Subsidy reduction, joint ventures challenge each other, how will domestic brands impact the new energy vehicle market

In 2016, the sales volume of China's new energy vehicle market exceeded 500,000. It is worth mentioning that the top three sales volume were won by independent brands BYD, BAIC New Energy and Geely Automobile. Among them, BYD's new energy global sales volume exceeded 100,000 units, accounting for 11% of the total global new energy vehicle products, becoming the only company in the world that simultaneously masters the core technologies of new energy vehicle batteries, motors, electronic controls and charging equipment, and vehicle manufacturing.

With the rising market demand and the advancement of subsidy guidance, it is predicted that China's new energy vehicles are expected to exceed 3 million in 2020, and its growth rate will be far ahead of traditional fuel vehicles.

Of course, it cannot be ignored that new energy vehicles are still a long way from becoming a mainstream means of transportation. Current new energy vehicle products still have many shortcomings. For example, how can we break through the many limitations brought by range and temperature? How to find a new driving force for the new energy vehicle market after the policy subsidies are reduced? Under the "attack" of foreign brands such as Tesla and BMW i, as well as joint venture brands such as SAIC-GM, can domestic brands still realize the dream of "overtaking on the curve"?

What opportunities are there for domestic brands to enter the new energy vehicle market?

Subsidies are declining, and new market drivers need to be established

In 2013, after the subsidy standards for new energy vehicles were clarified, the sales growth rates in 2014 and 2015 reached 120% and 340% respectively. In 2016, after the national and local subsidies began to show signs of decline, the growth rate declined to 54%, but still exceeded 500,000 units. Among them, BYD New Energy, a representative of independent brands and the sales champion for two consecutive years, has gradually established its own market influence and pattern through years of product matrix layout.

Compared with the growth rate of traditional fuel vehicles, the new energy vehicle market is on the fast track. It is undeniable that the current purchase subsidies and new energy licenses are still important driving forces for the new energy vehicle market. With the decline in market growth caused by the decline in subsidies, players in the new energy vehicle market need to quickly establish new driving forces.

First, changes in industry standards are bringing new positive signals to new energy vehicle companies. In the process of policy subsidy reduction, the points trading system has begun to be formulated and implemented. Drawing on the ZEV policy of California, the United States, and combining it with China's existing carbon emission rights trading management policy, relevant government departments will manage automobile carbon emissions. The policy will be launched nationwide as early as 2017. Although the implementation details and implementation difficulty still need more specific evaluation, from the perspective of the entire industry chain, this is a healthier and more lasting approach, and at the same time sets a lower limit for the penetration rate and ownership of new energy vehicles.

With the new favorable policies, if domestic brands want to overtake others and take the lead in the new energy vehicle market, we may focus on the following three points:

First of all, we must master the core new energy vehicle technology and achieve leading technology products;

Secondly, we need to have innovative market strategies to proactively guide consumers’ purchasing power in the transition zone between policies and market demand;

Finally, we must actively carry out product layout, extend from a single product line to a product matrix, and lay out products from multiple dimensions of the industrial chain and market to establish the core competitiveness of the enterprise.

The most important thing for product upgrade is to master core technology

For new energy vehicles, mastering core technologies means mastering the "three electric" technologies of automotive batteries, motors, and electronic controls, as well as important technologies such as charging support and vehicle manufacturing.

Batteries are the core components of new energy vehicles, especially electric vehicles, and their cost accounts for 40%-50% of the total vehicle cost. The energy density of batteries and the management capabilities of thermal management systems deeply test the driving range. At present, ternary batteries and iron batteries are the mainstream in the market, and BYD has a deep accumulation of battery technology and always maintains its leading position among domestic brands and even foreign brands. BYD's lithium iron manganese phosphate battery has the advantages of high voltage, high volume density, high cycle life and high safety. It is widely used in BYD's new energy vehicle products, and its driving range is far higher than that of products of the same level, which has rapidly promoted BYD's new energy market share. At present, BYD has established the world's largest iron battery industry base, and its production capacity is expected to reach 26GWh in 2018.

The control of core technologies has opened up BYD's product leadership. When the new energy vehicle market just entered a period of rapid growth in 2013, policy subsidies made people more tolerant of product performance. At that time, most of the products on the market were "1-generation" products, with a range of 100 kilometers, a full charge of almost a day, and even low-end products would not be less than 100,000 yuan. It was not until 2016 that many companies moved from "1" to "2". BYD's Qin EV and other products launched in early 2016 have a range of 300 kilometers and quickly became a popular model on the market. By April 2017, BYD had successively launched new models such as Song EV300, Qin EV300, and e5 300, officially raising the user standard to "3". In the Beijing-Tianjin area alone, 40,000 households have joined the ranks of BYD new energy vehicle owners.

At the same time, the control of core technology has brought cost-effectiveness advantages to BYD. For example, two new heavyweight cars of BYD Song family, Song DM and Song EV300, were launched. The national unified price of Song DM after subsidies is 179,900 yuan to 209,900 yuan, and the national unified price of Song EV300 after subsidies is 199,900 yuan to 209,900 yuan. As a mid-level SUV, it is quite competitive among gasoline cars of the same level. At the same time, BYD also gave the first 10,000 users an additional 10,000 yuan in electricity fees. This 10,000 yuan can charge 6,600 degrees and travel more than 80,000 kilometers, which is equivalent to the mileage of an ordinary new energy vehicle in 5 years. The price drop has a very important appeal to consumers in the new energy vehicle market, and BYD's new pricing model of "considering the cost of buying and using cars for customers" has magnified this advantage.

In addition, BYD New Energy has launched a "10,000 People Test" campaign, calling on the public to test drive BYD new energy vehicles and truly test their performance and range. Before the Song DM and Song EV300 were launched, they had undergone various professional tests with a total mileage of more than 1 million kilometers.

In addition, the plan for 1 million charging piles will be gradually implemented this year, and the promotion of new energy vehicles will have more confidence in the user experience. It is worth mentioning that in terms of charging and discharging technology, BYD Song DM and Song EV300 are also equipped with original mobile power station technology, realizing the function of 220V AC discharge. This function allows users to play electric mahjong, eat hot pot in the suburbs, and even rescue other electric vehicles, bringing a new travel experience.

It can be said that new energy vehicle companies that master core technologies will take the lead in establishing their own market position.

Strategic innovation to create a new energy ecosystem for user travel

Transforming from an automaker to a travel service provider has become a consensus among leading automakers. Mercedes-Benz's establishment of the car rental platform Car2GO, General Motors' investment in the travel service platform Lyft, and BMW's establishment of Charge Now can all be seen as innovative strategic layouts being made by leading global automakers.

For new energy vehicle companies, it is particularly important to grasp the user experience and provide the travel service needs of users. Different from the usage habits of traditional fuel vehicles, new energy vehicle users are in urgent need of a vehicle management platform and travel service platform of their own. On this platform, perhaps I can be the first to buy the car I want to buy, I can understand the vehicle's power management status at any time, I can find an empty charging pile nearby and complete the charging and payment through the mobile terminal smoothly. This requires new energy vehicle companies to think ahead and create ahead in everything.

Take BYD and BAIC New Energy as examples. As early as 2015, they had cooperated with many new energy e-commerce platforms and shopping guide platforms to test the waters of new energy automobile e-commerce. BYD has gone a step further and officially cooperated with many industry associations and top companies such as the China Energy Conservation Association, State Grid, Wanda Plaza, SOHO China, Didi Chuxing, Ping An of China, and Autohome to create a new ecosystem for China's new energy automobile industry. Through plans such as future funds, financial ecology, second-hand car replacement, and VIP customer policies, it brings more convenience and support to car owners.

In simple terms, if local subsidies are not in place, BYD will advance the subsidies to car owners, so that the entire consumption process will not have any concerns due to factors such as subsidies. This innovative market strategy will serve as an important reference for domestic brands to impact the new energy vehicle market.

Multi-dimensional layout and product matrix build brand competitiveness

The century-old automobile technology is facing the comprehensive impact of electrification, intelligence and networking trends. Being at the intersection of these three important trends, new energy vehicles are facing unprecedented market opportunities.

In 2020, in addition to the domestic new energy vehicle market being predicted to reach sales of 3 million vehicles, smart driving and partial unmanned driving may also usher in the first year of application.

From the perspective of product technology, it is particularly important to promote intelligence and networking. BYD, a leading company in the new energy vehicle market, actually has another industry label as an "IT company" and a "black technology company". As early as the gasoline car stage, BYD had night vision and 360-degree panoramic parking functions. Later, plug-in hybrid vehicles and pure electric vehicles such as Song EV300, Qin EV300, e5 300, etc. were successively launched, and they also have many incredible new functions such as remote start, automatic parking, and remote control parking. At the same time, BYD has joined forces with Baidu to further improve the various functions of the Internet of Vehicles. And BAIC New Energy, which ranks second in market sales, is also rumored to be jointly exploring smart driving related strategies with startups.

From the perspective of product matrix, there should be a reasonable layout for each market stage. BYD's plug-in hybrid vehicles and pure electric vehicles have continuously brought BYD's product line to a new height, gradually covering various market segments in the 100,000-300,000 market range, and the "7+4" strategic layout has achieved results. At the same time, in terms of horizontal dimensions, BYD has a product layout in various new energy application markets such as passenger cars, SUVs, commercial vehicles, rail transit, energy storage stations, etc., covering more than 50 countries and more than 240 urban areas around the world, and has 12,000 authorized patents.

This product matrix layout has formed a very solid "vertical and horizontal" product competitiveness, allowing independent brands to continuously move up from the early low-end market and price war situation and accumulate corporate brands. For example, today, it is difficult to say that BYD is a product supplier. With the simultaneous development of solar energy, energy storage power stations, new energy vehicles, and rail transportation, it has gradually become a company that can provide comprehensive solutions in the global new energy industry chain.

Therefore, whoever can quickly and steadily layout the product matrix and enhance the competitiveness of the corporate brand will have the opportunity to become the "new overlord" in the new energy vehicle market and bring important value to the global new energy vehicle industry chain.

Are you looking forward to the “new travel” of new energy vehicles?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.