Picture source @Visual China
Text | Songguo Finance, author | A spinach
On December 15, 2005, the Toyota Prius hybrid entered China, kicking off the development of domestic new energy vehicles. Today, 18 years later, domestically produced and imported new energy vehicles have penetrated more than one-third of my country's passenger car market, and the vision of dividing the world from petrol vehicles is gradually coming true.
In November this year, with the further release of demand for car purchases and the continuous support of preferential product policies by car companies, my country's new energy vehicle industry has achieved new breakthroughs in development. Data released by the China Association of Automobile Manufacturers shows that in November 2023, the production and sales of new energy vehicles were 1.074 million and 1.026 million respectively, a year-on-year increase of 39.2% and 30% respectively, setting a record high.
However, while making rapid progress, bottleneck periods are also inevitable. Specifically, the shadows caused by inventory pressure, low profit margins, and low month-on-month growth are casting a shadow over the industry. Data show that China's auto dealer inventory warning index has been rising for four consecutive months. As of November, it has exceeded the 60% mark and reached 60.4%, a month-on-month increase of 1.8 percentage points. For the whole year, it is second only to the 1% affected by the Spring Festival holiday. and March, which is the slowest season.
Not long ago, Cui Dongshu, secretary-general of the National Passenger Car Association, issued a document stating that in the first three quarters of this year, the revenue of the automobile industry increased by 10% year-on-year, costs increased by 11% year-on-year, and the overall profit margin was 4.9%, which was lower than the profit margin of the entire industrial enterprise of 5.6%. average level. In addition, judging from November sales data, more than half of the top 20 new energy vehicle companies have sales that are basically the same or even lower than last month.
We are currently experiencing momentum at the end of the year, and the anxiety of new energy vehicle companies is obvious. Under such circumstances, how effective can the price strategy be?
The sales growth rate of leading car companies is not significant month-on-month, but has it become the biggest dark horse in the industry?
Overall, compared with the same period last year, many car companies achieved eye-catching sales breakthroughs in November.
According to public data, among the top 10 car companies in terms of sales in November, BYD still ranks first in sales, with sales reaching 301,378 vehicles, a year-on-year increase of 31.1%; Geely, which ranked third, achieved sales of 65,034 vehicles, a year-on-year increase of 87.7%; ranked third Fifth and sixth, Changan and Aian achieved sales of 50,598 vehicles and 41,567 vehicles respectively, a year-on-year increase of 57% and 44.5% respectively; while Ideal, Great Wall, Xpeng, and Wenjie all ranked among the top ten, with sales growth exceeding 100% year-on-year. , among which, Xiaopeng performed most impressively, with a year-on-year growth rate of 244.9%.
To achieve such performance, the "price war" still plays an important role, especially in November when there are major promotion nodes such as "Double 11".
It is understood that at the beginning of November, BYD fired the first shot of price reduction, announcing that from November 1st to 30th, five models of Ocean Network's Frigate 07, Dolphin, Seal Champion Edition, Song PLUS Champion Edition, and Destroyer 05 Champion Edition will be limited-time. Discount, the discount range can reach up to 18,000 yuan. Immediately afterwards, Aian Automobile launched a limited-time preferential policy for AION Y Plus and other models such as 99 yuan to offset the 5,999 yuan purchase price, 0 interest for the entire series for 2 years, and a replacement subsidy of up to 4,000 yuan. It also provided 20% off for a limited time to grab the original electric pile. activity. Subsequently, the star models of Great Wall Motors also joined the ranks of price reductions, such as the new Euler Lightning Cat, which has a limited-time discount of 30,000 yuan...
In fact, in order to stabilize their market share and achieve annual sales targets, new energy vehicle manufacturers have already launched this year Several rounds of price wars were conducted. Since Tesla’s price cuts at the beginning of the year, the competition for low-price discounts has continued to this day. Added to the background of momentum at the end of the year, it is expected that the new round of combination competition will only become more intense. It can be said that the current sales of new energy vehicles have formed a strong path dependence on the price reduction strategy.
However, it can also be seen from the data that the sales growth rate of most mainstream new energy vehicle companies is not significant month-on-month. For example, in November, BYD's sales increased by only 0.1% month-on-month, Xpeng Motors' sales increased by 0.2% month-on-month, Li Auto's sales increased by 1.5% month-on-month, and Great Wall Motor's sales increased by 2.3% month-on-month... This is partly due to the current industry's high inventory pressure. is a major reason, and may indicate that the old path of focusing on price reductions and discounts is slowly going nowhere, and car companies need to find new ways to break the situation.
It is worth noting that as mainstream new energy car companies are gradually falling into sales anxiety, a dark horse has also emerged among the top 10 car companies in terms of sales - Wenjie.
In November, Wenjie sold a total of 18,827 vehicles, a month-on-month increase of 48.2%, of which 15,242 Wenjie new M7 vehicles were delivered, exceeding 10,000 units for two consecutive months.
The new M7 can continue to shine mainly due to the unique supply chain advantages provided by Huawei's smart car selection model. Huawei's smart car selection model refers to a production and sales model in which Huawei is deeply involved in product definition, vehicle design, and channel sales, and empowers car companies in terms of product styling, interior and exterior design, and brand marketing. As the first partner of this innovative model, Thalys has gone from the trough at that time to the "big hit" with the new M7 of Wenjie, which has undoubtedly proved the potential that supply chain cooperation optimization brings to enterprises.
Specifically, in the smart car selection mode, Cyrus and Huawei have a clear division of labor. As a long-established automobile manufacturer, Cyrus has advantages such as three core technologies, smart factories, and super electric drive smart technology platforms. Therefore, it focuses on product research and development, production, delivery and after-sales; Huawei has deeply enhanced the soft power of its products. If you ask JieXin M7 is equipped with the HUAWEI ADS 2.0 high-end intelligent driving system, which enables high-speed and urban high-end intelligent driving that does not rely on high-precision maps. The two-phase integration of
also creates strong product strength. Recently, the "2023 Understand the Car Emperor Winter Test" announced some test results of the Infinity series models. In multi-dimensional tests such as intelligent driving, power loss and fuel consumption, pure electric endurance, etc., the Inquiry series models were tested in extreme working conditions of ice and snow. Excellent overall performance. Although it is undeniable that Wenjie can achieve sales breakthroughs with the help of preferential policies, in the final analysis, it can achieve a steady increase in sales in recent months because its own product strength is strong enough. This also shows that in the current fiercely competitive market environment , car companies can no longer rely solely on price wars to achieve greater sales breakthroughs.
Tesla is the first to increase prices, has a new competition begun?
In fact, the new energy automobile industry is paying more and more attention to the supply chain, and price war may no longer be the main driver. This can also be seen from the recent price increase event of Tesla, the "pioneer in price reduction".
In November, while other players were still pursuing price wars, Tesla raised prices four times in a row in a month. A closer look shows that behind the price increase is the increasing pressure on the company's profitability. The financial report shows that Tesla's gross profit margin in the third quarter of 2023 was 17.9%, lower than the 18.7% in the first half of the year.
However, when its peers are using various preferential policies to boost prices, its price increase obviously needs some confidence to support it.
Specifically, Tesla’s pricing method usually does not take into account market supply and demand and the prices of competitors. Its underlying logic is that as long as the product maintains industry advancement, it should be in a leading position in pricing, while product advancement is mainly Relying on the company's strong supply chain and resource integration capabilities.
It is understood that Tesla has an integrated supply chain from manufacturing to distribution, and has a strong voice and initiative in supply chain management.
On the one hand, Tesla has been promoting the in-house manufacturing of key components such as batteries, semiconductor chips, motors, and charging piles since 2020. And with the soaring price of lithium, Tesla may even enter the field of lithium mining and refining, fundamentally reducing the possibility of cost surges caused by rising raw material prices. Overall, these moves will undoubtedly help Tesla keep pricing power in its own hands.
, on the other hand, builds super factories and achieves high automation. Take Tesla's Shanghai Gigafactory as an example. It has the world's most advanced automobile production lines, including raw material transportation, stamping, and welding, which are all automatically completed by a one-line production line, greatly reducing labor costs. In terms of production efficiency, it can produce about 18 vehicles in 10 minutes, and it takes an average of about 34 seconds to produce a Model Y. After the vehicles undergo various inspections at the factory, they will be dispatched directly to delivery centers across the country. Super production efficiency combined with fast transportation allows Tesla to produce on demand and basically achieve zero product inventory.
Based on its supply chain advantages, Tesla’s domestic sales in November exceeded 65,500, a surge of 129% month-on-month and 5% year-on-year.
Why brands such as Tesla and Wenjie attach so much importance to the supply chain are mainly driven by consumer demand and guided by industry upgrading trends.
Specifically, when consumers purchase products, although they will be attracted by various preferential policies, they are essentially still most concerned about the reliability of the product. A survey report by Southern Metropolis Daily in August 2023 showed that "low travel costs", "low driving noise and good driving experience" and "high degree of intelligence" are the main factors attracting respondents to buy new energy vehicles, with the proportions in order being 64.79% , 61.97%, 54.93%. The value of these products ultimately depends on the supply chain.
In addition, how far new energy vehicles can "run" in the field of intelligent driving also depends on the supply chain. Monitoring data from the Gaogong Intelligent Automobile Research Institute shows that my country's smart car market penetration rate has risen to 46.93% from January to October 2023, and is expected to exceed 50% throughout the year, while this value was only 0.32% in 2018. The era of smart driving has arrived quietly, which naturally places higher demands on enterprise supply chains.
Therefore, more and more companies have begun to pay attention to the resilience of the supply chain and are committed to independent research and development to enhance the endogenous value of corporate development. For example, in terms of self-developed parts and components, car companies such as Aion, Changan, and Jike have successively joined the self-developed battery team. At the same time, in order to gain greater say, many car companies have also begun the era of independent car manufacturing. For example, NIO recently acquired the production equipment and assets of the first advanced manufacturing base and the second advanced manufacturing base from Jianghuai for 3.16 billion yuan.
Judging from the current actions of relevant car companies, whether they are fighting for traffic or channels, they will eventually return to the arena with the theme of "supply chain". In the era of "supply chain is king", those car companies with greater market voice will definitely be those car companies that truly have the dominance of the industrial chain.
