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This article was reproduced from the Autocarweekly public account.
Author: Du Debiao
Experience is the mother of wisdom.
In April, sales figures were released, with the new energy sector continuing to rise. We are accustomed to regarding pure electric vehicles as the future, but at present, the best sample for studying the automotive market is a mixed market, not all electric and not all fuel. Thus the theme of the Shanghai Auto Show, “Embrace Change,” is not that the future is already here, but that we are now in a transitional period of unknown duration.
The overall environment has inadvertently highlighted the resurgence of a certain technology, which has almost inevitably risen to become the second or even first male lead, having been originally backup technology for domestic brands and created by Japanese brands as a niche market, and now it has risen to become a national strategy. Although pure electric products have seen a visible increase in sales figures in the April rankings, hybrid products are quietly establishing their own territory, whether in the domestic-made or Japanese camp.
A Hybrid Fund
In fact, the market has been hinting at this all along, as with the pioneer in the hybrid field in the domestic market, First Automobile Works (FAW) Toyota, whose “Qing” family, i.e. its hybrid series, sold up to 130,000 units last year, accounting for 16.2% of its sales structure, while the “Qing” family’s accumulative sales of electrification technology reached 370,000 units.
According to FAW Toyota’s positioning of its hybrid products, they belong to the high-end luxury market segment. In the B-grade market, where product prices are generally declining, the starting price of the Vios hybrid series is RMB 239,800. According to FAW Toyota’s policy, it often presents itself as being engaged in a superficial price war, which is to say that in a city like Beijing, where car purchases are restricted, the Vios is discounted by about RMB 10,000, while the Rongfang hybrid is given a discount of RMB 6,000, both of which are less than those of their respective counterparts. This at least shows two things: FAW Toyota, including Toyota itself, has its own attraction for hybrid products, and this guarantees profit.
As an aside, in March, Toyota announced its FY2020 report, with a net profit of JPY 2.25 trillion, or RMB 132.3 billion, making it the car company with the highest profits globally.
At the technical level, hybrid is just an energy-saving means, but now it has become a microcosm of the market. During the transitional period, the market presents a diverse picture, like tastes, with some liking spicy hot pot while others prefer yinyang hotpot, some liking pizza while others prefer a Japanese buffet at RMB 288 per head. When it comes to the auto market, not everyone expects pure electric cars to arrive tomorrow, universally preferred. Some still have a lingering attachment to fuel systems, some are accustomed to small-displacement turbocharging, and still others believe in the moderate way of hybrid power.
New forces, on the other hand, predict from their own point of view that pure electric products will have a high market share in the next few years, hoping to surpass time itself. However, the leading companies are in no hurry to change; they present a progressive, hierarchical state based on market conditions.
Toyota’s power technology includes T power, fuel, HEV, EV, and PHEV. Especially with the adoption of dual motors, the top-of-the-line model of RAV4 Plug-in Hybrid Electric Vehicle (PHEV), the RAV4 Prime, can accelerate from 0 to 60 miles per hour in 7.4 seconds and has a pure electric range of 59 miles. More importantly, from fuel to plug-in hybrids to driving pleasure, this lineup is open to everyone.
To compare with the investment market, this is like a hybrid fund. In contrast, the technology stocks represented by new forces are full of uncertainties and opportunities, with risks and gains coexisting. Praising and attacking are both flying side by side, whether it’s a blessing or a curse depends on fate.
But this belongs to regional changes after all. For most individual investors, professional financial advisors often choose a few funds for you to package together, which is a safe way for ordinary people to invest. Just like Toyota’s TNGA architecture, which has spawned a variety of models from fuel-powered, turbocharged, hybrid to pure electric, the key is the low fuel consumption verified by the market, and quality assurance, which is truly low-risk and high-return.
This is the sense of propriety and the level of the market that the big companies face in the transitional period. Like Toyota’s products, the models derived from the TNGA architecture all come with a light sports gene, which is suitable for most people’s tastes. As for this level, it does not mean that they remain unchanged in terms of technology.
Who is most likely to have the last laugh?
In terms of the broad concept of new energy, Toyota’s Corolla Hybrid can be considered as a pioneer, but it was not included in the commercial and subsidy policies in China. Nowadays, both the old and new forces regard the speed of electrification as one of the indicators，when discussing the speed of turnarounds of traditional giants, it is often likened to elephants.
But regarding EV, Li Shufu expressed it directly: now it’s too easy to make an EV. Spend a few hundred million, and an engineering company can come up with a few sample cars. Therefore, the threshold does not lie in the sample cars, nor the platform, because it is hard to imagine that traditional giants, who have mastered the more numerous and complex fuel platform architecture, would be challenged by the simpler pure electric platform. Instead, the threshold lies in scale, stability and sustainability.
Therefore, Toyota Motor (China) Investment Co., Ltd. (TMCIC) stated that it will fully support the Toyota Beyond Zero strategy in China, create the TOYOTA bZ brand’s lineups of electric vehicles exclusively for the Chinese market with the new e-TNGA electric platform. There is no need to be overly excited. For the long-time player, Toyota, who was one of the first to contact with electric cars, this is merely a normal operation.## Jiang is the eldest and most experienced.
The pure electric market always has ups and downs. It seems that no one has truly taken the lead, as safety always comes first. Therefore, when Toyota plans to introduce pure electric or autonomous driving to the market in the future, they must have confidence in doing so.
The “conservative” Japanese brands may become their strengths in the future by adding safety factors to their products, just like the outstanding collision test results of the Corolla have impressed the market. Another question is, under the increasingly homogeneous trend of pure electric technology, what kind of technical direction will Toyota’s new EV products take? After all, their previous THS hybrid technology was difficult for other companies to replicate.
But will they launch an electric revolution at this point? I don’t think so. FAW Toyota will continue to maintain their sense of hierarchy, and future pure electric models may be developed as a branch. Their ability to meet the diversified requirements of various market segments is based on the company’s size and capabilities. In the final analysis, the differences between traditional brands and new players’ strategies and tactics will be determined by their scale and foundation.
It has been reported that FAW Toyota has begun to promote digital transformation, focusing on private-domain traffic, launching a super APP, establishing its social circle, while realizing the interconnectivity of cars, services, sales, and charging. Moreover, they can also leverage their large data and cloud computing capabilities. Their recent actions indicate an overall strengthening of all aspects, including the rejuvenation of the Crown brand, the launch of medium and large SUVs, and other initiatives.
Small manufacturers focus, while large manufacturers implement a layered approach, both of which represent customized strategic tactics based on their respective strengths. The latter is more advantageous: regarding the future, traditional brands and new players have different perspectives. For example, FAW Toyota sold more than 800,000 vehicles last year, targeting 920,000 this year, with a goal of one million next year. Therefore, whether they are developing pure electric products, autonomous driving, or flying cars in the future, they only need to convert their current user base to be in control of the future.
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.