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[SMM Analysis] what new growth points will be detonated in the epidemic era after the new energy vehicles go to the countryside to encircle the cities?
Jul 16,2020 21:59CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

SMM7 March 16: July 15, the Ministry of Industry and Information Technology, the Ministry of Agriculture and villages, and the Ministry of Commerce jointly issued the "Circular on carrying out the activities of New Energy vehicles to the Countryside", and the activities of New Energy vehicles to the Countryside will be carried out from July to December this year. 16 models from 10 car companies, including Beijing New Energy, Great Wall Automobile, SAIC GM Wuling, will participate.

The notice also said that a launch event (Qingdao City, Shandong Province, scheduled for late July) and four special activities (located in Haikou City, Hainan Province, Kunming City, Yunnan Province, Chengdu City, Sichuan Province, and Taiyuan City, Shanxi Province, from late August to late September), and a series of enterprise activities will be arranged.

Source: Ministry of Industry and Information Technology (click to view the official text)

Chen Shihua, deputy secretary general of the China Association of Automobile Manufacturers, said that at present, the main battlefield of sales of new energy vehicles is concentrated in cities where car purchases are restricted, and promoting new energy vehicles in villages and towns has certain advantages. On the one hand, compared with gasoline, electricity is more economical; on the other hand, consumers in villages and towns have relatively small travel radius and less concern about the mileage of new energy vehicles; in addition, villages and towns and rural areas are also more convenient in parking and charging. Through the activities of new energy vehicles to the countryside, in addition to allowing consumers to enjoy car purchase concessions, it will also expand the impact of new energy vehicles in rural and township areas, optimize and upgrade vehicles, so as to promote the growth of domestic sales of new energy vehicles.

Post-epidemic era: the policy of the gradual recovery of the new energy vehicle market plays an important role.

Like all industries, the new energy vehicle market has also been hit by the epidemic at the beginning of this year, with February being the most. According to the production and sales data of the China Automobile Association, automobile production and sales fell 82.9% and 81.7% respectively in February compared with the same period last year. Although supported by the policy, the production and sales of new energy vehicles were 9951 and 12908 respectively, down 82.9% and 75.2% respectively from the same period last year. The China Automobile Association pointed out that on the production side, the output level of enterprises is low due to the slow progress of resuming work and the supply of spare parts; on the consumer side, product consumption is stagnant and market demand is seriously suppressed, which will have a significant impact on the automobile market in the first half of the year.

Source: China Automobile Association

With the gradual relief of the epidemic and local enterprises have returned to work and production, coupled with the introduction of a series of favorable policies of the central and local governments, the new energy vehicle market began to recover. As of June data, China's production and sales of new energy vehicles completed 102000 and 104000 respectively, up 21.3% and 26.8% month-on-month, down 25.0% and 33.1% from the same period last year. At the same time, June is also the month with the highest production and sales of new energy vehicles in China in the first half of this year. Although from a year-on-year point of view, this year's car market is still difficult to leave the cold winter, but the month-on-month data performance is still eye-catching.

Since the first half of the year, the state has made frequent policies on the development of the new energy automobile industry to boost the consumption of the automobile market. Among them, the notice on improving the Financial subsidy Policy for the Promotion and Application of New Energy vehicles issued in April made it clear that the implementation period of the financial subsidy policy for the promotion and application of new energy vehicles would be extended to the end of 2022, slowing the decline in the strength and pace of subsidies. The release of this policy has given a shot in the heart to the new energy vehicle industry. In addition, the promulgation of the double points policy issued in early July also underpinned the sales of new energy vehicles. The policy of new energy vehicles going to the countryside undoubtedly provides new help for the development of the whole industry. according to the documents, the main models focus on the field of middle and low-end new energy vehicles.

Rural areas surround cities: focus on low-and middle-end new energy vehicles

According to a survey conducted by the China Electric vehicle Association of 100 people, it is found that the existing new energy vehicles do not meet the needs of the rural market. In rural areas, some new energy passenger car enterprises have certain sales, while new energy truck enterprises have less sales. At present, most of the new energy vehicles sold by enterprises to the rural market are small and mini vehicles. At the same time, from the level of consumption, the car purchase budget of rural residents is concentrated within 70,000 yuan, mainly about 50,000 yuan.

The final conclusion of the investigation team is that at present, the permeability of new energy vehicles in rural areas is low. At the level of new energy passenger vehicles, affected by multiple factors such as subsidies for new energy vehicles, traffic restrictions and purchase policies and lack of purchasing power, except for a certain penetration in rural areas in economically developed areas such as Beijing, Shanghai, Guangdong and other economically developed areas, the overall scale of the rural market is relatively small and there is a broad space for promotion in the future. At the level of new energy trucks, the sales market is mainly concentrated in urban areas driven by policies and road rights, and the penetration of the rural market is insufficient. In the future, the mismatch between supply and demand for the promotion of new energy trucks in rural areas needs to be solved.

Compared with urban cars, the rural market for the use of new energy vehicles is different, on the one hand, it does not need a longer mileage, on the other hand, it is more sensitive to price, which can be seen from the first time the car went to the countryside as early as 2009.

In the preferential agricultural policy put forward in the Plan for the Adjustment and Revitalization of the Automobile Industry published by the State Council on January 14, 2009, a one-off financial subsidy was given to the purchase of less than 1.3L displacement or the replacement of light trucks. In terms of time, it has been 10 years since the first car went to the countryside from 2009 to 2010. Bohai Securities believes that subsidized micro / light trucks, minivans, motorcycles and other models all have a useful life of about 10 years. This policy release coincides with the time when the last round of cars need to be replaced, which will help rural residents to eliminate old cars with large carbon dioxide emissions and promote the upgrading of automobile products in an all-round way.

Micro-face successor: is the mini electric car going to be popular again?

In the first time of car going to the countryside in 2009, micro noodles became the biggest winner in the car market at that time, and they were also the main force for cars to go to the countryside, of which Wuling and Chang'an models accounted for half of the country, which shows their strength in the micro-car market. Ten years later, Micro Electric, as the successor of the post-micro era, seems to be coming to the fore.

According to the Soochow Securities report, most of the models participating in the activities in the countryside are entry-level A00 and A0 electric vehicles, with a price of 50,000 to 70,000 yuan. Small and micro electric vehicles represented by mobile models are mainly sold in Guangxi, Shandong, Hebei, Anhui and other third and fourth lines and below. Most of them are once hot sales, with a mileage of about 300km, which is enough to meet the daily needs of rural areas, leading in economy and practicality. In the third and fourth lines and below, it is expected to replace low-speed cars and accelerate the sinking of the electric car market. The A00 class will benefit from the electric car going to the countryside, and the sales volume will increase rapidly in the second half of the year. At present, the monthly sales of the A00 class car are 10-20, 000. The monthly sales of the electric car to the countryside are expected to reach 30, 000 +, and the annual sales are expected to reach 200000 +, which is about the same.

On the whole, the effect of going to the countryside of new energy vehicles may be the same as that of cars going to the countryside in 2009, which will greatly stimulate the consumption of new energy vehicles in rural areas, and will also greatly mobilize the enthusiasm of rural consumers to buy cars, which is a great benefit to new energy vehicles. Batteries, as the main core components of new energy vehicles, will also benefit. As the impact of the epidemic gradually recedes, the power battery industry recovers rapidly. according to data released by the China Automotive Power Battery Industry Innovation Alliance, after a slight decline in installed capacity in May, domestic power battery installation entered the growth channel again in June. In June, the number of cars loaded with power batteries in China was 4.7 GWH, down 29.1% from the same period last year and an increase of 34% from the previous month. China's power battery loading accumulated 17.5 GWH in the previous six months, down 41.8% from the same period last year, but the new energy vehicle market as a whole is picking up. Coupled with the new energy vehicles going to the countryside, it will also provide a demand point for the demand for raw material nickel sulfate.

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