Nine car companies cut prices on the same day! Excessive production capacity of new energy vehicles will lead to life and death

The Year of the Dragon has just arrived, and the price war for new energy vehicles has gone crazy.

On March 3, Xpeng Motors announced that all G6 models will receive an immediate discount of 20,000 yuan for a limited time, with prices starting from 189,900 yuan after discounts. On March 1, according to media statistics, at least 9 car companies officially announced price cuts or limited-time discounts.

Previously, BYD, Wuling, Changan Automobile, Nezha Automobile and other car companies have announced price cuts.

In 2023, traditional fuel vehicles have experienced waves of fierce price wars, and now this wave of price cuts has finally reached new energy vehicles.

When will this price cut storm end? What changes will it bring to the entire industry?

Although they are not in a life-and-death situation like fuel vehicles, the sales of domestic new energy vehicles are still rising, with a year-on-year growth of 36.2% in 2023, with sales reaching 7.736 million vehicles.

But on the other hand, it is a fact that there is overcapacity and oversupply of new energy vehicles.

In the past two years, BYD's new energy production capacity has increased from 800,000 vehicles to 2.5 million vehicles; Tesla has also increased its production capacity from 600,000 vehicles to 1 million vehicles; the new power representative "Wei Xiaoli" has a production capacity plan of 1 million vehicles above.

According to predictions from Pacific Securities, domestic new energy passenger vehicle production capacity will reach 13.46 million units in 2023.

Based on this estimate, the capacity utilization rate of new energy vehicles in 2023 will be only 57.47%.

Generally speaking, the standard for normal production capacity is 79% to 83%. If it is lower than 79%, it means overcapacity.

It is understandable why the sales of most car companies in 2023 are far less than expected.

According to announcements from various companies, only a few brands such as BYD and Ideal will achieve sales targets in 2023.

As early as 2021, the Passenger Car Association issued a public warning to pay attention to the problem of overcapacity of new energy vehicles. Three years later, not only has this problem not been solved, it has become increasingly prominent.

If there is excess production capacity and anyone wants to sell more, exchanging prices for the market is the simplest and crudest way to boost sales.

A typical example is last year's "best-selling" BYD, which has set a sales target of 4.5 million vehicles this year. However, BYD's sales in January this year fell 41% from December last year, and its single-month sales were overtaken by Geely. The pressure from the market has obviously affected BYD's prediction of the auto market for the whole year, and price cuts are a matter of course.

Fortunately, compared with fuel vehicles, the cost of new energy vehicles is constantly falling. Among them, the most important thing is the fall in the price of lithium carbonate, the raw material for batteries.

This is due to the large-scale development of global lithium resources driven by high profits in the past few years, and the overall production has remained high, resulting in oversupply and falling prices.

According to data from the China Automotive Power Battery Industry Innovation Alliance, in the first nine months of last year, the production of power batteries reached 533.7GWh, but less than half was installed in vehicles. More than 270GWh of batteries were put into storage, and the output was much higher than demand.

After reaching its peak at the end of 2022, the price of domestic battery-grade lithium carbonate began to decline. Compared with the peak price of nearly 600,000 yuan/ton, it has now dropped to 101,500 yuan/ton, a decrease of 82.2%.

In the cost of new energy vehicles, the "three-power" module battery, motor, and electronic control account for about 60% cumulatively. This is the main reason why electric vehicles were generally more expensive than fuel vehicles in the past. With a budget of 100,000, you can buy a compact car in the field of fuel vehicles, but in the field of electric vehicles, there are only A0-class cars or mini cars.

According to statistics, for every 100,000 yuan reduction in the unit price of lithium carbonate, the cost of a pure electric vehicle battery with a capacity of 70KWh will decrease by 0.85 to 15,000 yuan.

From this perspective, if the price of lithium carbonate remains low or continues to drop, it can completely offset part of the price reduction losses and improve the operating resilience of car companies.

It can be boldly predicted that for some car companies that have done a good job in cost control, the "blood bar" is still very thick, and the price reduction should not be completed yet.

But when the price war will end, we should not just look at costs, but also at supply and demand.

In 2024, judging from the growth targets released by various new energy vehicle companies, the planned delivery volume of BYD, Wenjie, and Lideal alone will increase by 2.3 million vehicles, while market demand is only expected to increase by 2.1 million vehicles.

So this "cake" is simply not enough for each car company to share!

This is why we start a price war at the beginning of the new year. When we meet in a narrow road, the brave will win. We must first grab the cake into the bowl.

At present, it’s hard to say who will win, but companies at the tail end will definitely have a harder time.

After government subsidies have been reduced, sales of new energy vehicles have become increasingly concentrated among leading companies.

In the past three years, the market share of the top ten has increased by about 10%, approaching 80%. BYD, which ranks first in sales, has a market share of 35%. In 2021, this proportion is only 19.5%.

The new car-making forces that were once so popular are generally having a hard time.

Qichacha data shows that in the past two years, the number of bankruptcies of new energy vehicle-related companies has been increasing year by year. In 2023, about 52,500 companies will go bankrupt, a year-on-year increase of 88.2%.

There are two main reasons for the collapse: First, the technology is not up to standard and there is a lack of core technology, involving battery life, battery safety, etc., which leads to product quality problems, or the technology is limited, the product experience is not good, consumers lose confidence, and the product naturally sells out. not good.

Second, the capital chain is broken. For example, Evergrande Motors suffered a loss of over 56 billion yuan in 2021 and a loss of 27.6 billion yuan in 2022. It could have been supported by Evergrande's blood transfusions, but there were problems with the capital chain and it was difficult to continue building cars.

From the current point of view, the penetration rate of new energy vehicles has exceeded 30%. As the outcome of industry competition becomes clearer, the price of new energy vehicles will eventually return to rational competition, especially the price of low-priced electric vehicles. Bigger ups and downs.

But this may lead to further "involution" in overseas markets, as well as a price war in the mid-to-high-end market. The answer to who will live and who will die is far from being revealed.