoting the popularization of new energy vehicles, helping to alleviate consumers' charging anxiety and accelerating the transition of the energy structure to clean energy.
The Paper: Is the change in the subsidy policy for new energy vehicles because the market is saturated?
Chen Ling: The shift in subsidy policy does reflect the maturity of the market. The NEV industry is highly competitive, and even without subsidies, companies will reduce prices to attract consumers.
Not only Tesla, BYD and other leading companies are fighting price wars, but also new power car companies such as Ideal, Xiaopeng, and Weilai continue to launch new technologies and models, and even Huawei and Xiaomi have joined the fierce war, making the industry "very volatile".
On the other hand, because there are relatively few charging facilities in individual homes, public charging piles are essential for the adoption of electric vehicles. The government needs to invest in these infrastructures to support the widespread use of new energy vehicles. For cities, this infrastructure investment is a public good and contributes to sustainable development.
The Paper: The industry is already so competitive, why are so many companies willing to enter?
Chen Ling: The new energy vehicle industry is a highly integrated ecosystem, with a long industrial chain, high output value, and significant economies of scale, making it a well-deserved pillar industry.
New energy vehicles are at the dawn of a blowout in both China and the global market. With the growth of social and economic development and the penetration rate of automobiles, it is bound to become an important part of consumption, and it is impossible for any country and enterprise to give up this big cake of growth.
Moreover, the electrification and intelligent technology of new energy vehicles have not yet been finalized, and different technical routes such as battery swapping, fast and slow charging, and battery technology innovation are in progress.
The Paper: What are your prospects for China's new energy vehicle industry in 2024?
Chen Ling: In 2024, the new energy vehicle industry is likely to continue its rapid growth momentum of 20%-30%, but some companies may withdraw from the fierce market competition.
The competition comes both from the rapid expansion of markets and production capacities, as well as from disruptive innovations in automotive technology.
The most anticipated innovations come from the two modules of power batteries and intelligent driving, such as breakthroughs in solid-state battery technology or the advancement of intelligent driving to a higher level.
Since both vehicle electrification and intelligence rely heavily on infrastructure networks and industrial ecology, cities that are conducive to accelerating the construction of new energy vehicle industry ecology will stand out in this round of competition. For example, the construction of public charging and swapping facilities, the opening of legislation and applications for intelligent driving road testing, and the provision of convenient urban intelligent platforms, computing power and networks.
It remains to be seen which cities will emerge victorious in 2024.
Designed by Yu Fei
In 2023, The Paper Research Institute will launch a new column "The Paper City Observation", and recently launched the annual planning "City Yearbook 2023". 7 researchers are the main authors, summarizing 2023 and foreseeing 2024. 7 major fields, 71 cities, we wave goodbye to 2023.
--------
Cities are born out of agglomeration.
A city's public policies, living environment, and Xi customs shape the background color of citizens' lives.
The Paper City Watch, which focuses on public policy, responds to public concerns, and explores urban issues.
![Research on the Construction of Regional Characteristics in Local Comprehensive Yearbooks[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)