Since entering April, the involution of the auto market has not relaxed at all, and the price war set off by BYD is still affecting the entire auto market. At the same time, the launch of Xiaomi cars has also made the whole situation even more confusing. In this context, car companies also have to think rationally about how to go next.
01
Poor performance in the first quarter Car companies gathered to lower their targets
Recently, it was reported that Tesla will reduce production capacity. Earlier this month, Tesla China reduced production of the Model Y and Model 3 by adjusting the working week for employees at its Shanghai factory from six and a half days to five, according to company insiders. The cuts are likely to continue until the end of April. Employees have not yet been given clear instructions on when production will return to normal.
In an environment of weak electric vehicle sales and highly competitive markets, even Tesla, the global champion in pure electric vehicle sales, cannot withstand the pressure of declining sales. Tesla's direct sales model is to arrange the production plan according to the order volume, and there is no dealer to play the role of reservoir regulation. The reduction in production capacity means that Tesla's terminal order volume is not as expected.
In the first quarter, Tesla's global production exceeded 433,000 units, and about 387,000 units were delivered, a significant decline year-on-year and month-on-month. In the first quarter of last year, Tesla delivered 422,000 vehicles, compared with 484,500 in the fourth quarter of last year.
In the Chinese market, in February this year, Tesla's sales in China reached 60,365 units, compared with 71,447 units in January, down 15.5% month-on-month and 18.9% year-on-year. This does not bode well for Tesla. Tesla's wholesale sales in China totaled 89,100 units in March, totaling 220,900 units in the first quarter, slightly lower than the 229,300 units sold in the same period last year.
On the other hand, the wait-and-see sentiment of consumers continued in the first two months of this year, which also calmed down the new domestic automakers. Li and NIO have lowered their sales guidance for the first quarter, and BofA Securities has also lowered its full-year sales forecast for Xpeng.
After achieving its sales target for 2023, Ideal has confidently set a target for 2024 with 800,000 units. But the ideal is very plump, and the reality is very skinny. Li Xiang, the founder of Li Auto, sent an internal letter to re-examine the strategic development of MEGA, and it seems that he is also preparing to readjust the annual sales target. It is reported that Li Auto's annual sales target for 2024 will be adjusted from 800,000 units to 560,000~640,000 units.
Judging from the actual situation, this step of the ideal is both a precipice and a last resort. In February, Ideal sold 20,251 vehicles, a year-on-year increase of 21.8%, but compared with 31,165 vehicles in January, a decrease of 35% month-on-month. Sales rebounded slightly in March, but the monthly deliveries of 28,984 units and the first quarter delivery of 80,400 units were still far from their targets.
Following the ideal, NIO also lowered its first-quarter deliveries. On March 27, NIO announced a downward revision of its first-quarter deliveries. According to the announcement, based on recent business developments, about 30,000 vehicles are expected to be delivered in the first quarter of this year. For comparison, the official sales in the first quarter were 31,000~33,000 units, and now the range has been lowered by 1,000~3,000 units.
In February, NIO sold only 8,132 vehicles, less than 10,000 units, a sharp decline year-on-year, down 33.1% year-on-year and 19.1% month-on-month, showing a lack of stamina in the competition in the new energy vehicle market. NIO sold 11,866 units in March, and its cumulative sales in the first quarter were only 30,053 units. Thanks to the timely reduction of the target, NIO would not have been able to achieve its sales target in the first quarter.
02
Is it a rational judgment or is it a fear of losing?
Since entering 2024, the market competition has become more fierce than in 2023. At the beginning of the year, BYD and Tesla sounded the horn of the price war, and then many car companies have launched preferential activities, and some of the price reductions are as high as tens of thousands of yuan.
Specifically, in February, the BYD Qin PLUS Glory Edition and the Destroyer 05 Glory Edition were listed, with prices falling by 20,000 yuan, and the starting price dropped to 79,800 yuan, bringing the price of electric vehicles into the "7 prefix". Subsequently, the new energy brands of Changan Qiyuan, Nezha Automobile and SAIC-GM-Wuling have followed up with price cuts, and the starting price has dropped to less than 100,000 yuan, which is regarded by the industry as a signal for independent new energy vehicles to fully impact the A-class sedan market. Under the repeated price reductions, electric vehicles have also crossed the "same price of oil and electricity" and officially come to the era of "electricity is lower than oil". In addition to Tesla's reverse price increase, domestic brands have invariably made big price cuts, especially before and after the release of Xiaomi SU7, Extreme Krypton, Wenjie, and Weilai have all made a move, and this price reduction tide is not inferior to the price reduction tide that Wuhan took the lead in March last year. Although the Model Y was raised by 5,000 yuan, the original value of 12,000 yuan of star gray paint was changed to a free option, and users who bought the star gray Model Y still saved 7,000 yuan in disguise.
At the same time, hybrid models continue to sell well, which has a great impact on the pure electric vehicle market. On March 27, Wang Chuanfu, chairman of BYD, said that the fifth-generation DM-i hybrid technology will be launched this year. Since late February, BYD has intensively launched the Glory version of the model to occupy the minds of users, and the sales and growth rate of plug-in hybrid vehicles have exceeded that of pure electric vehicles.
For car companies, pure electric vehicles must find their own position in the competitive landscape in order to go long-term. As Li Xiang said in the internal letter, pure electric models should have their own strategic rhythm, focus on core user groups, and abandon the comprehensive flowering strategy.
On the other hand, the new forces of high-end and intelligence are still pouring in, building a technological moat for some brands, which is expected to break the pattern of "Wei Xiaoli" and reconstruct the new energy market. In the first quarter, the momentum of the world was rapid, and it surpassed the ideal for two consecutive months to become the No. 1 sales volume of the new forces. Huawei Technologies continues to provide continuous support for the Wenjie series, and since the facelift and launch in September last year, the cumulative number of new M7 products has exceeded 140,000 units. Another model that boosts the brand's premium ability, the M9, delivered 6,243 units in March, ranking first in the sales of new forces with more than 500,000 yuan.
Xiaomi SU7 detonated as soon as it was launched, and it was set to exceed 50,000 units in less than half an hour, which made many car companies have a sense of crisis. If you don't stand out, you will be out, and the new car-making forces can no longer sit in the high hall, and lowering the target is only the first step.
03
A protracted battle towards high-quality development
The automobile market has entered the era of stock, and the competition is bound to become more fierce in the future. For car companies, if the goal is too high, it will not only bring disadvantages to their own development, but more importantly, once the set goal is not achieved, it will affect the confidence of capital and consumers in the brand, thus triggering a series of butterfly effects, which will be a more fatal blow. Therefore, the reduction of production and the reduction of the target are not only forced by the situation, but also logical.
At present, the wait-and-see sentiment in the market is serious, residents' consumer confidence is insufficient, and the consumption index has not yet returned to expectations, and the market trend is not as optimistic as several car companies. According to Wang Qing, deputy director of the Market Economy Research Institute of the Development Research Center of the State Council, residents' income and consumption expectations are still in the process of rebounding, judging from the consumer confidence index in January, which is only about 88.9, although there is a certain lag, but it is actually still in a relatively weak range. At the same time, the slowdown in the growth rate of residents' income and the shrinkage of household wealth will have a relatively obvious inhibitory effect on automobile consumption, especially for the consumer demand for renewal and replacement.
In the past year, government management departments have launched a "trade-in" policy, and the market is waiting for favorable policies to promote consumption. Therefore, before the introduction of relevant pro-consumption policies, it is expected that consumers' wait-and-see sentiment will be heavier.
In the eyes of industry insiders, the macro environment is certainly an important factor affecting the auto market, but from the perspective of corporate strategy, car companies cannot mess with themselves. Rather than being dragged into a price war to survive, it is better to stand firm, regroup, and pursue high-quality sustainable development.
Cao Guangping, a partner of Chefu Consulting, also pointed out that the main reason for the new power car companies to reduce production and targets is due to the decline in purchase demand due to the economic downturn, and the market is oversupplied. At the same time, the loosening of preferential incentives for electric vehicles in various countries, the restriction of China's electric vehicle exports, the lack of rich product planning, and the slowdown in product upgrading are also the reasons for the lack of confidence of car companies.
At present, in view of the strategy of some car companies to reduce production, lower sales targets, reduce prices and launch low-cost models, Cao Guangping believes that these will have a certain positive effect on the operation of car companies, but it is difficult to make a fundamental reversal in corporate performance.
The development of pure electric vehicles is long-term, and it is difficult to require it to reach its peak at this stage. Cao Guangping believes that before that, car companies will either turn to the strategy of "hybrid make-up", or they will have to do a good job in "the development of innovative functions and significant performance improvement of pure electric vehicles". "At present, it is unlikely that pure electric vehicles will occupy a large market share only by virtue of the 'dispensable' characteristics of good acceleration, good quietness and good wading. Electric vehicles can only occupy a more favorable place in the future market by relying on the progress of battery technology, the whole vehicle providing more new functions and high performance, and the convenience of using the car without anxiety. He said.
Text: Zhang Yahui Editor: Huang Bei Layout: Wang Kun
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