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Global New Energy Vehicle Development Report 2020

Global New Energy Vehicle Development Report 2020

The global new energy automobile industry staged a song of ice and fire in 2019, its differentiation was increasingly intensified. On one hand, giants such as GM and Ford have laid off employees one after another, Fiat Chrysler merged with Peugeot Citroen, traditional car companies embraced for collaboration. On the other hand, new forces representative Tesla accelerated for internationalization, with annual sales of nearly 400,000 units, YoY grow rate of 50%. One side, China's new energy vehicle subsidies have declined, and sales have been negative for the first time. Another site, Germany has increased new energy vehicle subsidies, and European new energy vehicle sales have increased significantly.

Since Carl Benz invented the first modern car in 1885, the automotive industry has never been the meeting point for so many technological changes, as it is today, involving energy, transportation, communications, computers and many other industries. The new quaternization of automobiles----the wave of electrification, intelligence, networking, and sharing has begun, centuries old automobile industry is standing on the eve of big change and reshuffle.

First change: the rise of new forces such as Tesla, the cross-border entry of technology giants such as the Internet and semiconductors, the restructuring of the automotive industry's competitive landscape, the restructuring of the core value chain, and some ODMs may become OEMs in the future.

1) Reshaping the landscape: The new car-making forces represented by Tesla are taking advantage of their first-mover advantages and Internet genes, and are constantly grabbing market shares of traditional car companies. From January to November 2019, Tesla Model 3 North American market sales reached 128,000 units, exceeding the total sales of the same class BMW 2/3/4/5 series (104,000), Mercedes C / CLA / CLS / E series (95,000), Audi A3 / A4 / A5 / A6 (70,000). On the other hand, GM, Ford and other traditional car companies have laid off employees one after another. FCA (Fiat Chrysler) and PSA (Peugeot Citroen) merged to become the fourth largest car company in the world. By contrast with new forces' dramatic advances, traditional car companies 'collaboration for warm was sharply slow.

2) Reconstruction of the value chain: In the future, the core value of the automotive industry will no longer be engines, bodies, chassis, but batteries, chips, vehicle systems, and data. Making cakes may be a traditional car company, but eating cakes may be the new force. Volkswagen, the world's largest car company, announced that it will become a software-driven company and set up a "Digital Car & Service" department to vigorously promote digital transformation. Toyota announced that Toyota will transform from a car company to a mobile company. Their competitors are no longer Mercedes-Benz, BMW and Volkswagen, but Apple, Google, etc. Giants such as Google, Qualcomm, Nvidia, Huawei, Ali, Baidu, etc. have embedded intelligent driving segments through cooperation, authorization, or supplier identity, etc., which may occupy important value points in the industry in the future. Some auto companies that cannot master the core technology can only be gradually marginalized and even reduced to OEMs.

Second change: Governments in Europe, Japan, and South Korea are accelerating their electrification transformation, verifying the forward looking of China's strategy for developing new energy vehicles ten years ago.

After ten years of planning and cultivation, China's new energy automobile industry has certain first-mover advantages and scale advantages. Chinese automakers have never been so close to their dream of becoming a powerful automobile country. However, in 2019, Tesla set up a sole owned plant in Shanghai and delivered on December 30. The Model 3 subsidized price was less than 300,000RMB. Faced with this "catfish", can Chinese auto brands maintain their first-mover advantage?

 1) Europe, the United States, Japan, and South Korea and car companies promote the bottom-top electrification transition through top design: In April 2019, the European Union issued the most stringent carbon emission standard in the history of "document 2019/631". Norway, the Netherlands, the United Kingdom, France, and Portugal set the fixed banned time for fuel vehicles until 2025, 2030, 2040, 2040, and 2040 respectively. The development of new energy vehicles has become the only way out. Germany has legislated to confirm that domestic electric vehicle subsidies will increase instead of decreasing. Pure electric vehicles priced below 40,000 euros, subsidy increased from 4,000 euros to 6,000 euros; auto companies increased their investment, like Volkswagen increased the capacity of electric vehicles to be produced by 2030 from originally planned 15 million to 22 million units.

2) China's new energy vehicle industry urgently needs to make up for the short plate and turn the first-mover and scale advantages into technology and brand advantages: China's new energy passenger vehicle sales in the first half of 2019 were 563,000 units, reached global market share 56.9%, much higher than 20% of the European Union,  battry motor, electrical control system, charging infrastructure and other industrial chain supporting have been initially formed; From January to November, Top 10 world sales value of new energy passenger car companies, China independent brands occupy 4 seats (BYD, BAIC, SAIC, Geely) . However, most of China's new energy vehicles rely on domestic sales. From January to September 2019, there wasn’t any Chinese brand in the popular models of US, EU and Japan market. Some core components are highly dependent on imports, such as IGBT devices, core components of electronical control system and image processing chips. In the global IGBT market in 2018, Germany, Japan, and the United States accounted for 34.3%, 7.2%, and 24.9%, respectively; image processing chips were basically monopolized by Nvidia and Mobileye (acquired by Intel).

 Third change: Automobile product attributes are more diverse, and cars will become software-defined intelligent mobile terminals.

1) Hardware changes: On the one hand, batteries, motors, and electronic controls will replace engines, then automotive power will face the biggest change in a century; on the other hand, intelligent networking will increase the demand for vehicle perception, interaction, and decision-making. The central control screen and chip will become the core components of the car;

2) Software change: The automotive electronic and electrical architecture will evolve from distributed to a centralized architecture (bottom operating system, chip SOC) similar to smart phones. Decoupling of software and hardware, which not only achieves hardware standardization, but also enables software to be repeatedly developed and utilized, which greatly reduces internal redundancy. In the future, there will be a battle like iOS and Android in the automotive industry;

3) Service and ecological changes: Intelligent connected cars can continuously update applications through OTA aerial upgrades during the life cycle, and interface interaction will give cars more application scenarios-in pilotless situation, the driver will have more free time, and the connected car technology enables to be connected with the office, home and public facilities at any time to achieve remote control. The car will be the entrance to a variety of services and applications.

Facing the great changes in the automobile industry in the past century, China ’s road to becoming a strong country is facing unprecedented opportunities and challenges. “Lane changing and overtaking cars” requires the full cooperation of policies and the entire industry chain. For this we recommend:

 1) Further guide the electrification transformation: Build pilot in the public service areas such as public transport, logistics, and taxi etc. firstly, ban the sales of fuel trucks.  And then encourage some key air pollution control areas and cities with high penetration rates of new energy vehicles to ban the sales of fuel car bans preferencially. Requirements for the proportion of new energy vehicles in the online car-hailing.

 2) Encourage and support of core technology research and development: intensify tax reduction for high R & D investment enterprises, set up a national new energy vehicle industry fund to support weak links in the industrial chain; coordinate government, enterprises and universities and other parties to tackle problems in key generic technologies like the battery materials and core chips.

 3) Strengthen the construction of battery safety system: use big data platforms to establish precaution mechanisms and strengthen pre-event supervision; establish full life cycle safety testing of power batteries to strengthen supervision during the event; establish accountability systems and strengthen post-event supervision. According to the “Report on the results of big data security supervision of the new energy vehicle national regulatory platform”, among 79 new energy vehicle safety accidents discovered in May-August 2019, there were 47 accidental vehicles connected to the regulatory platform, and another 28 accidents warned by the regulatory platform within 10 days before occurred .

4) Develop and support the new energy used car market: due to changes in social relations, economic conditions, and family population, car owners generally change cars for 3-5 years. The residual value rate of traditional fuel vehicles is about 70% in three years, and the residual value rate of new energy vehicles is about 30% in three years. The depreciation rate is too fast, and the cost of trial is huge. Many consumers are afraid to buy new energy vehicles and wait and see.

 5) Accelerate the construction of private charging piles and encourage the promotion of smart charging in the community: difficulty in charging is an important factor limiting the pace of new energy vehicle development. As of November 2019, China's public charging piles were 496,000 and private charging piles were 678,000, with completion rates of 99.2% and 15.8% respectively from the 2020 target. The construction of private charging piles fell far short of expectations. The large impact on the residential grid's load is an important factor for the slow construction of private charging piles; the promotion of community smart charging can effectively achieve peak cutting and valley filling, which reduces the grid load.