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Zeping Macro: at present, China's new energy vehicle industry is facing four major supply-side changes.
Sep 23,2020 09:04CST
translation
Source:Zeping macro
The content below was translated by Tencent automatically for reference.

SMM News: at present, China's new energy vehicle industry is facing four major supply-side changes:

One of the changes: opening up to promote development, the automobile "post-joint venture era" is coming. Tesla domestic, joint venture car power, new power differentiation, accelerated clearance of the industry. 1) Tesla continuously occupies the top monthly output list: in 2019, Tesla became China's first wholly foreign-owned car company. After climbing its production capacity at the beginning of 2020, its output exceeded 10,000 in March, and Model 3 occupied the first place in new energy passenger car production for six consecutive months from February to July. 2) Volkswagen, BMW and other foreign brands began to make efforts: from January to July 2020, the sales of new energy passenger vehicles of Volkswagen (FAW-Volkswagen + SAIC-Volkswagen) and BMW (brilliance BMW) reached 30, 000 and 16000 respectively, surpassing many domestic competitors. 3) the eight immortals of the new forces cross the sea with differentiated performance: the new forces represent Lai, ideal, Xiaopeng or rely on service or focus on intelligence to create differentiation advantages, and actively explore the upward path of their own brands, with cumulative sales of 1.8,1.2 and 7000 vehicles respectively from January to July. Among them, Weilai ranks fifth in the industry. At the same time, subsidies back slope superimposed the impact of the epidemic, a large number of car companies are on the verge of difficulties

The second change: the upgrading of supply stimulates new consumer demand, the overall sales volume of the industry has declined, but the proportion of private consumption has increased, and the industry has moved from high-speed development to high-quality development. 1) overall sales decline in the industry: with the overall decline in subsidies after June 2019, industry sales declined off a cliff, with sales falling by 28 per cent from July to December, down 28 per cent from the same period last year, and only a slight increase of 3.2 per cent for the whole year. With the superimposed impact of the epidemic in the first half of 2020, sales of new energy passenger vehicles were only 313000, down 44 per cent from the same period last year. 2) during the epidemic, private consumption was outstanding: private consumption of 2020H1 new energy passenger vehicles accounted for 71.7%, an increase of 18.9% over 2019. 3) the trend of large-scale and high-end new energy passenger vehicles is obvious: the proportion of A00 models continues to decline from 54.4% in 2017 to 15.0% of 2020H1's Class B cars, from 4.3% in 2017 to 27.3% of 2020H1.

The third change: Internet technology giants collectively seize the new battlefield of intelligent networking, integration, empowerment, upgrading into a trend. The level of electrification and intelligence of the industry continues to improve, and the competitiveness of products is significantly enhanced. 1) the technology giant has made great efforts to lay out the field of intelligent Internet connection: Huawei aims to become an "intelligent network connection automobile incremental parts supplier". In May 2019, Huawei set up a separate smart car solution, BU, and its vehicle networking solution, Hicar, has partnered with more than 150 models from more than 20 automobiles. At the end of 2019, Ali reorganized the zebra network to create a car-connected "Android system" that belongs to China. A few days ago, Tencent said it would incubate at least 100 innovative companies in the smart cockpit field in the next three years and support 1000 "small scenario" developers to carry out application innovation. 2) the mileage of the product has increased significantly: the average mileage of pure electric passenger vehicles has been continuously increased from the first batch of 211.6km in 2017 to the seventh batch of 391.4km in 2020. 3) Intelligent continuous infiltration: the loading rates of ADAS representative functions LDW, AEB, APA and AVM are 19.2%, 30.2%, 11.1% and 14.8%, respectively, which are significantly higher than those of 2019H1.

The fourth change: the construction of private piles is accelerated, the exchange of power stations is valued, and the infrastructure is more perfect. 1) acceleration of private pile construction: according to the China charging Alliance, the number of charging piles in China has increased from 66000 in 2015 to 1.322 million in 2020H1, a cumulative increase of more than 19 times; in recent years, the proportion of private piles has increased, from 12.2% in 2015 to 57.8% of 2020H1. 2) attention is paid to the replacement of power stations, which may be an important supplement to the charging infrastructure. This year, the construction of the replacement power station was included in the "Government work report" for the first time. On the one hand, changing electricity can greatly shorten the energy replenishment time of new energy vehicles, on the other hand, it can reduce the charging rate and improve the charging safety. After realizing the separation of vehicle and electricity, it can reduce the initial purchase cost of car owners and increase the residual value rate of vehicles. To a certain extent, many pain points faced by new energy vehicles can be solved. As of June 2020, the number of replacement power stations in China has reached 452.

China's new energy vehicles have experienced the embryonic period (2009-2013), the growth period (2014-2018), and began to enter the adjustment period in 2019. Under the strong promotion of the policy, China's new energy vehicle industry has accumulated a certain first-mover advantage and scale advantage, but many problems have been exposed under the impact of subsidy retreat, novel coronavirus epidemic situation, Tesla domestic and so on. In the future, a supply-side structural change of enterprises, products and technology is needed to lay the foundation for the high-quality development of the industry in the next decade. Recommendations:

1) to further guide the electric transformation: we should first ban the sale of fuel vehicles in public transport, logistics, rental and other official fields, encourage some key areas for air pollution control and cities with high popularization rate of new energy vehicles to ban the sale of fuel vehicles, and clarify the requirements for the proportion of new energy vehicles in online car-hailing.

2) encourage and support the research and development of core technologies: increase tax breaks for enterprises with high R & D investment, and set up a national new energy vehicle industry fund to support the weak links of the industrial chain; coordinate the efforts of the government, enterprises and universities to tackle key common technologies such as battery materials and core chips.

3) focus on the supply chain and strengthen industrial coordination: the automobile is in a great change that has not happened in a century. With the social development and the change of user demand, the automobile will not only be a travel tool, but also be endowed with many functions and attributes, which will bring about changes in the industrial value chain and ecological services, such as software-defined cars, travel-as-a-service, data value creation and so on. The automobile industry itself has a long chain and a large amount of value, and now it is deeply integrated and developed with communications, semiconductors, Internet and other fields. It is far from enough to rely on a single company. It is necessary to strengthen industrial coordination and common innovation in order to achieve sound development.

4) improve infrastructure construction and encourage the promotion of new modes such as smart charging and power exchange in the community: the difficulty of charging is an important factor that limits the development of new energy vehicles. Promoting community smart charging can effectively achieve peak cutting and valley filling, and reduce the load of Electroweb. Improve the formulation of power exchange standards and explore new modes of power exchange.

Risk tips: policy strength is not as strong as expected, industry competition intensifies, differences in the caliber of data statistics, and so on.

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