Xingye Dianxin: affected by the new license plate regulations, the sales of new energy vehicles in Shanghai are expected to increase by 68% and 56% this year and next year.

SMM News: event: October 24, 2020, Shanghai Public Security Bureau announced the adjustment of foreign license plate traffic management measures. "Traffic restrictions on foreign license plates will be imposed on viaduct sections from 7 to 20:00 starting from November 2, 2020." After May Day, 2021, traffic restrictions will be imposed on vehicles with external license plates on the inner ring road from 7 to 10:00 and from 16 to 19:00. "

In 2019, the number of minibuses in Shanghai was 5.4 million, an increase of 290000 over the same period last year, of which 1.7 million were resident in other provinces and cities, accounting for 31% of the total stock of minibuses. Over the past five years, the proportion of foreign vehicles has been stable at about 31%, with a large base, while traffic restrictions and road sections are needed for daily travel, so the new rules will have a greater impact on the existing stock of 1.7 million foreign license plates.

"Blue card" is expensive and rare, "Shanghai C" use scope is limited, "green card" is the best solution. In recent years, the average transaction price of a private car license has reached about 90,000 yuan, which is relatively expensive. In addition, the number of licenses released in the past three years has been stable at 126800 per year, and the winning rate is only about 5 per cent. Although the Shanghai C license plate does not need to participate in the auction and can be obtained if the application conditions are met, the scope of use is not as wide as the license plates of other provinces and cities under the new regulations. The preferential policy of "green card" for buying new energy vehicles just solves the above problems, and the competitiveness of green cards is greatly improved, which provides a continuous rigid demand for the new energy vehicle market.

The insurance volume of new energy vehicles in Shanghai ranks first in the country, and private demand occupies a dominant position. 2017-2020Q3 Shanghai new energy insurance volume is 6.1,7.7,6.0,6.18, accounting for 11%, 8%, 7%, 10% of the national proportion. Since the beginning of this year, the cumulative risk of new energy vehicles ranks first in domestic cities. 1-3Q2020 Shanghai new energy vehicles are insured for 46000 of personal use, accounting for 74%, mainly based on private demand.

Tesla has become the top seller in Shanghai, and the new license limit plus price reduction will continue to boost sales. In the ranking of new energy vehicles in Shanghai from January to September 2020, Tesla took the lead with 16800 vehicles, with a market share of 27%. Roewe and BYD ranked second and third with 1.2 and 6400 respectively. Shanghai is the stronghold of Tesla and SAIC Roewe, these two brands have first-mover advantages, perfect channel construction and strong consumer recognition. The new traffic restrictions on foreign brands will continue to pull up the demand for new energy vehicles in Shanghai, and sales are expected to boost with the recent price reduction of Tesla M3. It is estimated that the sales of new energy vehicles in Shanghai from 2020 to 2021 will reach 10.0 and 156000, which is + 68% and + 56% compared with the same period last year. Among them, the demand for conversion of some foreign brands is expected to contribute 16000 units next year, and the demand for new energy vehicles will maintain a growth of + 40%.

Investment advice: domestic personal new energy vehicle demand limited license plate, limited number policy has a greater impact, Shanghai license limit new rules will help the rapid improvement of the penetration of new energy vehicles. Continue to be optimistic about Ningde era, LG Chemistry-Tesla industrial chain, first Ningde era, Enjie shares, PUTALAI, Kodali, Hongfa shares and so on.

Risk hint: domestic production and sales of new energy vehicles are not as expected.