Zhang Yongwei: 10 Trends that should be paid attention to in the Development of New Energy vehicle Industry in the next 3-5 years

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Recently, Zhang Yongwei, vice chairman and secretary-general of the China Electric vehicle Association of 100, was invited to attend the third International Symposium on Crossing the Petroleum era held by the Energy Research Institute of Peking University, and released the theme report "Development trend and Policy Prospect of New Energy vehicle Industry". In the report, Zhang Yongwei focuses on 10 important development trends worthy of attention of the new energy vehicle industry in the next three to five years, and gives corresponding policy recommendations on the basis.

I. Ten key trends in the development of the new energy vehicle industry in the next 3-5 years.

1. The global development of new energy vehicles has entered an irreversible fast lane.

The only direction of global automobile development is new energy, or electrification, which has become the consensus of all countries and enterprises in the world. In the past, there were disputes and swings on this point in many countries, while China's new energy vehicle industry has been growing and reaching a new level. After several years of development, the irreversible trend of new energy has been basically formed.

At present, the penetration rate of new energy vehicles in China has exceeded 10%, that is, the proportion of electric vehicles in the vehicle increment is more than 10%, and is expected to exceed 30% by 2025. Penetration is also growing in the United States, Europe and other countries, especially in northern Europe, where Norway accounts for nearly 100% of new car sales. Of course, the technical route of electrification in various countries is not the same. China is mainly pure electricity, Europe is mainly plug-in, Japan is mainly weak mix, and so on.

2. China will still be in the leading position for a long time.

Based on the research and forecast of Bairen Club, the annual sales of electric vehicles in China will exceed 5 million in 2022 and reach at least 7 million in 2025, with an optimistic estimate of 9-10 million. From 1 million vehicles to 10 million vehicles, in just a few years, this rate of development has created the "best" of the global new energy industry. The number of new energy vehicles, the growth rate and the scale of the industry driven by them were unimaginable in the past. Take power batteries as an example, by 2025, the installed capacity of batteries in China will reach 600GWhh, the largest in the world.

3. Small and medium-sized cities and rural areas will become new market growth points for new energy vehicles.

In the past, the first cars of consumers in small and medium-sized cities and rural areas often chose fuel vehicles. Entering the high-speed development stage of motorization, the first car of consumers is likely to be a new energy vehicle. This will become a flashpoint of China's electrified market in the next 3-5 years, after large cities, and become one of the most important areas in the future market increment. This will play a huge role in reducing carbon emissions and improving motorized travel in third-and fourth-tier cities and rural areas.

4. China's electric vehicles have really entered the stage of market-oriented competition.

2021 is a watershed for China's electric vehicle industry. From the perspective of market competition, all financial subsidies will be withdrawn in 2022, all car companies will be at the starting line of the same policy, and the competition among car companies is bound to be more fierce. After the withdrawal of subsidies, newly listed models will also appear in a pile, especially foreign brands. From 2022 to 2025, China's new energy vehicle market will enter the stage of the emergence of a large number of new models and new brands.

Different from the characteristics of the development of the new energy vehicle market in the past decade, the market competition will enter a real stage of sweeping the sand. In the past, uncompetitive production capacity and brands, which grew up on subsidies, will face great challenges at this stage. Some production capacity will accelerate the exit, and some brands will disappear.

5. Automobile electrification and intelligence are officially combined into one.

Over the past decade, the theme of change in the automobile industry has been electrification. In the next stage, the theme of change will be intelligence based on electrification. The popularity of electrification depends on intelligence, simple electric vehicles will not become the market selling point, only more intelligent vehicles are the focus of market competition. On the other hand, only electric vehicles can embed intelligent technology more completely, and the best carrier of intelligent technology is the electric platform. Therefore, the intelligence will be accelerated on the basis of electrification, and the "two modernizations" will be formally integrated in the car.

6. substantial coordination between the energy revolution and the automobile revolution.

With the implementation of "double carbon", the reform on the energy side will make electric vehicles green and use real renewable energy. At the same time, new energy vehicles can interact with each other through access to Electroweb. The ideal model of wind power, photovoltaic, energy storage, electric vehicles and intelligent Electroweb will be realized ahead of schedule. In the next 3-5 years, technology and policies will further support the greening of electric vehicles, slowly moving from small-scale pilot projects to the track of large-scale development, and the energy revolution and the automobile revolution will truly achieve substantial synergy.

7. Supply chain has become the bottleneck and important competitiveness of automobile enterprises.

Low carbonization is the first great challenge for automobile supply chain. Under the global carbon neutral vision, almost all vehicle enterprises and parts industry pay close attention to and rely on the change of the supply chain. How to achieve green, low carbon or net zero emissions in the supply chain is a problem that enterprises must solve. The timetable for carbon neutralization of large automobile companies is only 10-20 years before 2035 or 2040, when the net zero emission of the whole chain of the industry will be achieved. This means that net zero emission should be achieved not only in vehicle manufacturing, but also in upstream parts manufacturing to logistics and transportation.

Intelligence is the second challenge facing the automotive supply chain, especially chips. In 2021, the global auto industry cut production by about 10 million vehicles due to chip supply shortages, with China cutting production by an average of 20 per cent.

Supply chain is a key threshold for the future development of electric vehicles and smart vehicles. This supply chain is global, and enterprises are affected not only by their own strategies, but also by international and other external factors. In particular, the epidemic situation, trade disputes among big countries, technological competition, shipping and so on, will affect the pattern change of the supply chain of the automobile industry.

8. The pace of technological innovation of new energy vehicles will be obviously accelerated, and the curtain of full-stack electrification of automobile products will be opened.

The outbreak of the market will stimulate a new wave of automotive technology innovation. In the past, the main problem troubling the marketization of new energy vehicles was cost. After the subsidy is withdrawn in 2022, technology will become the core factor in the competition between new energy vehicles and fuel vehicles. With the progress of technology, new energy vehicles basically have the economic advantage to compete with the same class fuel vehicles, and really usher in the inflection point expected by the industry.

Due to economic advantages, the development of high-end brand electrification is very fast, and Lulai has entered the market of BMW and Mercedes-Benz at the same price. In the A0 market, especially in the electric vehicle market with less than 50,000 yuan, its performance-to-price ratio also exceeds that of fuel vehicles. Thanks to advances in technology, especially battery technology, the advantages of motorization at both ends of the "cheapest car" and "the most expensive car" have become very obvious. In the next few years, the focus of industry competition will be on the "middle" market of about 200000, and gradually form new advantages.

9. Electrification drives the rapid innovation of business model

After the automobile electrification enters the real marketization stage, it will lead to the rapid innovation of a large number of business models. For example, optical storage and charging integration mode, power exchange mode, battery bank mode and so on.

10. Infrastructure facilities are gradually completed and derived from triple play new business type.

The infrastructure of the fuel truck era is only gas stations and gas stations. Due to the development of automobile electrification, major changes will take place in the energy infrastructure in the future. Charging, recharging, fast charging, slow charging, mobile recharging of the battery, hydrogenation, and so on, will constitute an integrated infrastructure. This will be a major highlight of electrified development in the future, and it will also be a hot spot for investment in the industry.

II. Six suggestions for future industrial development

1. Subsidy retrograde should be stable and predictable. In the stage of rapid development of automobile electrification, the policy should maintain appropriate stability and predictability. Subsidy retreat in 2022 is necessary, but it is best not to have high-frequency adjustments. Exit by the end of the year rather than early exit in the middle of the year is a common expectation.

2. The subsidy can be supported by double integral after going back to the slope. Double points is the most important policy to promote the electrification of cars after subsidizing the slope. Continue to optimize the double points policy has a great impact on the industry, the focus of 2022 optimization is to further increase the proportion and allow points trading. At the same time, the scope should be expanded to include trucks and commercial vehicles in addition to passenger cars.

3. Include cars in carbon trading. Allowing carbon policy to restrict the automobile industry can also encourage cars to achieve renewable greening.

4. Give support on the user side. After the car purchase subsidy is withdrawn, support can be given to the use of cars. Especially in the field of infrastructure construction and recharging of new energy vehicles, subsidies are given to builders and users to make the use cost lower.

5. Formulate non-monetization policies. It includes some non-monetization policy support for new energy vehicles in some cities, such as unlimited purchase, traffic restrictions, special lanes, priority parking and so on.

6. Encourage and support leading cities and enterprises. It includes encouraging leading provincial cities to promote electrification in an all-round way, encouraging leading enterprises to take the lead in achieving zero carbon, and encouraging leading factories to achieve net emissions or zero-carbon supply chains.