Chinese car companies lose money when they engage in pure electric vehicles, and only those with engines make money.
Since the beginning of 2024, multinational car companies such as Mercedes-Benz, Audi, Ford, and General Motors have announced that they will postpone the sale of fuel vehicles, or directly stop the development and production of electric vehicles......
Blume, CEO of Volkswagen Group of Germany, proposed at the performance communication meeting that fuel vehicles will be developed for at least 10 years, and the transformation of new energy will also take time.
The U.S. government recently enacted the strictest tailpipe emissions regulations in history, but at the same time, given the current state of the electric vehicle market, automakers are given more time to comply with these regulations.
Interestingly, the EPA's new rules are more gradual than initially proposed by regulators and will push the auto industry to achieve a majority of electric vehicle sales by the beginning of the next decade.
To meet the 2030 emissions target, it is estimated that 31%~44% of new light vehicle sales will need to be electrified, instead of the 60% originally recommended. On the surface, it seems to be more stringent, but in fact it leaves more leeway.
For a time, public opinion had different views on the development prospects of new energy vehicles, especially pure electric vehicles.
In the face of various doubts about pure electric vehicles, on March 15, the 2024 China Electric Vehicle 100 Forum, responding to various doubts about electric vehicles has become the main theme, in fact, it is more accurate to say that the doubts and prospects of pure electric vehicles are not clear.
Ouyang Minggao, vice chairman of the China Electric Vehicle 100 Association and academician of the Chinese Academy of Sciences, also repeated the old tune, the development of new energy vehicles is a major national strategy implemented by the Chinese government in comprehensive consideration of oil safety, air pollution, and industrial upgrading, and believes that "electrification is a trap set by the West" This statement is not in line with the facts.
In Ouyang Minggao's view, it is China that has led the electrification revolution, and the development of global pure electric drive vehicles is irreversible. Even his set of comparisons on the spontaneous combustion rate of pure electric vehicles and fuel vehicles have caused an uproar in public opinion.
According to the China Association of Automobile Manufacturers, in 2023, China's new energy vehicle sales will reach nearly 9.5 million units, with a market share of 31.6%.
In the first two months of this year, even affected by the Spring Festival holiday, the sales of new energy vehicles still reached 1.207 million, a year-on-year increase of 29.4%, and the market share remained above 30%.
While European and American automakers are suspending their plans for the development of new energy vehicles, China's new energy vehicles are still in a stage of rapid growth.
In 2023, Wang Chuanfu, who led BYD to complete 3.02 million sales and rank among the top 10 global car companies, believes that at this stage, China's new energy passenger vehicle market is in a critical period of "from quantitative change to qualitative change". He predicts that "in the next three months, the penetration rate of new energy vehicles may exceed 50%, or even higher, forming a market dominance of new energy vehicles."
Wang Chuanfu also specifically mentioned that "we must firmly embrace the great changes in automobiles unseen in a century, maintain strategic focus, and ensure the correctness of the strategic direction."
"Image source: Passenger Association"
According to the statistics of the Passenger Association, in January ~ February 2024, BYD still occupies the first place in the retail sales list of automobile manufacturers, and dominates the retail sales list of new energy vehicle manufacturers in the same period with a market share of more than 10%.
Mercedes-Benz, which has worked with BYD, has recently been trying to signal to the Chinese market that it has not given up on its plans to develop electric vehicles, after announcing that it will suspend the sale of gasoline vehicles.
Wang Xin, Executive Vice President of Mercedes-Benz China, said: "Mercedes-Benz is committed to continuously promoting electrification and intelligent transformation, and continuously expanding its local R&D layout. Mercedes-Benz has never given up on electrification, and we are firmly committed to the transition to electrification, but the speed of the transition depends on market conditions and customer needs. ”
Through Wang Xin's statement on behalf of Mercedes-Benz, it can be seen that Mercedes-Benz's recent series of decisions on electrification transformation are due to the significant decline in customer demand for electric vehicles in some countries or regions, but Mercedes-Benz still believes that the automotive industry needs electrification.
Volkswagen Group, the world's second-largest automaker, from Germany, has recently taken a similar approach to electrification. It's just that compared to the "inventor of the car", the Volkswagen Group is more active.
At the 2024 annual press conference held on March 14, Volkswagen also mentioned the reality of the slowdown in the demand for electric vehicles in Europe, but still said that it will continue to make efforts in the field of electric vehicles and be ready to meet the challenges.
"Image source: Volkswagen Group"
At the same time, the Volkswagen Group has also announced its ambitious future product plans: by 2027, Volkswagen will launch 11 new electric models, including two products jointly developed with Xpeng Motors, and is expected to be launched in 2026.
Of course, the Volkswagen Group also admits that Volkswagen is ready for sales in the Chinese market to continue to shrink in the face of changing market conditions, especially in the increasingly competitive market in China.
As stated by the Volkswagen Group, the competition in China's auto market has become more and more fierce in the process of continuous "involution". The "open and secret struggle" between Chinese car companies has penetrated into almost every detail.
So much so that An Conghui, President of Geely Holding Group and CEO of ZEEKR Intelligent Technology, lamented in a speech at the Forum of 100: "The competition in the market is becoming more and more fierce, some people lift the table, and some people get off the table."
Just like "Auto K-line" sorted out in the article "New Forces of Car Manufacturing: Either Shore or Drown", some car companies are unable to maintain "hematopoietic ability" in the fierce market competition due to the lack of "hard power", and many new forces of car manufacturing have disappeared from the historical stage of China's auto industry.
An Conghui believes that in the era of new energy vehicles, the competition between car companies is a systematic competition in the whole link, the whole experience and the whole life cycle, and the systematic advantages ultimately determine the differentiated competitiveness. As he said, Geely, which has now completed the layout of the whole industrial chain, "is exploding with greater upward momentum".
In addition, for Chinese car companies in the new energy era, An Conghui believes that they should export experience, technology and mode on the basis of global export of products and brands as Volkswagen Group did when it entered China.
Compared with Geely and BYD, which have enough accumulation to focus on the overall development of China's automotive industry, NIO, Xpeng Motors, Huawei, Baidu, ...... A number of bigwigs with Internet backgrounds have publicly "clamoured" their respective R&D strengths and intelligent driving technologies, revealing the desire of today's new car-making forces and latecomers in the automobile industry to "survive".
In the stage of rapid transformation of new energy and intelligence, there is no traditional fuel vehicle as the basic support, and it is difficult to achieve large-scale product production in a short period of time.
As long as one piece is toppled down, it will be difficult to prevent the whole thing from toppling.
Maybe Li Bin and He Xiaopeng know this clearly, but under the market pressure of "involution", they can only fall into an endless vicious circle.
"Image source: Xpeng Motors 2023 results announcement"
On March 19, the 2023 performance announcement data released by Xpeng Motors showed that although Xpeng Motors showed revenue growth and year-on-year loss reduction in the fourth quarter of 2023, for the whole year of 2023, Xpeng Motors' net loss increased by 1.237 billion yuan year-on-year to 10.376 billion yuan, a year-on-year increase of 13.53%.
NIO, which shares the same disease as Xpeng Motors, will have its revenue increase by 12.89% in 2023 to 55.618 billion yuan. Even so, NIO still had to face huge losses and further expansion of losses, with a net loss of 20.72 billion yuan for the year, a year-on-year increase of 43.5%.
Car companies in a similar situation are not just NIO and Xpeng. As Geely Automobile's CEO Gui Shengyue said at Geely Automobile's 2023 results conference on March 20, car companies with engines can still maintain profitability, while most of those without engines are in a state of loss.
"Auto K-line" once wrote in the article "Between Profit and Loss, Judgment from Superior!A Brief Analysis of the 2023 Performance Forecast of 16 Automobile Listed Companies| Combined with some car companies that have released their 2023 financial reports, it is found that only BYD and Li Auto have achieved profitability throughout the year focusing on new energy vehicles, and these two are car companies with engines.
"Image source: BYD 2023 Annual Report"
Among them, BYD, the sales champion of Chinese car companies in 2023, has sold a total of 3.013 million passenger cars throughout the year, of which 1.575 million are pure electric vehicles, accounting for 52.27%, and plug-in hybrid vehicles with engines account for 47.73%, accounting for 1.438 million units.
With the large-scale effect and the stable performance of the plug-in hybrid sector, which is almost equal to that of pure electric vehicles, BYD achieved a net profit attributable to shareholders of listed companies (referred to as "net profit attributable to the parent company") of more than 30 billion yuan.
In addition, as the sales champion of last year's new force, Li Auto delivered 376,000 new cars throughout the year, and the net profit attributable to the parent company reached 11.67 billion yuan, which was also a lot of money.
"Image source: Li Auto's 2023 results announcement"
"Automobile K-line" in the article "Ideal Auto: Turning Losses into Profits, Making Ends in the Dead| In the K Financial Report", Li Auto's 2023 financial report has been analyzed in detail, so I will not repeat it here.
Looking at the world, whether it is Mercedes-Benz and Volkswagen in Germany, Toyota and Honda in Japan, multinational car companies are balancing the development of fuel vehicles and new energy vehicles, rather than betting on a technical route.
Because of this, as sorted out in the article "Behind the Financial Reports of 12 Multinational Car Companies: The Global "Crazy Gold Absorption" Exceeds 1 Trillion! Why Are Chinese Cars Complacent?", multinational car companies have presented their own excellent report cards in history last year.
Clearly, they have room to maneuver during the market transition phase and are able to respond to the challenges of market risks and changes in demand.
It is precisely because of the trade-off between market demand, cost and profit that multinational car companies have chosen to temporarily slow down the pace of their new energy transformation.
However, from the long-term perspective of the development of the global automobile industry, no matter how brilliant the century-old development history of the internal combustion engine has been, and no matter how many people will miss the roaring engine and noisy streets, there is no doubt that new energy is the ultimate goal of the future development of automobiles.
During the two sessions not long ago, Li Shufu, a member of the National Committee of the Chinese People's Political Consultative Conference and chairman of Geely Holding Group, said in an interview with the media that the ultimate goal of new energy vehicles is to replace fuel vehicles, but it will take a long time.
In this development process, there may be countless possibilities for what kind of technical path to adopt for new energy. How to choose a technical route that meets the needs of consumers and the needs of enterprise development at different stages, in order to seek a balance between market share and profits, and maintain the stability, health and sustainable development of car companies and even the industry, is what Chinese automakers urgently need to think about.
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