New Energy "Double Points" Drops Soft Treadmill Firms Preparing for Fight

Before the 11th annual holiday, the "double-integration" policy, which has attracted the attention of all parties, finally came to the end. On September 28, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Commerce, the General Administration of Customs, and the General Administration of Quality Supervision, Inspection and Quarantine jointly announced the “Measures for the Parallel Management of the Average Fuel Consumption of Passenger Vehicles and New Energy Vehicle Integration” (below Referred to as ""Administrative Measures"").

Unlike the original consultation draft, the "Administrative Measures" essentially set a three-year buffer period for car manufacturers. The policy stipulates that the assessment of new energy vehicle points in 2018 will be abolished and will be postponed until 2019. It will allow “offsets for new energy vehicles generated in 2019 to be compensated using positive energy points for new energy vehicles produced in 2020” in 2019 and 2020. The proportion of new energy vehicles is 10% and 12% respectively.

The three-year buffer period appears to be gentle, but it is the last opportunity for car companies that have huge gaps in new energy points or have not made any achievements in the new energy field. Whether it is actively self-help or leveraging the power of self-owned brands or joint venture car companies worth mentioning, the development of new energy has become a top priority.

Fair buffer period

With regard to the delay in the implementation of the "double-integration" policy, there are many voices in the industry that "this is the result of numerous auto giants lobbying the Chinese government." Haezman, president and chief executive officer of Volkswagen (China) Investment Co., Ltd., had previously publicly appealed on multiple occasions that the "dual-credit" policy should give enterprises a longer "window period." He explained that according to Volkswagen’s plan, a series of domestic pure electric vehicles will be launched on the market in 2019, and in 2018, the public who sold nearly 5 million vehicles will not be able to complete 8% of the points (400,000 new energy vehicles). integral).

From June to June this year, foreign media reported that the four major automobile associations in the United States, Europe, Japan, and the United States have sent a letter to the Ministry of Industry and Information Technology to request the Chinese government to delay or relax the quota plan for electric vehicles and hybrid vehicles. According to media reports, these car companies stated in a joint letter that “the implementation schedule provided by the Chinese government’s quota plan is too optimistic and difficult to achieve. If no changes are made, it will cause confusion for all product lines operating in China. The prescribed date needs to be delayed by at least one year and needs to be more flexible."

It can be seen that the "double-integration" policy puts great pressure on joint-venture car companies. However, the same can not be ignored the fact that, in the new energy has a slight advantage in the self-owned brand car companies, can now easily face the "double credit" is also very few. According to Dong Yang, executive vice president and secretary-general of the China Association of Automobile Manufacturers, the main reason for the delay in the implementation of double-integration is that it is difficult for domestic auto makers to meet the proportion of new energy points. According to the assessment of the China Automobile Association, the actual value (estimate) of the new energy auto industry in 2016 is about 3%.

After the China Automobile Association released the automobile production and sales data for the first half of 2017, some agencies calculated the new energy vehicle points for domestic passenger car companies in the first half of this year, resulting in eye-popping results. At present, only seven Chinese brand car companies meet the requirements for points, namely BYD, Beijing Automotive, Geely, SAIC Passenger Vehicles, Zhongtai Automobile, Jianghuai Automobile and Chery Automobile. Not only can the joint venture not be able to meet the standards, even the Changan, Great Wall, Dongfeng, and Guangzhou Automobile Co., etc., whose annual sales of Chinese branded passenger cars are ahead of schedule, will face enormous challenges in meeting their standards. And even if the company is up to standard, the points that can be traded out are far from satisfying the huge gap. "According to the laws of the automotive industry, product development takes at least three years, and the production layout also takes more than one year. Assuming that companies have prepared, from the policy to the actual implementation, it also takes more than a year." Dong Yang believes.

Data show that in the first eight months of this year, the cumulative sales of domestic new energy vehicles was only 320,000, an increase of 30.2%; pure electric vehicles sold 260,000 vehicles, an increase of 43.5%. Although the overall sales of new energy vehicles are still growing substantially, it is difficult to meet the new energy production and sales targets set by the government at the current rate of growth. Therefore, the “dual-integration” policy is a rigid requirement for all passenger car manufacturers, and it urges all car companies to invest in the development of new energy vehicles, thereby promoting the transformation and upgrading of China’s automobile manufacturing industry.

Different roads on the same road

With the clarification of the "dual-integration" policy, each car company has significantly accelerated the pace of the deployment of new energy.

Recently, rumors about the establishment of a joint venture by Great Wall Motors and BMW have become the focus of the automobile industry. Although it is not yet clear how the cooperation between the Great Wall and BMW will ultimately be carried out, it is unclear how the product line will be arranged, but there are still some speculations in the outside world. Insiders said that the cooperation between the two parties is likely to gather in the field of new energy vehicles. This person believes that the Great Wall's new energy products are rare, currently only a C30 EV battery life is only 200 kilometers, the market competitiveness is worrisome. As confirmed, the cumulative sales of the C30 EV in the first five months of this year were only 30 vehicles. It is worth noting that at the beginning of this year, Great Wall Motor Chairman Wei Jianjun said in an unconventional manner that he would invest 30 billion yuan in projects such as new energy and intelligence.

It can be said that Great Wall Motor’s current and future new energy gaps need to be filled, and BMW’s success in new energy is obvious to all. According to the plan, by 2020, the Great Wall plans to break through the annual sales of 2 million units, and roughly calculate the 12% requirement of new energy vehicles for passenger car companies in 2020. At that time, Great Wall Motors needs to complete about 240,000 new energy credits. Its existing capabilities simply cannot be achieved.

Unlike Great Wall's transmission of olive branches to BMW, Chery is more interested in leveraging the capital market in the development of new energy. Recently, Chery Automobile, which was plunged into the "whole packaged and sold" rumors, finally declared to the public that "There are indeed many parties that are negotiating with Chery. Chery is planning to introduce new strategic investors."

"Chery does not have an 'all packaged and sold' plan. We are a state-owned joint-stock company. Whether it is the operation of capital between a strategic investor or a shareholder, it is a capital market norm and relevant behavior has existed for many years." Chery Automobile Wang Hao, director of the public relations department of the company, said. For the Chery plan to introduce strategic investors, industry analysts believe that this is behind Chery’s desire for funding. Under the strategy of "Technology Chery," looking at the development of new energy vehicles alone requires a lot of capital investment. As early as 2009, Chery sold 20% of its equity to five domestic investment institutions for the development of Chery's new energy projects, and introduced 2.9 billion yuan of funds, but then the related capitals have chosen to withdraw.

It can be seen that in response to the arrival of “double points,” each car company has resorted to all the stops. From the earliest public Jianghuai Marriage, to unexpected surprise, Ford teamed up with Zotye, to the new joint venture of Renault-Nissan and Dongfeng, leveraging on force has become a shortcut for many car companies to deploy new energy. However, auto brands such as BYD, Geely, SAIC and Chery are more inclined to go it alone with the technical strength accumulated over the years. The better and the better, three years later the new energy vehicle market sees.