Hosted by the China EV100, and co-organized by Tsinghua University, China Society of Automotive Engineers, China Association of Automobile Manufacturers, China Automotive Technology and Research Center, and China Automotive Engineering Research Institute, the China EV100 Forum (2023) opened in Beijing.
The forum invited representatives from government-related departments and leading companies in fields such as automotive, energy, transportation, urban, communication, and more. They engaged in in-depth discussions on various topics, including global automotive industry development, high-quality growth paths for new energy vehicles, China’s intelligent connected vehicle development strategy, development trends for core industry and supply chains like power batteries, new trends in automobile consumption transformation, collaborative development strategies for automotive and energy, new transportation energy security systems, commercial vehicle transformation direction, automotive aftermarket innovation paths, and digital and intelligent manufacturing models for automobiles.
At the 2023 China EV100 Forum, Cui Dongshu mentioned the following points in his speech:
- The soaring world oil prices drive the rapid electrification of China’s auto market, but the development is uneven, with significant differences in EV penetration across brands;
- Domestic brands are rising in the new energy vehicle market, especially the A00 and A0 models which have achieved significant growth;
- In China, 88.7% of public charging facilities are constructed by societal investment; in 2022, 1.19 million charging pile installation applications were successfully handled, improving the convenience of charging facilities construction in residential parking spaces;
- New energy vehicles have load-regulating characteristics and dispatchable potential, and through orderly charging methods, the number of accessible charging piles and the average load rate of power distribution can be increased. They can also participate in grid demand response and peak-shaving services to reduce electricity costs;
- China’s non-fossil energy generation capacity has reached 1.27 billion kW, accounting for 49.6%. In 2022, the newly installed non-fossil energy generation capacity reached 160 million kW. It is estimated that by 2023, the national non-fossil energy generation capacity will reach 2.57 billion kW, with a generation share of 52.5%;
- The new energy vehicle stock exceeds 13 million units, accounting for 4.1%. In 2022, sales exceeded 6.8 million units, with a market share of 25.6%. It is predicted that by 2023, the adjustable load potential of new energy vehicles will exceed 100 million kW;
- Promoting the integrated development of green energy and new energy vehicles can increase the absorption capacity of renewable sources such as photovoltaic and wind power, achieve industrial green development, and enhance the international competitiveness of new energy vehicles.Below is the original speech:
Now, I would like to present our assessment of the overall development trend of the new energy vehicle market.
Globally, the new energy vehicle market is experiencing strong growth, whereas the world automotive market has rapidly changed during the pandemic, shrinking from 94 million to 80 million units in three years. This transformation has brought about immense opportunities for China’s new energy vehicles as well as the Chinese automotive market, with significant growth over the three-year period. The core change has been the substantial increase in oil prices, which has stimulated the growth of new energy vehicles. We have always firmly believed that the pure electric development line championed by China is the key direction for growth, especially for the global new energy vehicle market, which now accounts for 15% of the market share, with hybrids amounting to a total of 20%. A 28/72 pattern is well-established, and the development of pure electric vehicles is accelerating.
Under these conditions, China’s new energy vehicles reached 60% of the global share in January and February this year, and as high as 64% in the fourth quarter of last year. This demonstrates the extraordinary development of China’s new energy vehicles. In comparison to other Asian automotive powerhouses like Japan and South Korea, we have gained a dominant market advantage in new energy vehicles. Additionally, China’s new energy automobile industry chain has secured an overwhelmingly large market share, enabling the entire new energy vehicle sector to drive significant breakthroughs in the transformation and upgrading of China’s manufacturing industry. The immense pressure faced by traditional fuel vehicles has resulted in a 15% decline in the market from January to February this year. Despite this situation, our production capacity is exceptionally strong. According to the production statistics from the Association of Automobile Manufacturers, our production has surged from 990,000 units in April last year to 2.11 million units in June last year, though the market performance has been relatively weak, leading to intense pressure. With this pressure, new energy vehicles and traditional fuel vehicles have developed a complementary relationship. New energy vehicles have demonstrated strong growth in the A0 and A00 segments, while the A-class traditional fuel vehicles have maintained a robust expansion. In terms of the overall development trend, electric vehicles have vast potential in China, and with the country’s aging population, China is entering a new stage of comprehensive development featuring vehicles of all sizes, driven by electric cars. The Chinese vehicle market, represented by American A-class and B-class large vehicles, is experiencing a well-rounded and favorable development.Under this development trend, traditional fuel vehicles currently face an extremely severe challenge, mainly due to our income disparity. Our operating income proportion has significantly decreased, while transfer income has increased dramatically, causing a severe decline in the purchasing power of entry-level consumers. At the same time, with heavy debt pressure, we used to consume 72% of our income, but now only 65% of our income is consumed. This continuous tightening has had a serious impact on consumption for ordinary people. Under this influence, new energy vehicles in some markets have absolutely dominated the automotive market; A00 class vehicles, represented by pure electric vehicles, account for 100%. This has further widened the entire passenger car market structure, resulting in a strong growth trend for the automobile market.
Under this growth, we see hidden worries; the decline rate of joint-brand vehicles is far beyond our expectations, whereas the luxury car market overall has a relatively stable performance, particularly the individual luxury car market, which remains in a relatively good state. In this situation, hybrid, plug-in hybrid, and pure electric vehicles are fully developed; plug-in hybrids are quickly advancing towards the 100,000 RMB price range, while regular hybrids are rapidly moving towards the high end, forming a pattern of differentiated competition between high and low-end electrification. From this development, I believe that new energy vehicles, with passenger cars as the core representative, will be a significant trend. New energy-specific vehicles are growing rapidly at present, compulsive sector-wide electrification provides huge opportunities for new energy vehicle development. However, we consistently hold that the most significant challenge facing public sector electrification is the lack of products and effective products. All they have are products from small-scale enterprises, without forming a unified national market. Public domain electrification must be centered around a large national market, simplify products, and promote rapid development of excellent enterprises and products; otherwise, situations like the new energy bus market will face relatively passive outcomes. Rapid growth, followed by severe bottleneck problems, is what new energy dedicated vehicles mainly rely on for road rights. Without road rights, there will be no trend for new energy dedicated vehicles to develop; therefore, passenger vehicle development is healthy development, that is, driving new energy vehicles’ rapid development through market-oriented consumption. Why do China’s new energy vehicles show a super-fast growth trend? In 2020, there were only 1.17 million, reaching 3.3 million in 2021 and 5.5 million in 2022. Thus, our growth increased by 2 million in 2021 and 3.2 million in 2022, forming a robust growth increment and creating a global miracle. The core lies in the rapid emergence of excellent products at high, middle, and low-end levels; high-end Tesla, mid-high-end BYD, and entry-level Wuling, all contribute to this exceptional growth trend.In contrast, the global oil prices have shown an upward trend in recent years, escalating from approximately CNY 6,000 per ton in 2020 to CNY 9,500 per ton in 2022. High oil prices have accelerated the rapid electrification wave in China’s automobile market. In this development, however, we observe an uneven penetration rate: luxury cars account for approximately 22%, joint venture brands for 3.5%, and domestic brands for around 50%. The growth momentum is now exceptionally strong. As Director Xu Changming mentioned earlier, reaching over 50% penetration signifies the dawn of a new era, with China’s domestic automobile brands rising and achieving tremendous growth relying on new energy sources. Both the low and high-end markets have experienced all-around development, especially within the A00 and A0 segments, which have repeatedly accomplished miraculous results. The A00-class Wuling Hongguang demonstrates strong performance, and this month’s GAC Aion Y showcases an extraordinary state. These tiny electric vehicles are experiencing a rapid rise and BYD plug-in hybrids have created a significant market sensation.
In this miracle, we can see several significant growth markets, particularly the A0-class pure electric cars that reached the level of the second half of last year in February, showcasing a robust state. The A-class pure electric vehicle personal market has not effectively started, falling far short of the A0 level. This market consists of 24,000 units, while the other has 60,000 units, forming a huge gap. Current A00-class consumption is not strong, which leads to certain growth pressure. Tesla has encountered a relative growth bottleneck, and it needs new power for future growth. Plug-in hybrids represented by BYD have achieved an ultra-strong growth state, and A, B, and C-class plug-in hybrids all display strong growth characteristics.
Under this growth, the development of new energy is gradually showing a rapid extension from large to small and medium-sized cities, especially under rapidly changing policies. In 2021, the plug-in ratio in Shanghai reached 13%, in 2022 it reached 10%, and in February 2023 it achieved a 3% proportion. As for pure electric vehicles, Shanghai had a 10% share in 2020, 22% in 2021, 29% in 2022, and 41% in 2023, which amounts to nearly 50% when combined. Therefore, the trend toward electrification drives the development of new energy vehicles in small and medium-sized cities, counties, restriction cities, and the overall growth of Beijing and Shanghai. At present, the development momentum of new energy in Beijing and Shanghai is entering a relatively decelerated stage, similar to traditional fuel vehicles. We believe that the widespread development of China’s new energy vehicles will be a new healthy phase for market-oriented development in the future.Under this development, domestic brands are on the rise, making significant breakthroughs in high-end markets, especially represented by NIO in the 400,000 RMB and above market, forming a huge breakthrough. The 200,000, 300,000, and 400,000 RMB markets have all achieved good performance, especially the 300,000 and 400,000 RMB markets, where we believe domestic brands have formed a rapid growth trend along with joint venture brands. NIO’s performance in the 300,000-400,000 RMB segment shows an extremely strong position. Looking forward to 2023, we believe that the entire economic development relies on the automobile market. However, the current development of battery technology is still limited. China’s low-cost battery development is relatively good, while high-end technology development faces some pressure. In the future, the Chinese car market will focus on replacement and upgrades, with high-end development being the core driving force, and private consumption serving as the backbone of development.
Under this scheme, the current private market only accounts for 77% of the total, with room to grow to 90% in the future, indicating that the Chinese automobile market still has considerable growth potential. With this growth, China’s consumption faces pressure from the real estate market. In the future, as the real estate market cools down, China’s automobile consumption will experience a rapid increase, with consumer stimulus being the core trend. Last year, the China Automobile Association predicted the number of new energy vehicles to reach 6.5 million units, which, since August, is relatively in line with expectations. Unfortunately, we didn’t predict the effects of the November and December epidemic, which made our predictions for traditional fuel vehicles somewhat optimistic. We now forecast that new energy vehicles will reach 8.5 million units this year, growing by 30% overall, with a gradual slowdown in growth, and exports exhibiting strong growth momentum. We believe plug-in hybrids and pure electric vehicles have become the backbone of our export growth, especially pure
electric passenger vehicles that have performed well in the global market, particularly in Europe and Southeast Asia, with SAIC representing a strong growth trend in Chinese exports.
In the domestic market, the issue we currently face is the high popularization rate in Beijing, while smaller cities and emerging markets have lower rates. In China, wealth leads to popularization, whereas in the rest of the world, demand leads to popularization. As a result, China’s consumption capacity and demand do not effectively match. Comparing Beijing’s high popularization rate with cities like New York, which has the worst rate in the US, highlights the gap between the two countries in terms of leveraging consumption as an engine for economic growth and development. Additionally, there is still potential for the release of driver dividends. We believe that there is still room to grow for over 600 million drivers in the future, especially for drivers aged 60 and above, as their numbers are currently relatively low. As drivers gradually age, this demographic change presents an excellent opportunity for the comprehensive development of the automobile market. Consequently, automobile consumption will also spread widely. In the future, with the trend of electrification, the replacement cycle for traditional fuel vehicles (e.g., 15 years and above) will shorten to 10 years or less, leading to significant growth in new car sales, coupled with export growth. Overall, we believe that China’s vehicle production and sales will inevitably break through 40 million units, with an extremely promising future scale.Thank you all, thank you!
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.