200,000: The shock China's new energy vehicles give to the world

This year, the explosive popularity of the Beijing Auto Show has continued to the Chongqing Auto Show. At the bustling auto show venue, stands of BYD, NIO, Avita, and Wenjie are packed with people. It is reported that by 2024, the penetration rate of new energy vehicles in China (including passenger and commercial vehicles) is expected to approach 40%, and the number of potential buyers for new energy vehicles has become comparable to that of fuel vehicles, with plug-in hybrid and models priced between 100,000 and 200,000 yuan being the most popular.

01

Chinese New Energy Vehicles, A Bit of Shock to the World

On the first floor of the APM shopping mall in Wangfujing, there is a beautiful store of Zhiji, which displays the latest L6 and L6S models. As one of the most prosperous centers in Beijing, the appearance of foreign friends is also very frequent. A tourist from the Middle East, when inquiring about the price of Zhiji vehicles, was surprised to find that a new energy vehicle like this can be bought in China for only 200,000 yuan, which is a bit shocking to the world.

Advertisement

Data shows that from January to April, the global market share of Chinese new energy vehicles has been stable at 64%. In 2023, Chinese brand passenger cars sold a total of 14.596 million vehicles, a year-on-year increase of 24.1%, with a market share of 56%, an increase of 6.1 percentage points compared to the previous year; in December, sales reached 1.619 million vehicles, a year-on-year increase of 25.9%, and the market share reached 58%.

In the past two years, the market share of Chinese brand passenger cars has been continuously increasing. On the one hand, our mainstream car companies have been faster than joint venture brands in the transformation of electrification; on the other hand, the export market, which has performed well, is mainly Chinese brands. In addition, during the process of exploring experience, Chinese brands have established a complete and controllable industrial chain.

On June 11, the Passenger Car Association released data showing that in May 2024, the retail volume of China's new energy vehicle market was 804,000 vehicles, a year-on-year increase of 38.5%, and a month-on-month increase of 18.7%; the export volume of new energy vehicles was 94,000 vehicles, a year-on-year decrease of 4.0%, and a month-on-month decrease of 18.8%; the wholesale penetration rate of new energy vehicle manufacturers was 44.2%, an increase of 10.2 percentage points compared to 34.0% in May 2023.

Data from the Passenger Car Association shows that in May, the domestic retail penetration rate of new energy vehicles in China was 47.0%, an increase of 14 percentage points compared to 33% in the same period last year. Among them, the penetration rate of new energy vehicles in domestic retail of independent brands was 71.2%; the penetration rate of new energy vehicles in luxury cars was 28.4%; while the penetration rate of new energy vehicles in mainstream joint venture brands was only 7.5%. Looking at the monthly domestic retail share, in May, the retail share of new energy vehicles from mainstream independent brands was 71%, a year-on-year decrease of 2.1 percentage points; the share of new energy vehicles from joint venture brands was 4.5%, a year-on-year decrease of 0.1 percentage point; the share of new forces was 16.3%, with brands such as Xiaomi Automobile driving the year-on-year increase of the new force share by 3.5 percentage points; Tesla's share was 6.4%, a year-on-year decrease of 0.5 percentage points.Some industry insiders believe that the new energy vehicle (NEV) industry is accelerating its overseas expansion, but the barriers are also thickening. On one hand, China's automobile market has maintained rapid growth over the past decade, and NEV technologies are advancing on multiple fronts with a variety of fast charging, battery swapping, and energy replenishment methods. On the other hand, barriers to NEVs are strengthening. Internationally, the U.S. imposing tariffs and Europe's carbon footprint requirements are increasing barriers; technically, the industry will face barriers in electrification and Intelligent Connected Vehicles (ICVs) in the future.

How New Energy Vehicles Entered the Major Market

At the beginning of 2024, Tesla took the lead in slashing prices, followed by Li Auto and NIO in lowering their prices. Although both are price reductions, the purposes are different. Tesla's price reduction aims to further capture market share, while Li Auto and NIO's price cuts are directly due to the need for a smoother transition to product updates.

"Li Auto's price reduction is due to product iteration. The Li L series products are about to be updated and replaced, with plans to be released and delivered in March. This is the same pace as the withdrawal of Li ONE before," said a car dealer in Shandong. The new round of price cuts at the beginning of 2024 is behind the car companies' competition for market demand before the Spring Festival, and also the leading companies in the segmented market's behavior of giving concessions to consumers under the trend of declining upstream parts costs.

The "price war" in 2023 has left many car companies "still in shock." Such a war is not only within the scope of new energy vehicles, but the continuous price reductions of new energy vehicles have also impacted the big-name oil cars.

According to statistics, the scale of car market price reductions in May this year has already exceeded 90% of last year's total, and has surpassed the total scale of price reductions in 2022. Among them, the terminal prices of joint venture brand fuel vehicles have basically hit the bottom, and at the same time, the diversion effect of new energy vehicles has caused luxury car prices to fall. Currently, the selling price of luxury brand models in the first and second tiers has become normal, with dealers selling cars at zero profit or even at a loss. Relevant data shows that the promotional strength of luxury cars in May this year has reached a peak of 21.7%.

Affected by changes in the automobile market price system and the impact of Chinese electric car brands on the luxury car market, the market share of luxury car brands continues to shrink. Data from the Passenger Car Market Information Joint Conference of the China Automobile Circulation Association shows that in April this year, the retail sales of luxury cars were 200,000 units, a year-on-year decrease of 12%, and a month-on-month decrease of 24%. At the same time, the retail share of luxury brands is 13.2%, a year-on-year decrease of 0.9 percentage points.

Car companies that mainly sell traditional fuel vehicles cannot withstand the "full firepower" of new energy vehicles. Taking GAC Group as an example, its sales volume in May was 156,000 units, a year-on-year decrease of 25.33%; in the first five months of this year, its cumulative sales volume was 700,000 units, a year-on-year decrease of 24.51%. Among them, the sales volume of GAC Honda and GAC Toyota both showed double-digit declines, with a decrease of 24.3% and 27.26% respectively.

In addition, SAIC Volkswagen's sales volume in May was 90,000 units, a year-on-year decrease of 3.01%; SAIC General Motors' sales volume in May fell by 58.27% year-on-year, with sales directly "halved." In the first five months of this year, SAIC General Motors' cumulative sales volume has decreased by 44.25% year-on-year.The most direct comparison is the launch of the AITO M9, which has directly impacted the price and market of the BMW X5. In the off-season of the car market in May, the sales of Huawei AITO M9 reached a new high, exceeding the BMW X5 by more than twice. The BMW X5, which once sold at a premium, is now experiencing a decline in sales, with domestic new energy SUVs such as Li Auto and Geely diverting the market. The BMW X5 does not have an advantage in terms of power and cost, and the price may be significantly reduced to maintain sales.

Where is the impact?

The owner of a NIO car said, "In our family, weekends are mainly for traveling with a family of five; therefore, a seven-seater car is somewhat cumbersome. A large five-seater car where everyone can sit comfortably and the trunk is practical is a more suitable choice. Therefore, when changing cars, we targeted the direction of a large five-seater, and finally brought the brand new NIO ES6 home. After arriving home, its performance did not disappoint us."

NIO founder Li Bin clearly explained why the first car had to be so large: the two-child policy, families with two children need a spacious seven-seater car.

More and more car companies are associating themselves with the two-child policy when introducing large-sized seven-seater SUVs. For example, Lincoln Navigator, in the United States, has always been a business executive reception car that looks unapproachable, and no one would associate it with a middle-class family with two or three children. However, when it was introduced to China, Lincoln's senior executives said, "With the popularization of the two-child policy, the market where Navigator is located will grow rapidly."

I think this is also why new energy vehicles can impact the car market. No one can resist "adapting to local conditions."

03

Are new energy vehicles involved in self-media?

While it seems to be going smoothly, not making a profit is the pain point of new energy vehicle companies. The sales of IM Motors tell us: "Apart from Tesla and BYD, the rest are basically not making money, they are all losing money." Moreover, compared to new energy vehicles, the market concentration of the top ten key enterprise groups in the fuel car field has decreased. Xu Haidong said that new forces in car manufacturing may only produce new energy vehicles, and they can gain a certain market share in this field, but their sales in the fuel car field are still not in the top ten.What is the new energy vehicle industry rolling up now? Technology and price are certainly important, but at the Chongqing International Auto Show Forum, "making Douyin" has also become a hot term. It seems that the success of Lei Jun's Xiaomi SU7 has brought some shock to everyone.

In the surging wave of the new energy vehicle market, the decision-making process for consumers to purchase cars is becoming increasingly complex, and the channels for obtaining information are becoming more and more diverse. Research reports show that in terms of obtaining car information, the Internet is gradually surpassing offline 4S stores and has become the main way for consumers to obtain information. According to data monitoring one week after the start of the auto show, the new energy vehicle industry accounts for 76.5% in social media communication, and the auto vertical media communication accounts for 23.5%. It can be seen that car companies have also realized that social media communication channels have far exceeded the vertical communication media channels.

On major social media platforms, BYD has greatly improved brand popularity and reputation through multi-dimensional cooperation and communication strategies. Through close cooperation with partners from all walks of life, BYD has not only won the widespread recognition of consumers but also improved brand awareness and favorability. The Zeekr 007 is also a "super net celebrity" on major social media platforms. Especially on short video platforms such as Douyin, it is gradually catching up with the main position of new energy vehicle launches. The marketing volume of Xiaohongshu is also not to be underestimated, with the channel share increasing from almost 0 content to nearly 3%, becoming a new position for car promotion and publicity.

How to do it?

1) In terms of publicity content, car marketers should change the traditional publicity methods of flat and video advertisements, and change the publicity content focused on cost-effectiveness to focus on environmental protection, convenience, green, and other main publicity content, to cater to the consumption concept of the new generation of consumers with more novel and fashionable content, and attract consumers to choose new energy vehicles;

2) In terms of publicity form, car marketers should use a variety of new media publicity methods at the same time, fully utilize the characteristics of different types of new media publicity to formulate corresponding publicity strategies for publicity, such as: when car marketing companies use Douyin live broadcast to sell new energy vehicles, they can employ network live broadcast personnel to live broadcast their driving experience, allowing consumers to understand the environmental protection, cleanliness, and convenience of new energy vehicles through the network live broadcast, in order to gain consumer recognition.