Written by | Cao Shuangtao
Edit | Yang Bocheng
题图 | IC Photo
Reverse, be careful! Reversing, be careful!
After the familiar sound resounded from the domestic countryside to the high-tier cities, domestic electric tricycle sales increased from 8.9 million units in 2019 to 15 million units in 2022.
Source: Qianzhan Industry Research Institute
Behind the increase in sales of electric tricycles, in rural areas in China, electric tricycles can help farmers transport crops and agricultural materials during the busy season, saving a lot of manpower. During the off-farm season, electric tricycles can also help farmers transport goods from rural areas to towns and counties, and complete simple commodity trade.
Under the dominance of the domestic agricultural industry structure by smallholder economy, the penetration rate of electric tricycles in rural areas is extremely high. DoNews visited several rural areas in Fuyang City, Anhui Province, and Zhoukou City, Henan Province, and found that electric tricycles have almost become the standard equipment of rural households in these areas, and they can be found everywhere on rural roads.
Source: DoNews
In domestic cities, from vendors to community properties, from express delivery companies to instant delivery companies, etc., are based on electric tricycles, compared with fuel vehicles or new energy vehicles, electric tricycles not only have lower depreciation costs and use costs, but also do not need to consider parking problems, and are more economical and convenient.
Nowadays, "please pay attention to reversing" is gradually resounding in the global market, which not only makes some netizens on social media claim that they earn $10,000 a day by selling electric tricycles in the United States, but also makes Jinpeng win the top 1 of the world's low-speed electric vehicle sales for three consecutive years.
Source: Douyin, Jin Peng's official Weibo
Ni Xiaofeng, general manager of Jiangsu Guowei Motorcycle Co., Ltd., said in an interview with the media that orders exported to the United States in January this year have tripled year-on-year.
Xishan District, Wuxi, Jiangsu Province, where Guowei is located, is known as the "hometown of China's electric vehicles", and a complete electric vehicle industry chain has been formed there, and its products have been sold to more than 140 countries and regions around the world. Relevant data show that in 2023, the average foreign trade growth rate of the industry will reach 20%, and that of individual enterprises will reach 50%.
In some countries, there is still a great opportunity for tricycles to go to sea. Taking the Indian market as an example, the CR3 of the Indian tricycle industry in fiscal 2023 will be 45.4%, and there is no strong monopoly market for the time being. In the segmented cargo tricycle market, the main sales volume in FY2021 was contributed by small and medium-sized players in the market.
Source: Statistic
Source: Statistic
So how can Chinese tricycle manufacturers grasp the opportunity to go overseas, continuously improve their competitiveness, and achieve greater growth in overseas markets?
1. The demand for overseas electric vehicles varies greatly, and Chinese enterprises need to adapt measures to local conditions before going overseas
India is currently the fastest growing region for electric tricycles in the global market. According to India's SIAM data, the monthly shipment volume of India's tricycle market in October 2023 was 76,940 units, a year-on-year increase of 42% from 54,154 units in the same period last year, and a record high.
In the fiscal year ending March 31, 2024, sales of two- and three-wheelers in India increased 148% year-on-year to 1.18 million units.
Bain & Company predicts that there will be about 30 million electric two-wheelers, 6 million electric four-wheelers and 770,000 electric three-wheelers on India's streets by 2030.
Statistic expects electric tricycle penetration in India to reach 90% by 2030, up from 3.1 times that of 2021.
Source: Bain & Company
Source: Statistic
However, not all countries have maintained a high growth rate of three-wheeled electric vehicles like India, and the data of the "KNBS2023 Economic Survey" shows that from 2020 to 2022, the number of registered tricycles in Kenya will be 5,896, 6,350, and 4,001 respectively, and the annual sales will be less than 10,000 units.
According to the Federation of Thai Industries (FTI), in the first five months of 2023, only 123 of the 33,365 pure electric vehicles registered in the country were tricycles, accounting for only 0.36%. In the decade from 2013 to 2022, the number of tricycles in Japan has maintained a growth momentum, but the number of tricycles in 2022 is only 24,940.
Source: Statistic
In 2019, the market size of electric tricycles in Europe and the Americas was only $27.7 million, less than 1% of the total size of the global electric tricycle market, and the market size will continue to shrink.
Source: Statistic
Behind the big difference, the economy and convenience of electric tricycles are the key to driving their sales growth, which is consistent with the logic of domestic market demand. For example, India is mainly mountainous and has vast land, and its own consumers prefer motorcycles, and India is also known as "the country that rides on motorcycles".
Source: Statistic
After global oil prices rose in 2022 due to international conflicts, Indian consumers and businesses had to consider low-cost travel options. India's ET Auto reported that the electric three-wheeler segment grew 101% year-on-year to 177874 units in FY2022. High fuel costs are one of the reasons e-commerce companies are exploring electric vehicles.
Suman Mishra, CEO of Mahindra Electric India, also pointed out that the trucking sector is the main driver for e-commerce companies to embrace electrification, while many logistics companies have fully electrified fleets for the first and last mile.
The same is true in Africa, where tricycles play a key role in rural, peri-urban and urban landscapes in many African countries, such as in Mombasa and coastal Kenya, where internal combustion engine tricycles are one of the main modes of transport in the region, and companies plan to replace internal combustion engine tricycles by designing electric three-wheeled tuk-tuks that meet local conditions and applications.
However, in the process of real demand landing, there are big differences among overseas countries. For example, in order to accelerate the transformation of India's energy structure, the country's Minister of Heavy Industry, Mahendra Nath Pandey, said that 500 crore will be allocated in 2024 for the electric vehicle promotion plan in 2024.
The maximum subsidy is Rs 25,000 and Rs 50,000 per light tricycle (e.g. e-rickshaw) and heavy tricycle (e.g. cars and commercial vehicles) respectively. At the same time, the government plans to allocate Rs.339.7 million to support the sale of 13,590 electric tricycles.
But not all countries have the same subsidies for electric tricycles as India, such as Mexico, where the top brass favors traditional fuel oil and bets the country's future on fossil fuels to support Petroleos Mexicanos. In Latin America, where Mexico is located, subsidies in many countries are also given to conventional fuels, as well as buses and subways.
Kenyan President William Ruto has set a target of 200,000 electric motorcycles nationwide by 2025, but the country's high electricity costs, annual tariffs on three-wheeled electric vehicles, and bureaucratic imports have slowed down the development of electric tricycles.
Europe, the United States and Japan should have a relatively mature automotive industry chain and a relatively early start, so they can be put into the new energy vehicle market for structural transformation.
In addition, there are also big differences in the difference in overseas infrastructure and the demand of domestic consumers for tripods. For example, traffic congestion and uneven road quality in India lead to frequent traffic accidents.
According to Statistic, there were about 461,000 road accidents in the country in 2022, and about 3% to 5% of the country's GDP is spent on road accidents every year, and about 70% of the accidents involve young Indians.
The country is home to about 1% of the world's car ownership, but accounts for 6% of the world's road accidents. This is another reason why the Indian government is developing the electric tricycle industry and local consumers and businesses are opting for more resistant electric tricycles.
Source: Statistic
Unlike India, European and American countries have relatively good urban traffic conditions, well-developed public transportation systems, and relatively complete infrastructure. For example, in the top ten most congested metropolitan areas in the world in 2023, there are almost no European and American countries.
Source: Statistic
At the same time, many European and American countries have high requirements for the certification and compliance of electric tricycles, and they do not even let go of the right of way.
At present, behind the current high enthusiasm of European and American consumers for electric tricycles, it is actually based on the satisfaction of driving excitement and emotional value brought by the demand for early adopters.
For example, a foreigner on YouTube said that the electric tricycle is the most humorous and best mood car he has ever driven in his life. Many foreigners who could not speak Chinese in the past, after driving the three jumpers, not only gained emotional value, but also passively learned the introduction of Chinese, and the first word they could say was "reverse, reverse". Some American students also said that American white men treat electric tricycles as toys, just like rich people in Beijing use Beijing A motorcycles as toys.
Moreover, unlike the agricultural structure of the mainland, farms in European and American countries adopt private ownership and management farms, large commercial farms, cooperatives and agricultural companies, and the demand for electric tricycles in agricultural production is not as strong as in rural areas in China.
The same situation is also in Japan, where the country's small land area, limited agricultural industry, and mature motorcycle culture and bicycle culture are limiting the increase in the scale of electric tricycles in the country. World-renowned motorcycle brands such as Suzuki, Yamaha, and Honda were all born in Japan.
Second, the comprehensive competitiveness of price, offline and products, Chinese enterprises continue to compete
In addition to the above reasons, the price of electric tricycles is also the key to the growth of overseas tricycle penetration.
According to SAIM data, India is one of the world's largest exporters of two-wheelers, and the main exporters of electric tricycles include Nigeria, Somalia, the United Arab Emirates, Iraq and Mexico.
Nigeria's inflation rate will exceed 20% in 2023, Nepal will impose a 10-month import ban, Ethiopia will suffer from drought and high inflation of more than 30% at the same time, Bangladesh will experience a severe depreciation of its national currency, and Africa will crack down on India's Bajaj Auto and TVS Motor's occupation of the African market at low prices.
Under the impact of multiple factors, India's electric tricycle exports fell from 4.61 million units in April 2021 to February 2022 to 3.46 million units in April 2022 to February 2023, a decrease of 24%.
In the future, the rising inflation in many overseas countries may dampen the growth of demand for electric tricycles in the country.
The Financial Times reported that U.S. consumer prices rose 3.5% for the year to March this year, higher than the expected 3.4%, and inflation was higher than expected for the third consecutive month, prompting traders to bet that U.S. interest rate cuts could be lower than expected and will not begin until November, and many European countries are currently introducing relevant measures to curb the increase in domestic inflation.
Further, if the price of an electric tricycle is higher than that of other modes of transport, domestic consumers will still prefer other modes of transport. For example, on the Amazon platform, some domestic electric tricycles are sold overseas for as much as US$7,000 to US$10,000 (about 45,000 to 60,000 yuan).
Source: Amazon
However, in the first half of 2023, the average retail price of electric vehicles in Europe exceeded 65,000 euros, but the retail price of electric vehicles in China was slightly more than 31,000 euros, and the BYD Dolphin and Yuan Plus series were both priced at 20,000 euros, according to JATO Dynamics data. In contrast, in the eyes of consumers in European and American countries, can the three bunges be so fragrant in the future?
It is not only the price of domestic electric tricycles on the consumer side that has soared, but also the situation for enterprise products. For example, on Ali International Station, the price of some domestic garbage removal electric tricycles is directly pulled to $4,027 to $4,999. In the context of the K-shaped differentiation of the global consumer market and the pursuit of cost reduction and efficiency increase, the excessively high price of domestic tricycles overseas is easy to dissuade overseas consumers.
Source: Ali International Station
Of course, the overseas price of some domestic brand three-wheeled electric vehicles does have a strong price competitiveness in overseas markets. For example, on Ali International Station, the price of electric tricycles exported by Guowei to France is 550 euros to 600 euros, while the current price of electric tricycles in France is several thousand euros to 10,000 euros.
Source: Ali International Station
However, two-wheeled and three-wheeled electric vehicles, including new energy vehicles, are strong offline businesses because offline stores carry consumer test drive, after-sales and other services at the same time.
Based on this, how to properly handle the relationship between government and enterprises, how to formulate a reasonable profit sharing ratio with partners according to the different markets and cultures of each country, and then expand more partners, which is a great test of the control ability of Chinese tricycle manufacturers.
In addition, how to improve the comprehensive ability of products according to the differences in the needs of overseas consumers is the key to ensuring its sales growth.
On the one hand, the global climate is extremely different, which has an impact on the life of electric tricycles, and Chinese companies need to adjust according to regional differences. For example, in the desert climate of the Middle East, the tires and batteries of electric tricycles are required to be more resistant to high temperatures. In Southeast Asia, where the climate is in tropical rainforests, the steel used in electric tricycles is required to be more resistant to rain corrosion and avoid large-scale rust of the product.
On the other hand, overseas local manufacturers continue to innovate products around electric tricycles. For example, the Surge S32 launched by Surge India can convert an electric tricycle into a two-wheeled electric scooter in 3 minutes.
Source: Twitter
3. India is taking battery technology for three-wheeled electric vehicles to new heights
Similar to new energy vehicles, battery life is an important factor that affects the mileage of tricycles and influences consumer purchases.
However, unlike the domestic tricycle battery that is generally bought out, and urban public transportation is dominated by taxis and online car-hailing, India's electric human-powered tricycle is gradually becoming an important public transportation tool in India, which makes Indian tricycle manufacturers also completely roll up in tricycle battery technology like domestic new energy vehicle manufacturers.
For example, in September 2023, Montra Electric joined forces with Exponent Energy to develop a 15-minute fast-charging electric vehicle in the tricycle segment. Under the terms of the agreement, Montra Electric will launch a fast-charging electric tricycle using Exponent's 8.8kWh battery.
In October of the same year, Altigreen's all-new neEV Tez featured 3-in-1 charging, allowing users to choose between normal, fast, and fast charging options. The neEV Tez can be charged 100% in 15 minutes on Exponent's fast-charging network.
In April, lithium-ion battery maker Neuron Energy joined forces with Urja Mobility to adopt a leasing model for e-rickshaw batteries, and will launch the Kolkata region to expand more markets in India. In other words, the Indian tricycle market is similar to the battery swap and battery leasing model of NIO, a domestic new energy vehicle.
Not only that, but Indian tricycle batteries are also keeping up with the pace of international battery changes. In order to cope with the life degradation of lithium batteries and lithium iron carbonate batteries, global automakers are accelerating the development of hydrogen energy vehicles. In March this year, Toyota announced that it had mass-produced hydrogen-fueled vehicles that could be filled with hydrogen in three minutes and had a range of more than 700 kilometers.
In July 2023, India said the government had started the third phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles financial support scheme, which could cover hydrogen-powered vehicles, additional support for electric tricycles, and scaled-down versions of two-wheelers.
This means that in the future, the Indian electric tricycle market will usher in more and more involution, and domestic tricycle manufacturers may need to continue to learn from domestic new energy vehicle manufacturers on how to carry out continuous technological innovation around electric tricycle batteries when they go overseas in the future.
Epilogue:
At present, Chinese tricycle manufacturers have diversified ways to go overseas, such as Kenya's Kiri importing their parts kits from the Chinese market, assembling electric cargo tuk-tuks in Nairobi, and launching two electric tricycles with 1500W and 3000W motors.
However, if Chinese electric tricycle manufacturers want to truly do well in the international market, in addition to responding to the ever-changing policies overseas, product strength, cooperation ability, market insight and marketing power need to be continuously improved. We also firmly believe that perhaps one day in the future, the domestic three bunges will become a new business card for China to go overseas.