Author | Qiu Kaijun
Editor | Qiu Kaijun
New energy vehicles also need to “speak politics”. In the political blueprint being portrayed, what role will new energy vehicles play?
On October 16th, Xi Jinping delivered a report as a representative of the 19th Central Committee at the 20th National Congress of the Communist Party of China, outlining the goals, tasks, and overall direction of the development of the Communist Party of China and the national cause for the next five years and even longer.
Of course, the report does not directly mention new energy vehicles. However, the report makes a clear judgment on the situation and depicts new goals and strategies for the development of the economy. By following the general trend, we can know where new energy vehicles should go. Especially when the report becomes a policy proposition in the future, we can make a rough prediction of the policy environment that new energy vehicles will face.
We believe that the following trends are relatively clear:
- New energy vehicles will still maintain the status of a strategic emerging industry in the new era’s new journey and receive better policy support.
- Developing the new energy vehicle industry is an inevitable option for the high-quality development of the automotive industry. The new energy vehicle industry is also in line with the concept of green development, contributing to the greening and low-carbonization of economic and social development.
- New energy vehicles should be developed according to the requirements of modern industrial systems, and self-demands for high-end, intelligent, and green manufacturing.
- In the context of the “dual circulation” pattern dominated by the domestic cycle, the new energy vehicle market should pay attention to opportunities to expand domestic demand, as well as the opportunities to build the “Belt and Road.”
- Scientific research should conduct original and leading technological research to ensure the reliability and safety of the industrial chain and supply chain.
Industrial Positioning: Strategic Emerging Industry of the New Era
In the 14th Five-Year Plan, new energy vehicles have been established as one of the strategic emerging industries. Can this position be continued in the new era’s new journey?
First, we need to look at the changes in the overall economic development situation.
Since the 19th Congress report, the Communist Party of China has judged that the economy has shifted from a period of high-speed growth to a period of high-quality development and put forward the concept of green development.
In the report of the 20th Congress, high-quality development has been clearly defined as the primary task of building a socialist modern country in an all-round way and actively promoting high-quality development. High-quality development includes not only the economy but also politics, society, culture, ecological civilization, and other fields. However, the requirement for high-quality development in the economic aspect still has the priority, which includes: high-end industries; real economy; green and low-carbon; innovation-driven; supply-side shift from quantity to quality and from speed to efficiency; demand-side to meet the people’s aspiration for a better life, etc.The new energy vehicle industry undoubtedly meets the requirements of high-quality development.
In the 20th National Congress report, the strategy for green development was upgraded, and for the first time, it proposed to actively and prudently promote the peak carbon and carbon neutrality targets. The adjustment and optimization of industrial structure, energy structure, and transportation structure required by green development, as well as advanced technology development and promotion of energy-saving and carbon-reducing, and the control of fossil energy consumption and the clean and low-carbon transformation of transportation required by the dual-carbon goal, all need to be achieved by new energy vehicles and related industries.
Therefore, it is observed that in the new era, new energy vehicles, as a strategic emerging industry, will remain in the forefront of the country’s key development industries. At the same time, the new energy vehicle industry will also be an important driving force for achieving green development and the dual-carbon target.
Industrial Strategy: Modernized Industry, a New Growth Engine
China is the largest automobile market, also possessing a huge automobile industry. However, in the new era, the development of the new energy vehicle industry focuses not on the scale but on the quality.
In the high-quality development stage, new energy vehicles, different from the traditional manufacturing industry, must build a modern industrial system, rich in technological content, innovate high-value new products, and occupy a high position in the value chain.
Small and medium-sized enterprises in the new energy vehicle industry are suitable for the development of specialized and innovative industries, while large enterprises should focus on the transformation of manufacturing to enhance the high-end, intelligent, and green development.
In the high-quality development stage, there is a need to change the development momentum. New energy vehicles, as a strategic emerging industry, will play a role as a new growth engine. Therefore, the central and local governments will continue to have policy support.
Strategic emerging industries have the demand for integrated cluster development. New energy vehicles should integrate and develop with new generation information technology, artificial intelligence, new energy, new materials, high-end equipment, green environmental protection, and deep integration with the digital economy.
As the largest consumer product in terms of money, new energy vehicles can become a leading industry for the integration of emerging technologies.
Market Strategy: Focusing on the Domestic Circulation as the Main Body and Seizing the Opportunity of the “Belt and Road”
Regarding the domestic and foreign markets, the description in the 20th National Congress report is very clear: “Accelerate the construction of a new development pattern with domestic circulation as the main body, and domestic and international circulations promoting each other.”
Regarding the domestic markets, the report advocates “combining the implementation of the strategy of expanding domestic demand with deepening the supply-side structural reform, enhancing the endogenous power and reliability of the domestic circulation.”
Regarding the international market, under the proposal of promoting high-level opening-up, it emphasizes promoting the high-quality development of the “Belt and Road” construction.Over the past decade, China’s new energy vehicles have made great advances, mainly relying on the domestic market. Although it has achieved the largest sales globally, there is still a lot of room for the popularization of electrification, especially in undeveloped areas, peri-urban areas, rural markets, and broad demand.
Currently, China’s new energy vehicles are expanding into Europe, becoming a popular market. However, reports indicate that the international situation is “severe and complex”, and “external pressure could escalate at any time.” The risk mainly comes from Western countries. Relatively speaking, the new focus of opening up to the outside world under the “Belt and Road Initiative” should become a new export direction for Chinese automakers.
Note: although the dual circulation is adopted, the domestic circulation is the mainstay.
Research and Supply Chain Strategy: Breaking through bottlenecks and ensuring supply security
The 20th Party Congress report proposed that innovation is of core importance in the overall modernization of China and that innovation-driven development strategies need to be accelerated.
With regard to key technologies, the report proposed “persisting in promoting innovation oriented to world scientific and technological frontiers, economic main battlefields, national major needs, and people’s life and health, to accelerate the realization of high-level scientific and technological self-reliance and self-strengthening.”
Therefore, guided by national strategic needs, we must gather strength to carry out original and leading technological innovation, and firmly win the key core technological breakthrough battle. Accelerate the implementation of a number of strategic, global, forward-looking, and major national science and technology projects to enhance independent innovation capabilities.
New energy vehicles and intelligent connected vehicle technologies are at the forefront of global technological competition, as well as being vital products for the economic core sectors, the country, and the people. We must achieve high-level scientific and technological self-reliance and self-strengthening.
New energy vehicles also have bottlenecks, and their technological innovation capabilities are not yet strong enough. In the industrial development plan, three action plans have been proposed: battery technology breakthroughs, intelligent connected vehicle technology innovation, and new energy vehicle basic technology enhancement.
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The new energy vehicle industry has a large domestic market size but still relies on foreign supply chains. It is necessary to improve the resilience and security level of the industrial and supply chains, as well as the ability to provide strategic resources.
From now until the mid-century of this century, the next 30 years are the period when China is striving towards the second centenary goal, towards building a strong modern socialist country that is prosperous, democratic, culturally advanced, harmonious, and beautiful.
During this period, new energy vehicles and intelligent connected vehicles will surely become the absolute mainstream globally in this industry that focuses on “facing the world’s technological frontier, facing the main battlefield of the economy, facing the major needs of the country, and facing the people’s life and health”. China has gained certain advantages. China has no reason not to seize the opportunity and continue to promote the new energy and intelligent connected vehicle industry as China’s dominant industry, making contributions to the centenary goal.
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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.