In 2023, the new energy industry will deliver high-scoring answers: the sales of new energy vehicles will exceed 9 million, the new installed capacity of photovoltaics will exceed the historical record, and the new installed capacity of energy storage will increase by three times. It is undeniable that China's new energy development has achieved outstanding achievements and achieved corner overtaking in many fields. But we must not be complacent, let alone proud.
While seeing the achievements, from an objective point of view, China's new energy is facing three major concerns:
First, after the penetration rate of new energy exceeds a certain stage, the development rate will slow down, the competition will increase, and the price war will "involution";
Second, there is a huge space for the development of intelligent driving, but there is still a "lack of cores and souls" to prevent falling behind in the second half;
Third, the energy storage market is developing rapidly, but the phenomenon of bad money driving out good money is prominent.
In the long run, the mainland needs a more thorough new energy transformation to adapt to and lead the global new energy revolution. In this way, we put forward three suggestions for the development of new energy at this important time.
1. The long-term development of new energy requires new kinetic energy, and it is recommended that the south of the Yangtze River gradually introduce a ban on the sale of fuel vehicles
In 2023, the penetration rate of new energy passenger vehicles in China will reach 40%, and even more than 50% in some developed provinces and cities in the south.
On the one hand, the penetration rate of our pure electric new energy is still low and the growth rate is slowing down. From the data: from January to February 2024, China's pure electric vehicles will grow by 11.7% year-on-year, and plug-in hybrid vehicles will grow by 72.8% year-on-year.
On the other hand, the penetration rate of new energy from 40% to more than 90% will inevitably face the problem of slowing down the growth rate of penetration rate and making it difficult to inject new momentum into policy support. At present, the growth rate of new energy sales in major cities will slow down significantly after entering the high penetration range. For example, Shanghai, Shenzhen, and Hangzhou will have a new energy growth rate of 7%~11% in 2023, and the growth rate of other high-penetration cities is also slowing down. If this trend is maintained, there will be some pressure on the penetration rate of major new energy cities to exceed 50%.
In the long run, China's new energy transformation needs to inject new kinetic energy, and it is recommended that the region south of the Yangtze River should pilot the first project, refer to Hainan, and gradually introduce a ban on the sale of fuel vehicles in batches to increase the transformation efforts.
1) Gradually promote the ban on the sale of fuel vehicles, which is related to China's determination to transform the energy structure and the competitiveness of enterprises.
There are signs that Europe is determined to build a carbon-free energy system. On December 18, 2023, seven European countries pledged to fully decarbonize the power system by 2035, after the European Union had passed a nationwide ban on fuel vehicles in February, and the most radical Netherlands intends to completely ban the sale of fuel vehicles in 2025. The BMW Group, a representative of European automakers, also announced plans to stop production of gasoline vehicles at its headquarters in 2027.
The development of China's new energy vehicle market in the past decade has confirmed that the phasing out of fuel vehicles has also become a consensus between car companies and the market. On the enterprise side, China's car companies are also dominated by new energy models in model development and channel investment, and the ban on fuel vehicles has also become a trend, BYD will stop producing fuel vehicles in early 2022, Changan Automobile plans to stop selling fuel vehicles in 2025, and BAIC Group announced that it will stop producing independent fuel vehicles in 2025. On the market side, in 2023, new energy accounted for 7.75 million in domestic passenger car retail, a net increase of 2.07 million, an increase of 36%, and a net decrease of 920,000 fuel vehicles, a decrease of 6%, in addition, seven of the top 10 passenger car models in 2023 are new energy vehicles.
China's new energy going overseas based on the global market requires the same policy support and corporate determination, which is a great opportunity in recent decades and even a century. On the policy side, the second phase of the National Stage VI Motor Vehicle Pollutant Emission Standards will be implemented in July 2023, further increasing the requirements for emission control and increasing the transformation of new energy.
2) The conditions are ripe for the market to further increase the penetration rate of new energy.
Taking Hainan Province as an example, as early as 2019, Hainan Province took the lead in proposing a timetable for "banning the sale of fuel vehicles in 2030". Since March 2023, the penetration rate of new energy in Hainan Province has exceeded 50%, reaching the first place in the country. In terms of development goals, Hainan plans to add more than 60% of new energy vehicles in 2025, and 100% of new and replaced clean energy vehicles in the public service and social operation fields.
Hainan's new energy development model has a lot to learn from other regions south of the Yangtze River: Haikou and Sanya became pilot cities for battery swapping earlier, and local governments have introduced policies to support the development of Geely, Haima, Toyota and other car companies, encourage the construction of charging piles and the coverage of 5G roundabout routes required by the Internet of Vehicles, and accelerate the implementation of pilot projects such as intelligent driving and Internet of Vehicles.
In contrast, the industrial scale of the Yangtze River Delta, the Pearl River Delta and the middle and upper reaches of the Yangtze River is more advantageous than Hainan, and the clustering and supply chain integrity of car companies are higher. The Yangtze River Delta region gathers new forces such as NIO and Ideal, as well as large state-owned car companies of SAIC Group, and has a complete auto parts industry chain. The Pearl River Delta has new energy pioneers such as BYD and GAC, and Guangdong Province will produce 2.53 million new energy vehicles in 2023, accounting for 1/4 of the national output. Chongqing, the middle and upper reaches of the Yangtze River, is the home base of Huawei's models, ranking second in the country in terms of automobile production in 2023, and the output of new energy vehicles will exceed 500,000 units. Shanghai, Shenzhen, Chongqing and other cities have also taken the lead in becoming pilot cities for intelligent networking, and the developed areas south of the Yangtze River have the mature conditions to follow Hainan's example.
3) The south took the lead in banning sales, which will also contribute to the development of new energy in the northern region.
The penetration of new energy vehicles faces the status quo of uneven development between the north and the south: first, because of the attenuation of the mileage and energy density of power batteries in low temperature scenarios. Second, the construction of the charging and swapping system in the northern region is not as perfect as that in the southern region.
To a certain extent, the development of new energy in the southern region affects the process of new energy development in the northern region. Due to the gathering of major new energy vehicle companies and consumers in the south, advanced battery technology and charging and swapping facilities are the first to be verified and rolled out in the southern market, such as high-voltage fast charging technology, battery low-temperature attenuation suppression, and fuel cell loading are mainly piloted in the south.
The promotion of the restriction and ban on the sale of fuel vehicles in the southern region will prompt car companies to pay attention to R&D investment in areas such as winter range, thereby further accelerating the increase in the demand of the new energy market in the northern region. In the long run, with the new regulations on purchase tax, the promotion of low-temperature battery technology, and the rollout of 800V high-voltage fast charging in 2024, it is of great significance to achieve "new energy experience equality" between the north and the south.
4) Plug-in and range extension, as transitional technology routes, have made great breakthroughs in the market. In the next step, the ban on the sale of fuel vehicles can further increase the proportion of pure electric vehicles and further promote the process of electrification.
In 2023, plug-in electric vehicles will increase from 23% to 31%, and consumer acceptance of the transition technology will drive the overall new energy penetration rate to increase. It can be said that in the short term, the improvement of domestic electrification depends on hybrid, plug-in and other technologies. Starting in 2024, judging from the data of some months, the proportion of plug-in and extended range has reached more than 40%, and the price reduction of some plug-in models is also very obvious.
From the perspective of carbon emissions, pure electric vehicles are more environmentally friendly and are still a long-term development trend. The core of the development of electric vehicles is to reduce emissions, plug-in range extension has not achieved complete emission reduction, but pure electric new energy can actually achieve complete emission reduction. In the long run, the development of pure electric technology will replace plug-in and solve technical pain points such as fast charging.
5) Only by further expanding the scale of local new energy can we help the industry go overseas.
Objectively, in recent years, most of the mainland's new energy development achievements are still concentrated in the local area, and Chinese car companies have just taken the first step to "go global".
In 2023, BYD has become the world's largest new energy vehicle company, with sales of 3.02 million units, but the world's largest car company in terms of sales is Toyota, which sticks to the fuel vehicle market, with sales of 10.65 million units.
To transform the strength of China's own brands into industry discourse and global market share, it is inseparable from a larger, more mature local market. The current local penetration rate of 40%-50% is not enough to open up the awareness of overseas users of China's new energy brands. In terms of ownership, the number of new energy vehicles in China will be 20.4 million by the end of 2023, accounting for 6.07% of the total number of 336 million vehicles in the country. As the world's largest automotive market, China also needs a more thorough new energy transition.
2. Intelligent driving lacks a core and a soul, and it is recommended to establish a common system platform to accelerate the construction of China's new energy intelligent driving industry
To a certain extent, China's intelligent driving industry is facing the dilemma of "lack of core and soul" and insufficient degree of autonomy. The two cores of intelligent driving are hardware computing power chips and domain controller software architecture. In terms of hardware, the current AI chips used in intelligent driving training mainly come from NVIDIA, and in the context of tightening overseas restrictions, how Chinese car companies will build computing infrastructure is a major concern. In terms of software, it is also necessary to pay attention to the fact that under the trend of new energy vehicles going overseas, the software system may become the next regulatory and policy concern, and at the same time avoid being stuck by a new round of stuck.
In the future, it is recommended to establish a common operating system platform to jointly build the underlying intelligent driving technology and core hardware, and jointly build China's intelligent driving industry. Due to the particularity of the operating system: first, it involves the operation of the basic kernel of intelligent driving, second, it supports the application ecology and accumulates huge user data, and third, the adaptation and verification cost of the system is extremely high, and car companies cannot easily replace the operating system after choosing it. In QNX, Linux, Android, Hongmeng and other basic systems, how to choose the underlying route has become a major problem for car companies.
Data security is a core issue for autonomous driving systems. There may be data backdoors in overseas systems, which leads to sensitive data generated by vehicles during driving, such as location information, driving habits, etc., which may be hacked or collected by enterprises for illegal purposes, which not only threatens personal privacy, but also may pose a serious threat to road traffic safety.
In addition, the use of overseas systems may also lead to limited upper-level application development. Because the source code of these systems may be protected by patents or restricted by relevant policies, developers may encounter difficulties in developing upper-layer applications for autonomous driving systems. This not only increases the cost and cycle of development and iteration, but also may cause China's autonomous driving development to lag behind overseas markets.
The use of overseas systems may also be subject to the risk of policy changes. As international relations continue to change, certain countries may impose restrictions or sanctions on sensitive technologies. If the mainland relies heavily on these overseas systems, once this happens, it will have a serious impact on the mainland's intelligent driving application and development, putting Chinese car companies in a passive position.
On the other hand, choosing a mature system developed by a single enterprise may also face a series of policy risks.
In the current international situation, especially when it comes to technical cooperation in the field of high technology, governments around the world are strengthening the supervision and restrictions on foreign technology. Therefore, if the autonomous driving technology developed by a single company is adopted on a large scale, it is likely to be the subject of scrutiny by overseas regulators.
Especially when the relevant model has formed a scale advantage in the market, it is very likely that the overseas government will conduct a long-term technical review of the system of a single enterprise. The review is not only the safety and reliability of the technology itself, but also may involve issues such as national security and data privacy, making it difficult for China's new energy vehicles to go overseas on a large scale.
In addition, there are differences in standards and regulations for autonomous driving technology in different countries. If a company wants to bring its autonomous driving system to the global market, it needs to face regulations and standards in different countries and regions, which will not only increase the difficulty and cost of development, but also make it difficult for the technology to be widely used in different markets.
A new model can be adopted: joint investment in the automotive semiconductor industry, joint development of a set of underlying operating systems, research and development of software applications and intelligent driving ecology on the basis of which each company shares the results of algorithm training.
First, it can avoid repetitive and redundant algorithm training investment, Linux development iteration has gone through 30 years, QNX system has been used for more than 40 years, joint development can greatly save computing power costs and improve iteration efficiency.
On top of the basic operating system, companies can still customize the development of cockpit systems and intelligent driving systems according to their own market positioning to build a differentiated application ecosystem.
Third, the industry-shared system can effectively respond to overseas policies, and the jointly developed underlying operating system, as the industry's common intellectual property rights, is more likely to be recognized and accepted by overseas markets, and has more say in responding to overseas technical review and supervision.
3. The energy storage market is developing blocks, but bad money drives out good money, and it is recommended to improve industry standards and standardize the development ecology of the industry
2023 is a year of explosion in China's energy storage market, but the market has just entered the dilemma of chasing good money from bad money. In 2023, China will put into operation 21.5Gw/46.6Gwh of new energy storage capacity, an increase of more than three times year-on-year. There are more than 70,000 newly registered companies in the industry, and more than 58 investment projects of 10 billion yuan.
However, in the early stage of industry expansion, a large number of new capacity poured in, and price wars were inevitable, giving rise to low-quality, high-risk, and non-benign competition.
It is suggested to raise the safety threshold for grid-connected energy storage systems, establish access enterprise standards, standardize industry competition and develop ecology.
In 2023, the market demand for mandatory distribution and storage will surge, resulting in some energy storage systems that do not meet the comprehensive indicators and energy storage cabinets without safety guarantees being installed and connected to the grid, bringing huge safety risks. As a result, the effective utilization rate of overall energy storage is low, and it cannot fully exert its maximum value in the power system. In addition, the integration of inferior products to the grid has hit the enthusiasm of high-quality enterprises, and the "involution" of the industry has caused the cost pressure faced by energy storage companies to increase sharply, and it is more difficult to continuously invest in R&D and improve product efficiency.
In 2023, the upstream lithium carbonate price plummeted from 500,000 yuan/ton at the beginning of the year to 100,000 yuan/ton at the end of the year. The price of energy storage cells dropped from 0.92 yuan/Wh in January to 0.42 yuan/Wh at the beginning of 2024, a decrease of 46%. Behind the collapse in prices is the fear of inferior competition. The industrial ecology of healthy competition and healthy development should be that a large number of orders and demand flow to high-quality enterprises, help high-quality enterprises invest in product research and development, technology upgrading and industrial chain optimization, and then gradually put into the market with more competitive prices and products, forming a positive cycle.
In the future, with the introduction of market self-regulation and normative policies, the price of the energy storage industry will gradually recover to a reasonable level.
The first is to set the product safety threshold, and the quality and safety indicators of the battery system must be achieved, otherwise it cannot be connected to the grid, and the red line of quality and safety must be kept.
Second, it is recommended that the energy storage industry establish a strict access mechanism to ensure that energy storage companies participating in market-oriented competition have technical strength in cell material design, foreign body control, emergency protection and other aspects. Strengthen information disclosure and transparency requirements, and require energy storage companies to fully disclose information on the energy storage products they produce and sell, including materials, capacity, specific energy, life, supporting schemes and other information.
In addition, a third-party evaluation agency can be introduced for public projects of compulsory distribution and storage: to conduct technical evaluation of energy storage companies and battery products, provide objective and professional advice, and increase the fairness and transparency of market-oriented competition. Finally, incentive and subsidy policies also need to be followed up and improved, correcting blind development and beware of fraudulent subsidy behavior.
Let the dividends of industrial development feed more high-quality enterprises, and promote the formation of healthy competition and healthy development of the energy storage industry.
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