Xinhua News Agency, Berlin/Hefei, April 25 (Xinhua) -- Recently, the reporter visited a number of electric vehicle industry chain enterprises and interviewed domestic and foreign industry insiders, believing that in the field of new energy vehicles, the United States, the European Union and other aspects of the hype of "overcapacity" do not conform to the actual situation of China's industry, lack of understanding of the rapid growth of China's electric vehicle market.
In fact, the high cost performance of China's new energy vehicles stems from the comparative advantages brought about by the fully competitive market, technological innovation and industrial chain cluster effect. The speculation of China's new energy vehicle "overcapacity" by the United States and Europe is a deliberate misinterpretation of the logic of industrial development and an excuse for the implementation of trade protection measures.
On April 25, at the 2024 Beijing Auto Show held at the Shunyi Hall of the China International Exhibition Center in Beijing, visitors watched the new Beijing Hyundai Shengda. Xinhua News Agency reporter Cai Yang photographed
"Excess"?
"If China's electric vehicles are really 'overcapacity', then we should see a lot of huge parking lots crammed with new cars that can't be sold. The U.S. media Bloomberg recently reported that based on the analysis of public information of listed companies and industry associations, the inventory of Chinese auto dealers is not high, especially the capacity utilization rate of most of the top automakers is at an internationally recognized normal level.
In fact, in recent years, China's top 10 conglomerates in terms of auto sales have been much higher than the industry average in terms of capacity utilization.
In 2023, the capacity utilization rate of China's BYD Group, Tesla's Shanghai plant and SAIC Motor will be around 80%, compared with 23% for South Korea's Hyundai Motor and 25% for Kia Motors, according to an analysis by the British industry news website "This is the car".
Cui Dongshu, secretary general of the National Passenger Car Market Information Association, told reporters that the new energy vehicle industry as an emerging industry, its production capacity is relatively differentiated, and whether there is excess capacity should be judged by the capacity utilization rate of the head enterprises. The backward and low-end production capacity in small enterprises should not be counted, and this part of the production capacity is also "cleared" with market competition.
Analysts say that the so-called "overcapacity" in China's new energy vehicle field is largely a "numbers game". For example, some companies produce both new energy vehicles and traditional fuel vehicles, and when the sales of fuel vehicles decrease as the market share of new energy vehicles expands, some Westerners include these production capacities that will eventually be eliminated in the "total production capacity" of Chinese automobiles.
In addition, capacity construction is a dynamic process with cyclical factors, China's fast-growing new energy vehicle market requires production capacity to be laid out in advance, considering the future development, there is no problem of excess production capacity of new energy vehicles in general.
Ferdinand Dudenhefer, an authoritative German automotive economist and president of the Bochum Automotive Research Institute, said that China's electric vehicle market is far from saturated and will continue to maintain a faster and stronger growth momentum than the European and American markets. The EU's investigation into China's electric vehicles on the grounds of "subsidies" and "dumping" is untenable.
At the workshop of Li Auto's Changzhou base, a robotic arm is engaged in welding operations (photo taken on January 10, 2024). Photo by Xinhua News Agency reporter Ji Chunpeng
When the reporter visited the automobile supply chain enterprises, it was found that the rapid development of downstream OEMs, especially new energy vehicle manufacturers, is good for the market prospects, and the enterprises meet the demand, accurately plan and manage production capacity, and do not feel the "overcapacity" hyped by the United States and the West.
In Feixi County, Hefei City, Anhui Province, Zhang Huawei, head of Joyson Automotive Safety Systems (Anhui) Co., Ltd., which produces airbags, told reporters that the company's capacity planning is not blindly launched, but adjusted according to the needs of customers of automobile OEMs, and realizes "dynamic equilibrium" between meeting market demand and the benign development of enterprises. Zhang Huawei said that the automobile industry will indeed have "backward production capacity" due to technological innovation, but enterprises will generally deploy in advance from multiple perspectives such as operation, research and development, and production to guide its development to advanced production capacity, or realize refined management of production capacity through platform development technology.
Many industry insiders said that due to higher requirements for safety systems, electric vehicles often need more airbags, and some vehicles even need to install more than a dozen airbags, instead of the most traditional two. From the point of view of airbag production alone, it is a ridiculous algorithm to measure the current production capacity with the previous demand.
An executive of Continental Tire, a well-known tire manufacturer, believes that the so-called "overcapacity" is not worth refuting from the perspective of market growth. The executive said that the company plans to increase production capacity according to the average annual growth rate of 5% to 6% in the Chinese market, and there will be no surplus, and it needs to continue to increase capital and expand production.
The United States and Europe speculate on the overcapacity of China's electric vehicle industry, and often regard the planned capacity that has not been put into production as the actual capacity. In Ningguo City, Anhui Province, Xia Yingsong, chairman of Zhongding Seals Co., Ltd., told reporters that enterprises continue to adjust the actual production capacity with market changes, and it is unscientific to equate the planned production capacity with the actual production capacity and draw the conclusion of "overcapacity" on this basis.
On January 26, employees work at NIO's European plant in Biotorbagy, Hungary. Xinhua News Agency, photo by Ferti Otilo
Don't rely on "making up", rely on competition
Some advanced Western economies accuse the Chinese government of providing massive subsidies to the electric vehicle industry, causing China's "cheap electric vehicles" to be exported to the global market, causing market distortions. Industry insiders interviewed at home and abroad generally believe that this is a misinterpretation of the competitiveness of China's electric vehicle industry.
Yang Jian, chairman of Lanzhou Guangtong New Energy Automobile Co., Ltd., told reporters that enterprises that rely on subsidies have no vitality and cannot survive in the fierce market competition, let alone achieve results in the international market.
Tang Jin, a Japanese auto expert and chief researcher at Mizuho Bank's business solutions department, said that if you study China's electric vehicle market, you will know that the accusations that Chinese cars rely on subsidies to occupy the global market are untenable. He pointed out that the Chinese market is the most competitive market in the world, and the industrial chain and supply chain that is competitive in the world have been cultivated in the survival of the fittest, which is the biggest reason why China's new energy vehicles can win with cost performance.
At present, China's new energy vehicle regional industrial chain and supply chain system has formed an industrial ecology driven by vehicle enterprises, supporting advanced intelligent network industry chains, and efficient industrial policies.
This is the Hongqi new energy vehicle on display at the 4th China International Consumer Products Expo (photo taken on April 13, 2024). Photo by Xinhua News Agency reporter Yang Guanyu
Taking Hefei City, Anhui Province as an example, it has 6 major vehicle enterprises, an industrial chain with an output value of more than 100 billion yuan, and a strong production capacity of displays, chips, artificial intelligence, batteries and other related products. In recent years, Volkswagen Group has established a vehicle manufacturing base in Hefei, set up a wholly-owned R&D company, and built a battery system factory, and is committed to building Hefei into an advanced production, R&D and innovation center for new energy vehicles in addition to Germany.
Jiang Xiaowei, chief analyst of the automotive industry at Huaan Securities, said that the continuous accumulation of technological innovation and industrial chain gathering advantages make China's new energy vehicle prices more competitive, even if the price of electric vehicles exported to Europe is generally one to two times higher than the domestic sales price, there is still a price advantage compared with the new energy models sold by local European car companies.
Since 2015, the average price of an electric vehicle in Europe has risen from 49,000 euros to 56,000 euros, in the United States from 53,000 euros to 64,000 euros, while in China electric vehicles have fallen from 67,000 euros to 32,000 euros, according to statistics from the British company Junte Business Consulting.
Some foreign media have cited the price war of Chinese electric vehicle companies and the bankruptcy of some car companies as evidence of the "overcapacity" of the entire industry. Xia Yingsong said that price adjustment is a response strategy adopted by enterprises to market changes and is the embodiment of market strategy, which cannot prove "overcapacity". The collapse of some new energy vehicle companies is the process of market "clearing", which is the result of normal market competition and survival of the fittest, which just proves that China's industrial advantage is the result of full competition.
Ji Xuehong, director of the Automotive Industry Innovation Research Center of North China University of Technology, told reporters that now in the field of new energy vehicles, it is the United States, Britain and France that are implementing stronger subsidy policies. The U.S. government passed the Inflation Reduction Act to provide about $369 billion in tax incentives and subsidies to the clean energy industry, including new energy vehicles. In addition, France, Italy, Canada and other countries have also introduced similar preferential tax policies.
People see a driverless car at the Hannover Messe in Germany on April 23. Photo by Xinhua News Agency reporter Ren Pengfei
To say "excess" is protectionism
Interviewed industry insiders, experts and scholars believe that the real motivation for the hype of "China's overcapacity theory" in the United States and Europe is that they are aware of the increasing competitiveness of China's electric vehicle industry and are worried that they will lose their advantages in the competition in the automobile industry.
Ji Xuehong said that the EU launched a countervailing investigation on China's electric vehicles under pressure from the governments of some member states and the auto industry, and the relevant reasons lack evidence to support it, which is purely subjective assumptions, just like the United States restricted Japanese car exports in the 80s of the 20th century, which is "full of trade protectionism".
Tang Jin also believes that the purpose of the so-called "China's overcapacity theory" thrown out by the United States and Europe is to safeguard their own interests in order to be in a more advantageous position in the game.
In fact, the current market share of Chinese local brand car companies in the European market is still very low. For example, Chinese new energy vehicle brands BYD, Great Wall Motor, and NIO, which are included in the EU's countervailing investigation, have a combined market share of only 1.1% in Europe.
Visitors experience a bulletproof and reinforced BYD Seal electric car at the Brazilian Defense Exhibition in São Paulo, Brazil, April 4. Photo by Xinhua News Agency reporter Wang Tiancong
Jiang Xiaowei pointed out that China's new energy vehicles, which account for a relatively high share of the European market, come from car companies with capital backgrounds in the United States and Europe, for example, Tesla's electric vehicles produced by Tesla's Shanghai Gigafactory and exported to Europe are also listed as China's new energy vehicles exported to Europe in statistics. In addition, SAIC MG, Geely Lynk & Co, Dongfeng Ejet, etc. all have foreign investment backgrounds and are not wholly-owned car companies in China. These car companies benefit from the help of their overseas capitalists, and their profits are also "fed" to foreign capital through capital, and there is no situation where Chinese car companies "monopolize" the European market.
Experts point out that China's price advantage of new energy vehicles not only does not distort the market, but provides a solution for Europe to achieve its energy transition goals.
In Europe, due to the slow transition to electrification of traditional fuel vehicle companies, policy changes and uncertainty in consumer demand, the popularity of new energy vehicles is not as fast as expected. Nicholas Dvorak, a commentator on the economic section of the Austrian newspaper Standard, believes that China's offer of more affordable electric vehicles will help to promote the demand shift.
The Swiss mainstream media "Neue Zürcher Zeitung" recently published an article that the decarbonization process is costly, and cost-effective Chinese new energy vehicles have prompted European automakers to improve their innovation capabilities and technical level through healthy competition, and consumers will be the ultimate beneficiaries.
Kang Linsong, chairman of the board of directors of Germany's Mercedes-Benz Group AG, said that protectionism will not bring long-term success, and that the European industry should meet the challenges with better products, better technology and greater flexibility. "If we seek wealth in the midst of growing protectionism, we are going astray. (Xinhua News Agency reporters: Cao Xiaofan, Su Liang, Zhang Ziyun; participating reporters: Wu Huijun, Wang Haiyue, Liang Jianqiang, Wei Yijun, Shan Weiyi, Du Zheyu, Zheng Bofei, Liu Chunyan, Li Jizhi, Zhou Yue, Shi Song)