Great Masters' Discussion | Shen Chengpeng: How Tall Could the "Stature" of New Energy Vehicles be in 2023?

作者 |沈承鹏

Miao Wei, Vice Chairman of the 13th National Committee of the Chinese People’s Political Consultative Conference Economic Committee and former Minister of Industry and Information Technology, made a prediction at the China Electric Vehicle 100 People’s Conference Expert Media Exchange on February 17th that by 2023, the output of new energy vehicles may exceed 30%, reaching 9 million, or even 10 million vehicles.

Miao Wei predicted output, and there are predictions for sales. The China Association of Automobile Manufacturers predicts that new energy vehicle sales will exceed 9 million in 2023; the China Passenger Car Association predicts that sales of new energy passenger cars will reach 8.5 million; the China Electric Vehicle 100 People’s Conference predicts that new energy vehicle sales will reach 10 million.

The Chinese Electronic Commerce Association Intelligent Electric Vehicle Professional Committee predicts a lower figure, predicting that the number of licensed new energy vehicles will be 6.3 million.

The automakers’ predictions are also optimistic. FAW Group’s target is 384,000 vehicles, a year-on-year increase of 113.3%; SAIC Group’s target is 1.5 million vehicles, with sales of 1.073 million vehicles in 2022; GAC Aion’s target is to secure 500,000 to 600,000 vehicles, with sales of 271,000 vehicles in 2022; BYD’s target is 4 million vehicles, and it sold 1.8685 million vehicles in 2022; Geely’s target is to double sales and surpass 600,000 vehicles.

New forces are also not weak. NIO and XPeng’s target sales growth rate is more than 60%, Ideal’s is more than 80%, and NETA’s is to double.

The reasons why industry organizations and companies are bullish on new energy vehicles are that in 2022, new energy vehicles have continued to grow explosively, and there are even more bullish factors in 2023.

Although the industry generally sees it optimistically, the newly released data is disappointing. According to statistics from the China Association of Automobile Manufacturers, in January 2023, national auto sales were 1.649 million, a month-on-month decrease of 35.5% and a year-on-year decrease of 35.0%. Sales of new energy vehicles were 408,000, a month-on-month decrease of 49.9% and a year-on-year decrease of 6.3%.

At the same time, data from the China Passenger Car Association showed that in January, national retail sales of passenger cars were 1.293 million, a month-on-month decrease of 40.0% and a year-on-year decrease of 37.9%. Retail sales of new energy passenger cars were 332,000, a month-on-month decrease of 48.3% and a year-on-year decrease of 6.3%. According to statistics from China Automobile Dealers Association, the overall inventory of passenger cars held by car dealers at the end of January was approximately 2.3 million, with a stock turnover rate of 1.80, a month-on-month increase of 68.2%, a year-on-year increase of 23.3%, and inventory levels were above the warning line.Although there are two major holidays, New Year’s Day and the Spring Festival, as well as the option to freely return home for the first time in three years and go on overseas trips to alleviate the pressure, the recent slump, especially the sharp drop of new energy vehicles that have been performing strongly, still came unexpectedly. Cui Dongshu, secretary-general of the China Passenger Car Association, called it “the lowest January data since this century.”

Moreover, there seems to be another unexpected issue that has been overlooked—whether the data on the growth of new energy vehicle sales in 2022 is accurate.

Did our country really sell so many cars last year?

In fact, signs of the January slump in 2022 had already been revealed.

In November 2022, both the China Association of Automobile Manufacturers (CAAM) and China Passenger Car Association (CPCA) released automobile production and sales data for the month that showed a month-on-month and year-on-year decline, and the phenomenon of year-end automobile sales spikes that had occurred in previous years did not happen.

In terms of larger-scale data, CAAM announced that the national automobile sales volume in 2022 was 26.864 million, achieving a slight increase. However, the number of new car registrations issued by the Ministry of Public Security was 23.23 million, a significant decrease from the previous year. The gap between the two was 3.634 million.

According to CAAM’s data, the sales volume of new energy vehicles in 2022 was 6.887 million, while the number of new registrations for new energy vehicles issued by the Ministry of Public Security was 5.35 million, a difference of 1.537 million.

Why is the difference so large? Some industry insiders have analyzed that the data provided by CAAM records the number of cars that automobile manufacturers have wholesaled to dealers (including exported cars), some of which were not sold to end consumers. The data provided by the Ministry of Public Security records the number of cars that have been licensed, but it does not include imported cars or exported cars. According to the General Administration of Customs, there were 878,000 imported cars and CAAM exported 3.111 million cars in 2022, reducing the gap between the two to 2.233 million cars.

Because not all exported or imported cars necessarily reach consumers, it is difficult to determine the accurate number, but the fact that there is a difference of more than 3 million cars between these two authoritative institutions “is a phenomenon that has not been seen for many years.” In other words, “the actual terminal sales volume of domestic automobiles in 2022 was negative growth.”

If this judgment is true, then the large drop in the automobile market in January of this year is not a coincidence. At the same time, it will be even more difficult to achieve the sales data predicted by the industry and companies.

A prerequisite for high growthIn the past few years, China’s new energy vehicles have achieved a explosive growth, and have remained the world’s first for eight consecutive years.

It can be inferred that it is still possible for new energy vehicles to achieve growth, but the difficulty of achieving high growth is so great that it cannot be achieved only by the efforts of the automotive industry itself.

To achieve this goal, at least one necessary condition is needed, which is effective control of the epidemic.

The three-year epidemic has caused a heavy blow to the world economy, and China has not been spared. According to data from the National Bureau of Statistics, the country’s gross domestic product (GDP) was 101.3567 trillion yuan in 2020, breaking the trillion mark and increasing by 2.2% from 2019; in 2021 it was 114.9237 trillion yuan, increasing by 8.4% from 2020; in 2022 it was 121.0207 trillion yuan, increasing by 3% from 2021.

According to data from the Ministry of Public Security, in 2020, 24.24 million new registered vehicles were registered nationwide, a decrease of 1.53 million from 2019; in 2021, there were 26.22 million new registered vehicles, an increase of 1.98 million from 2020; in 2022, there were 23.23 million new registered vehicles, a decrease of 2.99 million from 2021.

The trend of the GDP and new vehicle registrations in the past three years is similar to the trend of the severity of the COVID-19 pandemic, which also reflects that the impact of the broader environment on the national economy and the automotive market is significant, and shows the fatigue of the economy and the automotive market after the three-year war against the epidemic.

After epidemic control measures were downgraded to class B, the large number of people traveling during the New Year and Spring Festival holidays for shopping, dining, entertainment, and tourism may be the dawn of economic recovery or a flash in the pan. However, it highlights the danger of a concentrated outbreak of the epidemic. It is both fortunate and uneasy that the epidemic suddenly disappeared.

One “scientific hypothesis” suggested that on January 6th and 10th, the Sun experienced two strong magnetic storms which ejected a large number of particles that combined with the earth’s air to form a disinfectant that disinfected the earth repeatedly, killing all the viruses.

The “scientific consensus” of medical experts is that because over 80% of Chinese citizens have developed herd immunity, “the five diseases do not invade.”

Whether it is the “scientific hypothesis” or the “expert truth,” if the epidemic no longer disturbs us, it will be a great fortune for China, the people, and the auto industry.

Two supports are needed for high growth

One support is that the auto industry has the necessary production capacity for high growth. This point has long been achieved by the auto industry, and it has also done a lot of work to limit production capacity.

In 2016, the State Council’s “Catalogue of Investment Projects Subject to Government Examination and Approval (2016 Edition)” proposed the principle of “no longer approving the establishment of traditional fuel vehicle production companies and actively guiding the healthy and orderly development of new energy vehicles.” In 2021, China’s production of new energy vehicles reached 3.545 million units. Media warned that new energy vehicle production capacity has reached 10 million units and is in oversupply.

Regarding this, Miao Wei has different opinions based on the best utilization rate of 80% of production capacity. He said, “If there is no reserve capacity of 10 million units in 2021, there will be no new energy vehicle production of 7.058 million units in 2022. New energy vehicles are mutually exclusive with fuel vehicles, and what really needs to be controlled is the oversupply of fuel vehicles. Fuel vehicle production capacity should be transformed into new energy vehicle production capacity. If the production of new energy vehicles reaches 9 million units or even 10 million units in 2023, the existing capacity of 10 million units is still not enough, and at least 11.2 million units of capacity are required.”

Another support is that “if you want consumer spending to recover, you must first make consumers’ wallets bulge.” This is said by Li Daokui, a famous economist and dean of the Institute of China Economic Thought and Practice of Tsinghua University.

The high unemployment and low income of ordinary workers, especially young people, caused by the three-year epidemic have affected the demand for “livelihood-oriented models” mentioned in my previous article “What kind of encouragement does China’s auto industry need,” and several sets of data recently released by relevant departments have added new evidence.

Among them, data from the National Bureau of Statistics shows that the number of births in 2022 was 9.56 million, a decrease of 850,000 from the end of the previous year, marking the first negative growth in nearly 61 years. It was 1961 when China had just experienced the severe blow of three years of natural disasters.According to data from the Ministry of Civil Affairs, the number of marriages in China in 2022 was below 8 million for the first time, the lowest in 36 years. The last time that happened was in 1986, which was the fourth year of the implementation of the strict one-child policy. Data from the People’s Bank of China shows that household deposits increased by 17.84 trillion yuan in 2022, much higher than the 9.9 trillion yuan in 2021. In January of this year, household deposits increased by another 6.2 trillion yuan, setting a new monthly record. This phenomenon has been interpreted as a decrease in residents’ risk appetite, uncertainty about the future, a decline in consumption expenditures, and an increase in precautionary savings. In other words, the money in residents’ wallets is not more, but they are too afraid to spend it.

All of the above data indicate that the damage to China’s economy and people’s livelihoods caused by the three-year pandemic is much greater than people realize. The time needed for the economy and people’s livelihoods to recover may also be much longer than the generally expected 3-6 months.

Can optimistic predictions for 2023 be realized?

To begin with, the high probability conclusion: under the circumstance of “actual negative growth in domestic terminal sales of automobiles in 2022 in China,” the increase of new energy vehicles will squeeze the market share of traditional fuel vehicles. The higher the growth rate of new energy vehicles, the lower the shrinkage of fuel vehicles.

If this feature continues into 2023, the possibility of fuel vehicles achieving even modest growth is extremely low.

Now let’s talk about new energy vehicles. The author provides two conditions, which should be the minimum standards for achieving high growth. At present, the probability of one condition being met is increasing. Even if “scientific hypotheses” or “expert predictions” have not been met, based on the experiences of other countries, the effects of the pandemic and new variants on people’s livelihoods and the economy will be much smaller.

The other two conditions are hard and soft. The hard condition is production capacity. China’s automobile industry has strong resilience, with obvious advantages on the production side: complete manufacturing facilities, a complete supply chain, a downward trend in upstream raw material battery prices, major breakthroughs in technology, exports, and autonomous brands. As long as we are no longer forced to close cities, factories, and restrict mobility on a large scale, improving production capacity and output is not difficult.

The soft condition is consumption. Nowadays, cars have become mass luxury goods, with a rapid increase in popularity among the general public. However, they are not necessities of life that everyone has to buy, and an increase in sales depends more on the thickness of ordinary consumers’ wallets.”Let the consumer’s wallet bulge” should include two meanings: one is how much money is in the consumer’s wallet, and the other is whether or not they dare to spend the money in their wallet. According to the customer data of CMB private bank JinKuiHua, the deposit of its top customers increased by 30% in 2022, and the top 2% of customers’ deposit accounted for 82% of the total deposit. This proportion reflects the embarrassment of ordinary consumers. This group was most affected by the epidemic in the past three years.

The phenomenon of not daring to spend the limited amount of money is even more serious. The phenomenon that household deposits reached a new high in a single month in January of this year, while there was also a boom in visiting relatives, traveling, entertainment, dining, and shopping, reflects consumers’ strong doubts about the future.

The height that new energy vehicles can achieve depends on various factors such as epidemic control, economic recovery, enterprise resumption of work and production, increase in employment rate, and increase in income. Zhang Yongwei, the secretary-general of China Electric Vehicle Hundred People’s Association, believes that if these favorable factors can be fully utilized and unfavorable factors can be effectively resolved, China’s sales of new energy vehicles are expected to become the first country to cross the ten million vehicles annual sales of new energy vehicles in 2023.

Can data be more accurate?

Finally, I have to talk about the issue of data. Having been in the auto industry for many years, I am often troubled, confused and misled by the overwhelming and chaotic data. Our data comes from different systems: those who produce cars, sell cars, use cars, manage cars, and manage imports and exports.

The functions of the systems have changed significantly over the past few decades, but the habits of exaggerating and singing their own tunes have not changed. For example, simple sales figures for cars can be seen in four or five different types every month and year, but they are all different. Not to mention that even industry insiders often cannot distinguish between different types.

For example, the sales volume of cars in 2022, the number of cars sold to consumers should match the number of cars registered, at least it should not be millions of cars difference, and the data released by one system proves that the sales volume of cars is positive growth, and another system proves that the sales volume of cars is negative growth. Confusing consumers is a small matter, but letting companies make wrong judgments and causing policy mistakes due to misjudging is a big issue.The society has progressed to the era of big data, intelligence and interconnectivity. It’s time for departments to put data coordination, improvement and integration on their agenda, as data authenticity is not a trivial matter.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email