New energy vehicles at the end of the year: the pattern is forming, and the battle is intensifying.

文 | 追辛

Editor | G3007

新年伊始，新能源汽车的战事已经开打。

In the past year, amidst the global supply chain tension, sales of new energy vehicles from various brands have reached new highs, with the domestic market structure beginning to take shape and the effects of scale becoming apparent. According to the latest forecast from the China Association of Automobile Manufacturers, new energy vehicle sales in 2021 will reach 3.4 million vehicles, a year-on-year increase of 1.5 times; while in 2022, new energy vehicle sales are expected to reach 5 million vehicles, a year-on-year increase of 47%, accounting for approximately 20% of total automobile sales.

In the new year, the reduction of financial subsidies has led some new energy vehicle brands to start competing by raising prices. Alongside the launch of multiple models by more car companies this year, the competition in the market will only intensify, but issues like chip and battery shortages in the supply chain still present challenges.

At the same time, more new players in the automotive industry are constantly emerging. The latest news reveals that consumer electronics giant Sony has officially announced the establishment of a mobile travel company to enter the electric vehicle field, while there are also reports of Wanda venturing into car manufacturing.

The pattern of new energy vehicles is beginning to take shape, with each company striving for victory in 2022.

With the end of 2021, various new energy vehicle companies have also released their annual performance reports, providing insights into the market landscape.

Official data released by Tesla shows that in 2021, the brand's global deliveries reached 0.936 million vehicles, with deliveries in the Chinese market expected to exceed 0.45 million vehicles. Byd's new energy passenger vehicles even reached 0.594 million units in 2021, a year-on-year growth of 231.6%.

Nio, Xpeng, and Li Auto, the three major domestic new forces in car manufacturing, continue to maintain steady growth trends, with annual deliveries surpassing 0.09 million vehicles each in 2021. Nio, Xpeng, Li Auto delivered 0.091 million, 0.098 million, and 0.09 million vehicles respectively, with year-on-year growth of 109%, 263%, and 130%. As for other new forces, Neta's cumulative deliveries in 2021 were 69,674 vehicles, with a growth rate of 362%; WM Motor delivered 44,157 vehicles in total for the year, close to the sum of deliveries over the past three years; and Leapmotor had annual sales of 43,121 vehicles.

Over the past year, traditional automakers have also accelerated their efforts in new energy, gradually narrowing the gap with leading new forces. According to disclosed data: After the Volkswagen ID series launched multiple new cars intensively, it has delivered a total of 0.07 million vehicles since March last year. GAC AION's annual delivery volume has also reached 0.1236 million vehicles, a year-on-year increase of 119%, achieving the 'small target' of selling 0.1 million units annually. Geely's GECKO and Dongfeng's Lantu Free have been delivering vehicles since the second half of last year, and sales have been increasing month by month.

From the sales volume of various companies last year, China's new energy passenger vehicle market has basically formed a pattern of 'two super + three strong + N new and old forces'.Among them, BYD and Tesla, with delivery volumes in the hundreds of thousands, firmly occupy the leading position, standing aloof. On the other hand, 'Little Weilai' relies on their respective core competencies and jointly occupies the second echelon with differentiation. The other 'N new and old forces' have become followers and challengers, some of whom have also begun to differentiate and fall behind.

For 2022, many institutions predict that leading new forces companies are also expected to achieve better sales performance. This is mainly because with the continuous growth in sales, new forces companies will launch more models, build more complete charging services, marketing, after-sales service networks, the brand effect will continue to expand, and sales will continue to rise.However, at the same time, a new batch of new car manufacturers such as Baidu, Xiaomi, Niuchuang, Qingshengdai, and Boxcar will also join the competition of new car forces, competing with traditional car companies for market share. In 2022, there may be more new forces continuously entering the car-making industry. According to incomplete statistics, various car companies will collectively launch 90 electrified models in 2022, and new energy vehicle products will welcome a peak year. The new car forces will also face a more severe test amidst diversified development.

A research report released by Tianfeng Securities shows that Xiaomi, Apple, Huawei, Didi, Baidu Jidu, and others may gradually launch new cars in the coming years, considering brand promotion, new models, new production capacity scaling. It is expected that technology companies will officially join the battlefield around 2024 and compete comprehensively with traditional car companies and new forces.

In addition to the continuously increasing competition in the overall market, the future competition in new energy vehicle manufacturing will also shift from electrification to more focus on intelligence.Huaxi Securities' report pointed out that the top three new car forces all surpassed 0.09 million units in annual deliveries, achieving a doubling growth, taking the lead in the first half of the competition dominated by electrification. With many new models scheduled for delivery this year, transitioning from stage 1 to stage N of development, the differentiation competition will be more reflected in intelligence. This is manifested in intelligent driving, self-developed L4 autonomous driving technology, and lidar almost becoming a standard feature in new models. At the same time, NIO, XPeng are also among the early implementers of the software charging model, establishing another profit growth point. On the other hand, in intelligent cockpits, self-developed custom operating systems, building the underlying ecology, single-core multi-screen assisting hardware interaction and collaboration. XPeng, Li Auto have successively completed dual listings on the Hong Kong Stock Exchange, and it is expected that NIO will also return to the Hong Kong market for listing, ushering in a new round of capital injection and enabling the start of the second stage of car manufacturing.

With the subsidy decline, car manufacturers are raising prices and moving from policy support to market-oriented operation.

At the initial stage of new energy vehicles, it relied heavily on policy support. However, with the expansion of the market size today, the policy effects will gradually shift to the market.

On December 31, 2021, the Ministry of Finance and other four departments issued the "Notice on the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles in 2022", mentioning that in 2022, the subsidy standard for new energy vehicles will be reduced by 30% from the base of 2021, with the implementation period until the end of 2022; the subsidy standards for urban buses, road passenger transport, taxis (including online car-hauling), sanitation, urban logistics delivery, postal express, civil aviation airports, and vehicles meeting the requirements in the public sector of party and government organs will be reduced by 20% from the 2021 base.This means that if there are no changes, 2022 will be the final year for subsidies for new energy vehicles. Both new and existing players will inevitably try their best to meet the expectations and needs of more consumers, and market competition will intensify.

Deng Xue, Managing Director of CICC Research Department and Chief Analyst of the auto industry, said that the current mainstream demand for new energy vehicles is for vehicle models priced below 0.08 million yuan or above 0.25 million yuan. The micro electric vehicles priced below 0.08 million yuan generally have a range of less than 300 km and are not eligible for subsidies, having no impact on the subsidy adjustment. For new energy vehicles priced above 0.25 million yuan, the subsidy change accounts for less than 2% of the car purchase price, with consumers being less sensitive to subsidy changes. The expected decline in subsidies will have a controllable impact on the demand from the current mainstream price range for new energy vehicles. For vehicle models priced between 0.08-0.16 million yuan, the subsidy change accounts for 3-5% of the car purchase price, considering that consumers in this price range are sensitive to price changes, the decline is expected to have a certain impact on the sales of existing new energy vehicles. Furthermore, in 2022, there will be more high-quality hybrid models in this price range, which is expected to stimulate new demand.

Cui Dongshu, Secretary General of the China Passenger Car Association, also mentioned: "With the 30% subsidy decline, it will have a certain impact on the growth rate of new energy vehicles, especially with an annual subsidy quota of about 2 million vehicles, which is significantly reduced from last year. Both the per-vehicle subsidy amount and the total volume are in a relatively low state. Therefore, each car manufacturer is facing the challenge of the post-subsidy era and will inevitably adjust prices."

In fact, as early as November last year, some car manufacturers released news of raising prices for complete vehicles, citing reasons such as the subsidy decline in 2022, as well as the continuous pressure from upstream raw materials of batteries, rising battery prices, and the ongoing supply chain tightness for chips, which have now been passed on to complete vehicles. Previously, Farasis Energy (Gan Zhou) Co., Ltd., Gotion High-Tech, and other power battery manufacturers explicitly stated in media interviews, "Due to the continuous rise in upstream materials, they are discussing price increases with car manufacturers."

Before New Year's Day, Tesla had already announced a price increase. On December 31, 2021, Tesla's official website in China showed that the price adjustment for the Model 3 rear-wheel-drive version was 0.265652 million yuan, an increase of 0.01 million yuan compared to the previous selling price; the price adjustment for the Model Y rear-wheel-drive version was 0.30184 million yuan, an increase of 0.021088 million yuan compared to the previous selling price. FAW-Volkswagen also announced on January 1, 2022, that its models will see a price increase: the ID.6 CROZZ and ID.4 CROZZ pure electric models will have an overall increase of 5,400 yuan. In addition, GAC Aion's sales staff stated in December last year that starting from January 1, 2022, the Aion LX will increase by 4,000 yuan, with a starting price of 0.23 million yuan. Nezha and Unusual Auto have also announced price adjustments after January 1, with Nezha's price increase ranging from about 3,000 to 10,000 yuan.

However, some car manufacturers choose to bear the subsidy difference themselves. For example, on December 31, Nio Inc announced the release of the 2022 car purchase subsidy plan: customers who paid a deposit to purchase the ES8, ES6, and EC6 before December 31, 2021, and successfully pick up the car before March 31, 2022, can still enjoy the subsidy at the 2021 national standard, with the difference borne by Nio Inc. Xpeng has also adopted a similar limited price guarantee strategy as Nio Inc: users who paid a deposit from January 1-10, 2022, can enjoy the same subsidy policy as in 2021, with Xpeng covering the difference between 2022 and 2021.

In addition to the rise in car purchase costs, the operating costs of using cars are also increasing.The recent adjustment explanation of the China Insurance Industry Association to P&C insurance companies on the calculation of the benchmark pure risk premium table for commercial insurance products for new energy vehicles shows that for new energy vehicles with a price below 0.25 million yuan in terms of auto insurance rates, the benchmark premium will not be raised; for new energy vehicles with a price above 0.25 million yuan, the benchmark premium may fluctuate.

Shortly after the introduction of this new exclusive new energy vehicle insurance, news of an 80% price increase for Tesla has attracted attention. Some car owners posted their policy information on social media, showing that when insuring a Tesla Model Y on December 23, the cost was 8278 yuan, but after the 27th, the insurance cost rose to over 0.014 million yuan, an increase of 80%. In addition, premiums for models such as Model 3 and Model P also increased to varying degrees. Xpeng provided data to the media, showing that according to feedback from insurance companies nationwide on December 28, 2021, the average price increase for all Xpeng models ranged from 2.9% to 18.2% (slightly different depending on the insurance company, region, and model), with the specific amount subject to the local insurer's quote.

Although there is short-term upward pressure on the purchase cost of new energy vehicles, in the long run, price reduction is the general trend. Cui Dongshu pointed out that there is great potential for price reduction in the future for new energy vehicles. On the one hand, the continuous increase in battery production capacity can lower battery procurement prices; on the other hand, new energy vehicles have a scenario-based travel direction and can customize corresponding products according to different usage scenarios to change the existing large and comprehensive structure, which is expected to reduce the overall vehicle cost. "In 2022, the production and sales of new energy vehicles are expected to reach a scale of 6 million vehicles, with over 5.5 million passenger vehicles, demonstrating a trend of strong growth."

In the post-subsidy era, the new energy vehicle industry will transition to fully competitive market-oriented operations. The production capacity and brands that have grown up relying on subsidies in the past and lack competitiveness may face significant challenges. However, this is also the inevitable path for China to transition from a major automobile country to a strong automobile country.

Despite the shortage of chips and batteries, the persistent supply chain shortages have become normal.

In 2021, the global automotive industry was plagued by supply issues with components such as chips and batteries due to the ongoing pandemic and natural disasters. The chip shortage has led to production cuts or halts for many automakers, insufficient production capacity, extended delivery cycles for dealers, and even situations where dealers have insufficient inventory to sell cars.General Motors, Ford, Tesla, and other companies were forced to adjust production and rethink the entire supply chain. According to AFS data, as of December 19, 2021, the global automotive market has accumulated a reduction of approximately 10.232 million vehicles due to chip shortages, with China's automotive market experiencing a reduction of 1.982 million vehicles, accounting for 19.4% of the total reduction. AFS predicts that due to the chip shortage, the global accumulated production reduction in 2021 will reach 11.31 million vehicles.

Although the market has extremely optimistic expectations for electric vehicles, upstream contract manufacturers have started to expand factories and increase production capacity to alleviate the chip shortage. However, it will take several years from construction to full production to truly integrate the new production capacity into the vehicle assembly supply chain. Therefore, the automotive chip shortage is expected to continue into 2022.Xpeng Motors also acknowledged to the media that like all industry peers, they faced supply chain shortages including chips in 2021, a challenge that the entire industry must confront. Xpeng Motors has been working with suppliers to address these issues and continuously improve the security of supply chain system. However, these problems cannot be solved overnight, and the industry will continue to face supply chain shortages in 2022.

As the global automotive industry accelerates its transition to electrification, the continuous rise in prices of raw materials such as nickel, cobalt, lithium, has led to a shortage of power batteries, triggering an imminent battle for these batteries.In the past year, major auto manufacturers have been investing, constructing their own facilities, or forming strategic partnerships to secure the supply chain for batteries amidst the ongoing 'chip shortage' crisis. This is to ensure a stable battery supply, reduce costs, and avoid falling behind in future market competition.

"Factors such as chips, batteries, lithium salt prices, etc., may still be constraints in the short term for the new energy vehicle market. Due to the normalization of the pandemic and the uncertainties in the international political and economic environment, the entire global raw material costs have surged, making it difficult to accurately estimate the extent and duration of their impact on the new energy vehicle market." However, some insiders believe that in the long run, the rapid development of the new energy vehicle market is an irreversible trend, and these issues will not hinder the progress of new energy vehicles.

Currently, the supply chain is a key threshold that electric vehicles and smart automobiles need to overcome in the future. This supply chain is global, and companies will be influenced not only by their own strategies but also by external factors such as international influences. In particular, factors such as the pandemic, trade disputes between major countries, technological competition, and marine transportation will all affect the changes in the automotive industry supply chain landscape.

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