New energy vehicles are sold at a loss, and fuel vehicles are in a hurry

Mirror Viewing Platform

2024-06-19 10:12Posted on the official account of Beijing Ran Yuan

New energy vehicles are sold at a loss, and fuel vehicles are in a hurry

JINGGUANTAICN ORIGINAL

Recently, at the 2024 China Automobile Chongqing Forum, the idea of "the same rights of oil and electricity" was raised again, causing heated discussions.

In the view of Zeng Qinghong, chairman of Guangzhou Automobile Group, and other bigwigs, the current automobile industry is mired in excessive competition, which is not only not conducive to the healthy development of the industry, but also causes losses and layoffs of car companies, which is not beneficial to society.

Therefore, he suggested that when the share of new energy vehicles and pure electric vehicles reaches 50%, relevant departments can study the issue of "the same rights of oil and electricity". The so-called "oil and electricity rights" are obviously "aimed at" new energy vehicles that are limited to exemption from vehicle purchase tax, vehicle and vessel tax, and unlimited numbers, so as to strive for the survival space of fuel vehicles.

According to the China Association of Automobile Manufacturers, the penetration rate of new energy vehicles in mainland China will be 31.6% in 2023 and is expected to be close to 40% in 2024.

With the improvement of the quality of new energy vehicle products, battery life and energy supplement, and the level of intelligent driving, consumers' willingness to buy is also rising, and the market share of new energy vehicles has reached 50%, perhaps in one or two years.

The enthusiasm for buying new energy vehicles is high

Compared with the maturity of fuel vehicles in China, new energy vehicles are just a "child".

In 2009, the mainland began to pay attention to new energy vehicles, and three years later, it was recognized as a strategic emerging industry. Since then, the mainland has focused on the research of key core technologies and cutting-edge technologies in the industry, cultivated and promoted the development of the new energy vehicle industry, supplemented by policy tilt, and finally created the possibility for new energy vehicle manufacturers to reduce product prices, increase production and improve brand quality, and promoted the mainland's new energy vehicles to the world stage.

BofA Securities Group recently said that it expects China to remain the world's largest electric vehicle market by 2025, accounting for 40% to 45% of the market share.

Its analysts believe that with the upgrading or innovation of the mainland's vehicle platform and technology, the mainland's electric vehicle products are more competitive than before, and the penetration rate of China's electric vehicles will continue to expand.

Mr. Zhang from Shaanxi Province saw the intelligence and comfort of domestic new energy vehicles in terms of driving and riding, and replaced the joint venture car that he had been driving for many years with a new power brand. Of course, unlimited numbers and low-cost cars are also important factors for Mr. Zhang's choice to change cars.

There are many consumers who think the same way as Mr. Zhang.

On June 11, the China Association of Automobile Manufacturers (CAAM) Passenger Vehicle Market Joint Branch released data for May, showing that the retail sales of new energy vehicles were 804,000 units, up 38.5% year-on-year and 18.7% month-on-month.

Source/China Automobile Dealers Association Screenshot of the Mirror Observatory

You must know that the retail sales of the national passenger car market in May were 1.71 million units, a year-on-year decrease of 1.9%. New energy vehicles are rising against the trend, and the enthusiasm for buying is particularly valuable.

Not only that, according to the research report of Everbright Securities, from January to May this year, the cumulative retail sales of the passenger car market were 8.073 million units, a year-on-year increase of 5.7%. The cumulative sales of new energy passenger vehicles in the first five months were 3.255 million, a year-on-year increase of 34.4%.

The penetration rate of new energy vehicles has exceeded 40%.

New energy vehicle companies make less and lose more

However, contrary to the sales performance of new energy vehicles, among new energy vehicle companies, there are only a handful of profits.

According to incomplete statistics, a total of 320 models of new energy vehicles will be sold in China in 2023, and the vast majority of them will sell less than 1,000 units per month. Without economies of scale, it is difficult to make profits.

Therefore, even if the mainland's new energy vehicles will sell 7.254 million units in 2023, a year-on-year increase of 38.6%, the only new energy vehicle companies that have achieved profitability are Tesla, BYD and Ideal.

Among them, BYD will sell 3.0244 million new energy vehicles in 2023, achieving a net profit of 30.041 billion yuan attributable to the parent company. This means that for every car sold, BYD makes less than 10,000 yuan. In 2023, Ideal will deliver 376,000 luxury smart electric vehicles, achieving a net profit of 11.81 billion yuan and a profit of 31,400 yuan per vehicle.

Weilai, Xiaopeng and Leap, which are also listed companies with ideals, are a little worse.

In 2023, NIO's total revenue will be 55.618 billion yuan, a year-on-year increase of 12.9%, and the loss will be 22.655 billion yuan, an increase of 44.8% over the previous year; XPeng's total revenue was RMB30.68 billion, up 14.2% year-on-year, with a net loss of RMB10.38 billion, an increase of RMB1.24 billion compared with 2022, while Leapmotor's total revenue was RMB16.747 billion, up 35.2% year-on-year, with a net loss of RMB4.216 billion, narrowing from RMB5.109 billion in 2022.

Source/Mirror Observatory Photography

The sales of "Wei Xiaoling" were 160,000 units, 140,000 units and 144,000 units.

Not only new forces, but also traditional car companies are burdened by the new energy vehicle business, and the financial data is not good.

In terms of Changan Automobile, AVATAR's revenue in 2023 will be 5.645 billion yuan, and the net profit loss will be 3.693 billion yuan. The revenue of Deep Blue Automobile is 25.883 billion yuan, the net profit loss is 2.999 billion yuan, and by the end of 2023, the net assets of Deep Blue Automobile are -1.969 billion yuan.

GAC Aion, which is backed by GAC Group, will have revenue of 53.234 billion yuan in 2023, a significant increase of 37.54% from 38.703 billion yuan in 2022. However, GAC did not disclose its net profit, and the loss is a high probability event.

Buying respite for a gasoline car?

I haven't seen the "return money" in the first place, and I have to join the duel of the price war, and 2024 will undoubtedly be worse for new energy vehicle companies.

Gaohe fell on the first working day of 2024, and car companies such as Hechuang were "invisible" in the automotive circle. And more car companies have to rely on layoffs to reduce costs and increase efficiency, and reserve a seat in the short-cut market.

Even ideals are mired in layoffs.

Zeng Qinghong made it clear at the Chongqing forum that "GAC has also laid off a lot." Guangqi Honda employees broke the news that the company has launched a large-scale layoff of more than 1,000 employees. Guangqi Honda responded that in order to ensure the company's sustainable operation and accelerate strategic transformation, the company will further improve personnel efficiency.

There is no doubt that the "price war" of nearly 60 new energy vehicles in the first five months of 2024 has not only stung new energy vehicle companies, but also "mistakenly injured" joint venture brands.

It is reported that Guangqi Honda sold 31,900 units in May, a year-on-year decrease of 41.31%, and a total of 173,600 units sold in the first five months, a year-on-year decrease of 24.30%, showing an accelerated downward trend. And GAC Toyota's life is not easy. GAC Toyota's sales in May were 61,000 units, down 17.00% year-on-year.

A number of industry insiders said that the good days of GAC Group relying on the two joint venture brands of GAC Toyota and GAC Honda to "lie down and win" are gone.

This is obviously unacceptable to GAC Group, after all, brands such as Aion still need a wave of "GAC Liangtian" milk.

However, the automotive industry has reached a consensus that how fast the development of new energy vehicles is, how fast the decline of joint venture brands is.

Miao Wei, former minister of the Ministry of Industry and Information Technology, has said in public that the replacement of traditional fuel vehicles by new energy vehicles has been formed, and the original goal of more than 50% of new energy vehicles in 2035 is likely to be achieved in 2025 at the latest to 2026.

Zeng Qinghong had to shout out "oil and electricity have the same rights". Because in his view, its "cash cow" fuel vehicles can only stand on the same starting line as new energy vehicles, and may be able to rely on strategies such as "price reduction" to have the power to fight.

Even if models such as Camry drop from 200,000 yuan to more than 100,000 yuan, it is still profitable; Even if GAC Aion produces a million-level Haobo SSR, it is still a loss.

Traditional car companies such as GAC do not oppose or are not afraid of "volume", but they just can't tolerate "unflattering at both ends". If there is really a day when "oil and electricity have the same rights", the life of "GAC" may be better again.

But, can it be achieved?

*Image courtesy of Visual China.

*Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice to any person.

View original image 814K