[special topic of SMM] Cheng Wang Or Cheng Kou? Which new energy car companies will survive in 2020?

SMM11, 22 March: since 2017, after the state put forward the slogan of "defending the blue sky," local governments have stepped up their inspection of environmental protection. As an important part of the blue sky defense war, the "new energy vehicle industry" has also been vigorously supported in recent years. Even in the context of the strongest "car market cold winter" in nearly 20 years, the production and sales figures for new energy vehicles are still considerable. Car sales in China fell 11.7 percent in October from a year earlier and 0.1 percent from January to October, while production and sales of new energy vehicles in the same month were 146000 and 138000, respectively, according to the Federation of Rider. They rose 58.1% and 51% respectively from a year earlier. Compared with the car market as a whole, the rapid growth of new energy vehicles is expected to become the biggest bright spot in the "cold winter" of the car market.

Car production in October 2018: (unit: 10,000 vehicles,%)

(data sources: China Auto Association, 100 million Euro Automobile)

Car sales in October 2018: (unit: 10,000 vehicles,%)

(data sources: China Auto Association, 100 million Euro Automobile)

While all kinds of enterprises and capital have made great efforts to enter the new energy vehicle manufacturing industry chain, the new energy vehicle industry has also developed rapidly. According to statistics from the China Steam Association, China has completed the production and marketing of 794000 and 777000 new energy vehicles respectively in 2017. Up 53.8% and 53.3% respectively from the same period last year, compared with 63.3 times and 60.7 times in 2012, production and sales have ranked first in the world for the third year in a row, accounting for more than half of the global new energy vehicle market.

Production of new energy vehicles in October 2018: (unit: 10,000,%)

(data sources: China Auto Association, 100 million Euro Automobile)

Sales of new energy vehicles in October 2018: (unit: 10,000,%)

(data sources: China Auto Association, 100 million Euro Automobile)

Winter is coming: foreign car-making forces are ready to move

Although we know that the industry is about to face a "cold winter" of overcapacity, new energy vehicles are, after all, an asset-heavy, high-tech industry. Some enterprises that do not have the ability to develop, produce, and manufacture new energy vehicles, or even lack experience in making cars, rely solely on the lower barriers to entry for the use of new energy vehicles. It is difficult to form its core competitiveness by means of holding, joint venture plant, cutting into the supply chain and other investment means to enter the field of new energy vehicle manufacturing.

At the same time of the difficult transformation of some domestic car enterprises, the car-making forces from abroad are eyeing covetously and ready to move. Recently, Tesla announced the pricing of Tesla Model 3 to Chinese customers and cut the price of Model S, which is sold in China, by 12% to 26%. Due to trade frictions between China and the United States, four months ago, Tesla announced that he would raise the prices of Model X and Model S by about 20 percent as tariff costs, but Tesla soon realized that rising prices had a significant impact on their sales. Tesla's recent price reduction choice also means that Tesla will have to transfer the original costs to consumers to fill the company's own profits. Tesla's practice of sacrificing profits to ensure his competitiveness also reflects the fierce competition in the new energy vehicle market in China today.

(Tesla Model S)

After a series of challenges, such as subsidy retreat, capital competition, qualification examination and so on, some of the previously vigorous car-building forces were forced to stop. With the gradual expansion of the share of the industry, the continuous entry of new faces from the outside, and even the aggression of foreign car-making forces, the future new energy vehicle market will be more overcast, and who can jump into the status of an unwithered giant? Proud of the pack? Who will be mercilessly swallowed up and can only become a new energy passer-by, in the past? Whether the new energy vehicle is the tuyere or the tip of the wave, it is probably up to the car companies to choose.