On September 16th, 2020, the Global New Energy Vehicle Supply Chain Innovation Conference was held at the Nanjing International Expo Center, attended not only by well-known domestic and foreign automakers and part manufacturers, but also by experts, scholars, and government representatives from the automotive industry.
At the conference, Ideal Vehicle Co-founder and CEO, Shen Yanan, delivered a speech on the current development of Ideal Vehicles and their next steps in supply chain changes. The following is the core content of the speech:
About Ideal
From January to August 2020, Ideal ONE occupied 40.6% of the medium and large-sized SUV market share for new energy vehicles, including pure electric vehicles, PHEVs and HEVs, showing the market’s recognition of range-extender drive systems.
Regarding energy conservation and emission reduction, Shen Yanan cited data that “47% of the mileage of national users depends entirely on the battery pack of pure electric driving. Many customers still use Ideal ONE as a pure electric vehicle.”
Regarding the selection of Ideal ONE’s driving mode, Shen Yanan pointed out that “it mainly depends on understanding why users choose it, or what their requirements are for new energy vehicles. User requirements are very simple and basic.”
He summarized the user requirements into three points:
- Users prefer pure electric driving for smooth acceleration, safety, and intelligent interaction.
- Users do not want to worry about charging or range anxiety.
- They want value for money and not be too expensive.
Based on user feedback, the range-extender technology helped Ideal ONE to meet user requirements. Although it is not subsidised, considering the reduction in purchase tax, customers can buy this car at a price cheaper than the same class and same performance fuel cars.
From this perspective, customers are willing to embrace such a car. This is also how to find a way to produce new energy vehicles that customers are willing to buy without policy guidance.
Regarding the sales distribution of Ideal ONE, Shen Yanan announced the sales situation in cities with car number restrictions and in cities without such restrictions. Nationally, 35% of the cars were sold in cities with restrictions, and 65% were sold in cities without restrictions, which is closer to normal market competition proportions than traditional new energy vehicles. This was based on no consideration of number restrictions and subsidies, and was a result of completely market-oriented competition.
About Supply Chain
The automotive industry has accumulated for centuries, and there will always be changes in the supply chain, but the automotive supply chain is still mainly based on continuation. Within this continuity, we see two important issues.
Although we are a commercial competitive enterprise and do not care whether suppliers are domestic or foreign, there are indeed many core parts where we only have exclusive supply and not much competition, and these components are mostly controlled by foreign enterprises.I believe that whether for Chinese or foreign companies, it is an opportunity as there is still a need for sufficient competition in many core components, which is a persistent issue.
Secondly, we have seen a problem that was mentioned earlier, which is the target to sell 5 million or even 7.5 million units of intelligent electric vehicles by 2025. However, can our existing supplier system support such rapid growth? Actually, it cannot. Moreover, looking back at the era when feature phones transitioned to smart phones in the mobile phone industry, many suppliers went out of business along with Nokia and Motorola. The suppliers’ production capacity quickly shifted to the new generation of smart phone brands. However, cars are different, and the partners in the automotive supply chain will have to transform, such as transforming to new brands like us, which will take a relatively longer time.
There is an issue here. From the perspective of customer demand, we have a very rapid development from the current 1 million units to 7.5 million units. However, can the entire supply chain system quickly adapt to the transformation? This is a challenge.
Of course, in terms of practical industry experience, we can also see many supply chain restructurings, which is the focus of my talk today: new cores, new crossovers, and new cooperation.
New Cores
Firstly, new core companies in the supply chain will emerge. Referring to the development of the intelligent mobile phone industry, some emerging, more competitive core brands of a new generation may form as well.
I have witnessed many Nokia and Motorola suppliers who completely withdrew from the market as the sales of these two major brands declined. However, some suppliers or emerging suppliers also seized new cores and the new core brands of the supply chain to develop.
Secondly, some new core suppliers and components will emerge. Take the example of mobile phones: some companies have developed from IC suppliers specializing in a small field in the past to competitors of Qualcomm, which was entirely achieved through the development of smart phones. Similarly, a group of suppliers will emerge from the intelligent electric vehicle industry.
New Crossovers
Many of you may already have felt this, especially entering the automotive industry from the consumer electronics and communication equipment industries. There are indeed a large number of crossovers, but it is still not enough. Following the experience of the intelligent mobile phone industry, there will be more and more companies cross over into the field.### New Forms of Collaboration
The new forms of collaboration comprise two parts: collaboration between car makers and collaboration between car makers and suppliers.
Currently, the total production capacity of China’s automobile industry is sufficient to support its further development. Different car makers are expected to have various new forms of collaboration, with some focusing on hardware production and others on intelligent and brand marketing. I believe that this will be the very next big trend in the industry. Of course, some traditional automakers may also consider moving in this direction while making the most of their respective strengths. This is the first type of collaboration.
The second type of collaboration will see new changes between car makers and suppliers. We will see many more joint ventures between new automakers and core component suppliers, especially those related to intelligent and electric vehicles.
For example, for the IDEAL Automotive Group, intelligence and electric technologies are our core strengths, and we cannot outsource our core strengths to a third party. However, we are open to cooperation and would look for very good partners to strengthen our supply chain through joint ventures.
In addition, we believe that there will be large integrated suppliers appearing in the future. As competition in the automotive industry becomes more comprehensive, many car makers will focus more on intelligence and software development. With limited resources and attention, we need to save resources for investment in intelligence and autonomous driving technologies. Therefore, we hope to have more supply chain partners to provide more complete solutions, such as an entire chassis or cabin.
The above are the three aspects of cooperation.
Today, since we are in Nanjing, I would also like to talk about our supply chain. Our most important seat systems, air conditioning systems, and many body components are manufactured in Nanjing. The industrial chain that Nanjing has prepared for new energy is excellent.The next step, whether from the perspective of industry chain extension or reconstruction, we believe that Jiangsu province, including Nanjing, has a very strong industrial foundation and great opportunities for transformation. As the industrial chain undergoes transformation, changes and optimization, it will benefit us greatly. We hope to discuss with everyone on how to promote the optimization of the entire industrial chain in Jiangsu or Nanjing region.
The above is a summary of all the content released by Shen Yanan at the meeting.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.