EV revolution is quite clear and is coming. Lithium sector...

EV revolution is quite clear and is coming.
Lithium sector sentiment is about at the bottom of the cycle, imo.

Multinational giants enter the Chinese new energy auto market to release three major signals
06-20 00:48Source: Economic Reference News0 Comments
Related stocks:Guoxin Energy
Abstract: A few months after the announcement of the three-phase electric travel strategy for China, Volkswagen Volkswagen launched a pure electric version of three vehicles to the Chinese market, which was quick and decisive. Far more than the masses, since the beginning of 2019, traditional multinational auto companies represented by Toyota, Nissan, Honda, BMW, etc. have changed their previous years to wait and see or take a break, stepping on the Chinese new energy auto market, and using pure electric power as Focus on development areas. At least three signals were released from the strategic actions of multinational automakers.


　　A few months after the announcement of the three-stage electric travel strategy for China, Volkswagen launched a pure electric version of three cars to the Chinese market, which was quick and decisive. Since far more than the general public, to enter in 2019, Toyota, Nissan, Honda, BMW and other represented by the traditional cross-car prices, a change of a few years ago to stop watching or tasted, great strides march country's new energyThe automotive market and pure electric power as a key development area. At least three signals were released from the strategic actions of multinational automakers.

　　One of Signal: Medium country's new energy auto industry ushered in an explosive growth period

　　In 2019, the global new energy automobile industry showed unprecedented initiative. In traditional Chinese domestic car prices and repairer of the new forces continued to be active at the same time, cross-car prices giants for the Chinese market, the development of marketable electric vehicles, reflects these enterprises pairs country's new energy optimistic anticipation of the automotive market.

　　Under the two-wheel drive of policy and market, China's new energy vehicles exceeded 10 million production and sales in 2018, and showed strong contrarian growth. Since 2019, the new energy vehicle market has continued to maintain rapid growth. China Automobile Industry Association released data show that a quarter of new energy auto production and sales year on year increase of 102.7% and 109.7%, of which pure electric vehicle production and sales grew 109.3% and 121.4%.

　　In fact, after more than ten years of cultivation, China's new energy automobile industry, especially in the field of pure electric vehicles, has achieved remarkable development results. The core technology of the industry has matured and stabilized day by day. The industrial chain and supporting infrastructure have been continuously improved, and the industry has basically gone. After the initial incubation period, it is making great strides into the rapid growth period. The multinational automakers, which have long dominated the traditional fuel vehicle sector, are keenly aware of the large-scale explosive growth period of the upcoming market through the growth and competition pattern of China's new energy auto market, and thus quickly switch from cautiously watching. To join the battle.

　　The population base, income level and sustained economic growth have jointly determined the rapid growth of China's new energy vehicle market, which will directly provide new energy vehicle manufacturers with considerable market demand . Furthermore, the rapid growth of the Chinese market will have a demonstration effect on other countries , and will also promote the establishment of a complete and strong industrial chain system around the world, and enable all types of new energy vehicle companies to gain technological maturity and scale due to the Chinese market. The accumulation of knowledge in mass production and other aspects will accelerate the pace of development of new energy vehicles around the world. Obviously, in the view of multinational automakers, the explosive growth of China's new energy auto market is a prelude to the explosive growth of the global market. In the future, the world will usher in the era of new energy vehicles.

　　Signal No. 2: Industry reshuffle under fierce market competition has begun

　　Multinational automakers are involved in new energy vehicles. In terms of industry, this is actually an attractive industry growth prospect that has attracted a large number of new entrants. The addition of many powerful suppliers will increase the market supply on a large scale and enrich the supply of various market segments. When the supply can better meet the demand , it will intensify the market competition and increase the production capacity to significantly exceed the demand. At the time of capacity, it can even lead to vicious competition. It can be expected that due to the influence of multinational automakers, China's new energy auto industry will have competitors shuffled, and “advance and retreat” will become the norm.

　　“Incoming” is reflected in more new entrants and factor inputs, faster technological advances, greater industry scale and closer international cooperation. More automakers from all over the world will enter the field of new energy vehicles in China, and many other investors will enter the border with this process. The increase in the number of industrial entrants, the increase in investment in capital and talents among existing players and new entrants in all segments of the industry chain will result in significant improvements in the quantity and quality of the factors obtained in the entire industry. These changes, on the one hand, provide conditions for industrial technological advancement and scale expansion, and on the other hand, bring more fierce competition, and force all new energy vehicles to find ways to carry out technological innovation, increase technological content and added value, and Reduce costs with large-scale production and sales . China's policy of further opening up to the outside world has provided space for the deeper cooperation between multinational automakers and local Chinese companies. The fierce market competition has directly led to the cooperation of international alliances based on complementary advantages, multinational and local Chinese vehicle manufacturing. Businesses, component manufacturers, etc., will be driven by market mechanisms to promote more diverse forms, richer content, and closer cooperation.

　　“Retreat” is concentrated in the fact that companies lacking market competitiveness will be eliminated in the survival of the fittest. The multinational automakers entering the market will surely integrate their existing advantages in terms of capital and brand, and try to establish new advantages in the field of new energy vehicles, and compete for limited markets with those who have entered and will enter the field of new energy vehicles in the future. Significantly intensified the intensity of market competition, reduced the average profit level of the industry, and accelerated the elimination of low-end brands of new energy vehicles. Some companies with slow sales, low technical level, insufficient profitability and tight cash flow will be eliminated first.

　　Therefore, in the future, with the entry of many multinational auto companies, China's new energy auto sector will surely see a pattern of new entrants increasing and more and more enterprises withdrawing from the industry. Regardless of "in" and "retreat", the era of comprehensive competition in China's new energy auto industry is approaching, and the rapid reshuffle of the entire new energy auto industry will inevitably be ushered in the next few years.

　　Signal No. 3: Local new energy car companies must grasp the window period

　　For the multinational auto giants to fully enter the Chinese new energy auto market, the domestic industry has long foreseen. The retreat of the new energy vehicle subsidy policy and the foreseeable end of the future, the cancellation of foreign capital ratio restrictions, and the acceleration of the opening up of the auto industry mean that domestic and foreign auto companies will directly face the same market competition environment .

　　In the case of deploying new energy vehicles to the Chinese market, multinational auto companies that have been “slowly beaten” have chosen to come to this critical time node for a rare and huge market opportunity. In the face of the massive entry of multinational auto companies, will domestic new energy auto companies be hit hard? Can Chinese car companies entering the track ahead of time win the second half? We believe that even if multinational auto companies concentrate on entering the Chinese new energy auto market, local new energy auto companies still have a good chance of winning.

　　Although China has become the world's largest producer and seller of new energy vehicles, the current domestic production and sales of new energy vehicles account for only 5% of total vehicle production and sales, and the volume is small. In the future, with the rapid growth of the new energy vehicle market, the “cake” in the Chinese market will become bigger and bigger. In a period of time, this will create a relatively relaxed competitive environment for various market participants including local car companies.

　　While the Chinese market is growing rapidly, more and more new energy vehicle markets will be launched globally, further creating a global fast-growing market. In the same period, Chinese local enterprises will inevitably “go out”. Therefore, the growing potential international market will alleviate the fierce competition in the global new energy vehicle market to a certain extent, and Chinese local auto companies will also win some time in participating in the international market competition.

　　Of course, it will take some time for multinational automakers to make product improvements from the layout of the Chinese market to the formation of huge capacity and market-scale products, as well as product feedback based on user experience.

　　However, whether it is the Chinese market that has shown rapid growth, or the global market that is about to start, or considering the time required for all types of new entrants to reach large-scale production, the power of all kinds of new energy vehicles is swarming. There are not many window periods left for local Chinese car companies. In the past ten years of pioneering industrial development practice, China's new energy vehicle companies have accumulated some foundations, such as the sales of domestic pure electric vehicles accounted for more than 70% of the current sales of new energy vehicles, many traditional cars. The new forces of enterprises and vehicles have realized mass production of new energy vehicles, and the differences between core technologies such as motors and electronic controls and international standards have been significantly reduced. However, on the whole, local car companies are in urgent need of improvement in terms of core technology level, brand building, large-scale production, and profitability. Local enterprises must firmly grasp the window period that is not long in the future, continue to innovate rapidly, and form their own unique capabilities, and then highlight the encirclement in this big wave of sandstorming, in various new energy vehicles including multinational car giants. The manufacturer wins the advantage in the same stage.

　　(Author: Tsinghua University Global Industry Research Institute)

(Article source: Economic Reference)