Shulou(Shulou.com)12/24 Report--

2023 is about to pass, looking back on this year's new energy vehicle market, price war is an unavoidable topic.

In January, Tesla took the lead in cutting prices in China to boost orders. In the following months, a large number of new energy vehicle enterprises and fuel vehicle enterprises followed suit, and the price war started in the whole industry.

Since then, the new energy vehicle market, price war one after another, there is no sign of a complete stop.

In December, the price war reignited. According to incomplete statistics, nearly 20 automobile enterprises have started price reduction promotion activities successively. Not only new forces car enterprises to cut prices, joint venture brands, state-owned car enterprises also joined the price war war. There is no doubt that this price war is the last wave of impulse operation at the end of the year.

In fact, at present, most new energy automobile enterprises have not yet moved towards profitability, and do not want to be threatened by price war. For this reason, the personage inside course of study puts forward, instead of fighting price war, it is better to fight value war, automobile enterprise should focus more on open source, improve product competitiveness by focusing on consumer demand.

So, how exactly do you roll up the "value war"?

Zhang Yongwei, vice president and secretary general of China Electric Vehicle 100 People's Committee, said that the focus of automobile products and enterprise competition depends more on the second half of the automobile industry at present, that is, the intellectualization above electrification is the core of future competition.

At present, the sales of the new M7 are hot, which has pointed out an important path for automobile enterprises to compete in the intelligent second half, that is, to pursue the ultimate intelligent price ratio. In addition, the majority of automobile enterprises can also reduce costs through rapid iteration to defeat competitors "fast."

This article focuses on the price war of new energy vehicle enterprises and tries to answer the following questions:

1. Why do new energy car companies have to fight price wars?

2. How should the value war be fought?

3. How to shape the ultimate intelligence-price ratio?

4. How to quickly iterate new energy automobile products?

1. Why fight price war? Over the past year, the price war in the new energy vehicle market has been one after another and continuous. One of the direct reasons is that the competition of new energy vehicles is very fierce and "the internal volume is serious." Shi Jianhua, deputy secretary-general of the China Electric Vehicle 100 Committee, said: "The subsidies for new energy vehicles have declined in an all-round way. With the new forces of vehicle building, cross-border forces, foreign investment and joint venture vehicle enterprises, China's new energy vehicle market has entered a cruel stage of big waves. "

For example, in the final knockout round of the domestic mobile phone market around 2017, a large number of mobile phone brands either actively or passively withdraw from the market, leaving only 3-4 main players in the end. Many insiders believe that similar final knockout rounds will also appear in the new energy vehicle market in these two or three years. In this regard, Lei Jun predicted that there will be only 5 automobile enterprises left in the future automobile market, accounting for 80% of the market share.

For this reason, the majority of new energy automobile enterprises hope to attract consumers through price reduction and compete for market share. However, at present, most new energy automobile enterprises have not yet made profits. In the price war of nearly one year, many new energy automobile enterprises choose to exchange price for quantity, but because the price reduction is much higher than the cost reduction, they have to sell cars with negative gross profit.

The reason why these car enterprises are willing to sell cars at a loss is that most believe that scale is the key to making money for car enterprises. During the 2023 Hundred People Forum, Zhu Jiangming, founder of Zero Run Auto, said,"We regard sales scale as more important than gross profit, mainly because we hope to reduce overall costs through scale advantages. "

At the performance communication meeting in the first quarter of 2023, He Xiaopeng, chairman of Xiaopeng Automobile, also said that under such fierce competition, Xiaopeng should adopt the balanced pricing method of scale priority, thus laying the groundwork for the low-price listing of Xiaopeng G6 and 2024 Xiaopeng G9.

In fact, BYD's financial data performance, has verified Zhu Jiangming, He Xiaopeng's words.

BYD's bike price fell to 157,000 yuan in the second quarter of 2023 from 170,000 yuan in the first quarter, but BYD's gross profit margin for its auto business in the second quarter was 21.6%, up from 20.7% in the first quarter. Behind the increase in gross profit is a significant increase in sales, that is, the cost reduction caused by scale. Specifically, BYD sold more than 552,000 vehicles in the first quarter and more than 700,000 vehicles in the second quarter, higher than in the first quarter.

How big is it to be profitable? Zhu Jiangming believes that annual sales of 500,000 vehicles is a threshold for car enterprises to survive. However, industry insiders believe that if you want to live well, annual sales must exceed 2 million vehicles. Lei Jun believes that millet cars to survive, the goal is to sell 10 million vehicles a year.

It has to be said that a year of price war has really expanded the sales scale of automobile enterprises. According to the sales data released by each automobile enterprise, the sales volume of ideal, Weilai, Xiaopeng, Zero Run, Nezha, Extreme Krypton and other new forces automobile enterprises in November increased significantly compared with January. Among them, zero-run sales growth in the same period is more than 1500%, November sales reached 18,500 vehicles.

2. The value war is worth fighting. Price reduction and price war require "capital".

At present, domestic new energy automobile enterprises, in addition to BYD to achieve full profits, but also ideal to achieve quarterly profits, other automobile enterprises have not yet made profits. At this time, car enterprises participate in the price war,"capital" is mostly not enough. After all, in the financing has entered winter now, only rely on their own capital, constantly expand the scale of sales, but not profitable, how long can support, is a big problem.

It can be expected that at present, many new energy automobile enterprises participate in the price war,"price for quantity," when the annual sales volume has not reached 500,000 profit lines, they will be overwhelmed by huge losses.

For example, Wei Lai, one of the new forces, delivered 142,000 new cars in the first 11 months of this year, a long way from the 500,000 mark. However, in the first three quarters of this year, Weilai has accumulated operating losses of 16 billion yuan, exceeding the level of 2022. Wei comes from the accumulated operating losses since 2016, which is close to 69 billion yuan.

If Weilai continues to sell at a loss like other automobile enterprises, the impact on scale will be even greater in the future. For this reason, Li Bin said at the earnings call on December 5:"We will not use price reduction in exchange for sales."

It is not just Li Bin who sees the huge damage of price wars. Deng Chenghao, CEO of Deep Blue Automobile, an electric vehicle brand owned by Chang 'an Group, believes that "the price war has been fought one after another, and the prices of many products are far from the value. In fact, this is not conducive to the real high-quality development of the new energy automobile industry. "Geely Automobile said that it should fight value wars, not price wars, focus on technical wars, service wars, moral wars, etc. to create a higher brand image and create value for users.

How to fight value war? For many cars, it is a test.

According to the analysis of brocade research institute, the main reason for new energy automobile enterprises to be involved in price war is the stagnation of innovation. On this basis, the new energy industry returns to the essence of manufacturing industry from scientific and technological attributes. Therefore, new energy enterprises out of the price war quagmire, large probability also rely on technology and resources have advantages of the leading traction to achieve a new round of industrial upgrading.

The so-called industrial upgrading, for today's new energy vehicle enterprises, is intelligent. Now, it has entered the second half of intelligence. As Zhang Yongwei, vice president and secretary general of China Electric Vehicle 100 People's Committee, said, intelligence determines the victory or defeat of the competition in the second half of the automobile revolution. The focus of future competition depends more on the intelligent development stage above electrification.

"Which technical route is deeply combined with intelligence, widely combined and integrated early, which technical route will be better involved in intelligence, so the intelligent future will become a core that determines the future competition of the industry and will also determine the future fate of different technical routes. "

Therefore, the value war of new energy vehicle enterprises, to some extent, is an intelligent war.

3. To create an intelligent war with extreme intelligence and price ratio, can there be cases of leading enterprises for reference?

The answer is yes, that is Huawei's Q & A series sales hot case. Since its listing on September 12, the first month of the new M7 has accumulated more than 60,000 vehicles. In contrast, sales of the M7 series last year were only 75,000.

Wenjie new M7 suddenly came back to life because of the extreme cost performance in terms of intelligence. The person in charge of Selis has said that the new M7 is a smarter experience and a more sincere price to create the ultimate price ratio of 250,000 yuan.

This points out an important path for intelligent competition in the second half_pursuing the ultimate intelligence-price ratio.

Specifically, after years of market education, Chinese consumers 'acceptance of intelligent cars has risen sharply. According to the investigation report of Southern Metropolis Daily in August 2023,"low travel cost,""low driving noise, good driving feeling" and "high intelligent degree" are the main factors attracting respondents to buy new energy vehicles, with the proportions of 64.79%, 61.97% and 54.93% respectively. The degree of intelligence has become the focus of consumers 'attention.

J.D. Power's latest research this year shows that the weight of smart experiences on consumer purchases has increased from 12% last year to 14%. And, as J.D. Power is an important product industry benchmark. In 2023, the innovation index of automobile intelligent experience research (TXI) in China's automobile industry reached 528 points, breaking through an all-time high.

Extreme Yue CEO Xia Yiping even shouted: "The cost performance has become the past tense, and the smart price ratio is the time to proceed. "

How to create the ultimate price ratio? It can be seen from the upgrade of the new M7.

The first step in upgrading M7 is to learn to use Internet thinking to collect opinions from multiple parties, including consumers. In order to ensure that the opinions can be implemented in the optimization of M7, Huawei has made great efforts. According to an interview with Huawei personnel by 36 krypton, Yu Chengdong once said: "Where it doesn't work, improve it immediately, and kill whoever fails to implement it. "The replacement of the product director of the M7 model, or related thereto.

The upgraded new M7 is more in line with consumers 'needs, especially the greatly improved driving experience, which is favored by consumers. According to 36 Krypton's survey of multiple owners, compared with other models, the new M7 has a stronger intelligent experience in terms of intelligent driving, smart cockpit, battery safety, body structure, etc.

For example, the new M7 is equipped with the latest Huawei intelligent driving system ADS 2.0. The NCA Urban area intelligent driving function in this system alone is different from the NOA route promoted by several cities and dozens of cities of many automobile enterprises, and finally reaches the scale of 100 cities. The new M7 is "open all over the country" at once.

From the "price" aspect, the optimization and improvement of the new M7 is not the popular stacking practice of previous automobile enterprises, but constantly improves the intelligent experience and optimizes the cost, thus reducing the price of the new M7. Compared with the starting price of the old M7 as high as 319,800 yuan, the new M7 directly reduces the price by 70,000 yuan, starting price to 24.98 yuan, and also provides an additional 30,000 yuan rights gift package.

4. In addition to the cases of Huawei's question-and-answer series, the zero-run cases are also enough to learn.

In this year's price war, Zero Run is a prominent car company. In January of this year, the sales volume of Zero Run was only 1139, and after a year of price war baptism, its sales volume in November reached 18,500 vehicles, an increase of about 17 times. By contrast, the ratio of sales in November to January is less than 2:1.

Why can Zero Run get such high sales volume in the fierce competition of price war?

At the 2023 Hundred People Forum, Zhu Jiangming, founder of Zero Run, expressed the importance of rapid iteration of smart electric vehicles. He said: "In the past, domestic automobile enterprises generally updated their products in four years, while it might take six years abroad. Smart electric cars, I think, should be two years old. "

"Today's smart electric vehicles are 60%-70% electronic components, including batteries, electric drives, electronic controls and smart cockpits, which add up to 60%-70% of the total cost of the vehicle. Because they all have electronic components, they all obey Moore's law." Therefore, after rapid iteration, cost reduction can be realized, and then price can be rapidly reduced in price war. Zhu Jiangming predicts that in ten years, 50,000 yuan will buy smart electric cars.

The sales of zero-run cars can grow on such a large scale, and Zhu Jiangming's rapid iteration, cost-reduction practices, it is hard to say that there is no relationship.

In fact, the success of many industries in China is based on "fast". Zhang Ying, founding managing partner of Jingwei China, said that in the mobile Internet era, whoever could iterate at the fastest speed and seize the network effect of the Internet often achieved the fastest growth.

Now in the age of intelligent manufacturing,"fast" is the same thing that hasn't changed. China's intelligent electric vehicle enterprises, to achieve two years on the iteration of a platform, has become the embodiment of core competitiveness. If you can't iterate a platform within two years, the model won't keep up with both intelligence and range.

"Because speed reflects strategic trade-offs, it means that you can predict, predict and win more than your competitors; at the same time, you have better team configuration, flexible combat units and non-lengthy decision-making processes. "

Therefore,"fast" is the only way to get ahead.

Not only Zhu Jiangming, Zhang Ying praised "fast," in BYD 2023 semi-annual report performance meeting, When talking about the future market pattern, BYD chairman Wang Chuanfu also said, The present is fast fish eat slow fish era, Not big fish eat small fish era. However, Li thought that at the ideal strategy meeting in October, he would reflect on the ideal intelligent investment only "half a year late" and decided to increase the investment to catch up.

5. Conclusion In 2024, the competition of new energy automobile enterprises will be more intense.

Liu Jie, vice president of Ideal Automobile, once said at Guangzhou Auto Show that the three years from 2023 to 2025 are the most critical knockout matches in the whole industry, and even the knockout matches continue to advance. Lei Jun predicts that there will be only five car companies left in the future auto market, accounting for 80% of the market share. Wang Chuanfu also bluntly said that if the car enterprises do not rush up in the next 3~5 years, there will be no chance.

The price war in the new energy vehicle market has been fought from the beginning of 2023 to the end of the year. According to the survey of Tencent Technology, the price war at the end of the year is more intense and fierce than that in the first half of the year. Predictably, in the more intense internal volume in 2024, price war, a customary means of competition, is difficult to eliminate. In this regard, Wang Chuanfu believes that the price war will last for three to five years.

However, in the future price war, some automobile enterprises have gained cost advantage through rapid iteration, and then obtained higher sales volume without excessively expanding losses, thus it is expected to enter the profit and death line of 500,000 vehicles; some automobile enterprises, through the ultimate intelligent price ratio, create a higher intelligent experience, obtain the pursuit of consumers, and are also expected to realize profits; However, some automobile enterprises can only rely on the practice of "selling one car and losing one car," and "participate in the war" by constantly expanding the scale of losses, which may be difficult for them to survive until the day of profit.

Liu Jie has predicted that by the end of 2024, which companies will eventually stay at the card table will be known.

[Full text reference]

[1]Jing Wei Zhang Ying's Internal Speech: 2024, Four Key Decisions, Zhenghe Island

[2]"The Truth about the Price War of New Energy Vehicles", Brocade Research Institute

[3]Auto Price War Continues for a Year, No Winners, Late Auto

[4]"The strongest wave of car price cuts has begun: more ferocious, but more silent," Tencent Technology

[5]"BYD Wang Chuanfu: The price war will continue for three or five years. The present is the" fast fish eat slow fish era,"the first finance and economics

[6]"Automobile" Price War "Is Inevitable" Value War "Is Necessary," Daily Economic News

This article comes from Weixin Official Accounts: Chebai Think Tank (ID: EV100_Plus), Author: Chen Zhongshan

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