New Energy Vehicle Overheating: Capacity Planning Exceeds 20 Million Units 10 Times Sales Planning

New construction vehicle forces have entered the mass production delivery period. On May 29th, Xiaopeng Motors held a ceremony to deliver 100 listed Xiaopeng vehicles at its Guangzhou headquarters. On May 31, Weilai Motor also delivered 10 vehicles to the first batch of users... In mass production of new energy vehicles. Behind this, excess capacity has become a new problem that has to be faced. According to industry sources, with the large influx of capital, the risk of overcapacity in the new energy automotive industry is continuously accumulating. If measures are not taken to deal with it in time, the new energy automobile market will face a serious bubble crisis after “de-subsidy”.

Excessive production capacity

China New Energy (6.170, 0.01, 0.16%) has been ranked first in the world in terms of production and sales for three consecutive years, accumulating a total of more than 1.8 million new energy vehicles. According to the data from the China Association of Automobile Manufacturers, the total sales of new energy vehicles in 2017 reached 777,000 units, a year-on-year increase of 53.3%.

Xu Haidong, assistant secretary general of the China Association of Automobile Manufacturers, said that in 2018, China's electric vehicle market will generate 40%-50% growth, and the annual sales of new energy vehicles will exceed 1 million. Given that there is a gap between the low-end auto market and consumer demand in the market, the new energy auto industry has experienced excess capacity.

In April 2017, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Science and Technology jointly issued the "Mid-term and long-term development plan for the automotive industry." It is proposed that by 2020, the annual domestic production and sales of new energy vehicles will reach 2 million.

According to the data released by the China Automobile Dealership Association, the problem of overcapacity in China's new energy automotive industry is already very serious. From the end of June 2015 to the end of June 2017, more than 200 new energy vehicle projects have been completed in China, and the amount of related investment amounts to more than 1 trillion yuan. The number of new energy vehicle production capacities that have been disclosed by various car companies exceeds 20 million vehicles. In the mid-to-long term development plan for the automotive industry, the target is set 10 times. According to the plan, most of these projects will be completed and put into production by 2020.

In May 2018, Li Zhanchuan, deputy inspector of the Policy Research Office of the Ministry of Transport, revealed that the purchase subsidies for new energy vehicles are expected to be withdrawn by 2020. In this regard, Huang Yonghe, a senior expert at the China Automotive Technology and Research Center, believes that if the other policies fail to keep pace after the 2020 subsidy is cancelled, there will be substantial excess production capacity if the company’s models are not sold.

However, Cui Dongshu, Secretary-General of the National Passenger Vehicle Market Information Association, said in an interview with the Beijing Commercial Daily reporter that the new energy vehicle is now subject to the issue of excess surface production capacity. It is just a planned excess production capacity that may not always be put into production. “The vast majority of new energy builders are hard to survive for five years,” said Cui Dongshu.

Supply chain overheating

In fact, the problem of overcapacity has caused some new energy supply chain companies to be in trouble. Recently, the news of the reduction of battery orders from the new energy company Yinlong New Energy's major campuses and the suspension of production at the plant continued to ferment. On May 30th, there were media reports that Luoyang Industrial Park, where Yinlong New Energy invested 15 billion yuan, has made slow progress.

In 2016, Yinlong New Energy started the process of rapid expansion after obtaining capital of RMB 3 billion invested by Dong Mingzhu, chairman of Gree Electric (46.580, -0.92, -1.94%). According to incomplete statistics, in 2017 Yinlong New Energy signed new energy industry projects in Lanzhou, Tianjin, Panzhihua, and Zhuhai with investment of up to RMB 80 billion. With these newly planned projects, Yinlong New Energy has 11 industrial parks nationwide.

The rapid expansion led to a substantial increase in costs, said Li Zhi, vice president of finance at Yinlong New Energy. As many current industrial parks are under construction at the same time, and the country’s subsidy funds for new energy vehicles have not arrived, Yinlong New Energy 2017 is indeed To make ends meet, the difference in funds is about 4 billion yuan.

Not only is Yinlong New Energy, the entire domestic new energy battery industry is developing rapidly. The data shows that current China's power (21.470, -1.88, -8.05%) battery shipments account for more than 70% of the global market share. In 2014-2016, the average annual growth rate of the domestic power battery industry was as high as 368%, 324%, and 78.6%, respectively. In 2016, the amount of investment in the power battery industry exceeded 100 billion yuan.

Behind this high growth, the issue of overcapacity of power batteries has already emerged. According to calculations, if all the currently formed production capacity is released, a huge capacity of 170 GWh/year will be formed, which is approximately seven times more than the actual market demand, and can meet the annual production of 5 million electric passenger cars and 500,000 electric cars. The total demand for passenger cars. According to relevant plans, the total capacity of China's power battery will reach 285GWh in 2020, but the demand for power battery in the same period is only 97GWh.

According to industry insiders, under the background of overall overcapacity in the new energy automotive industry, the power battery industry is characterized by structural overcapacity, and the high-quality production capacity of leading enterprises is being sought after, while the backward production capacity of small and medium-sized manufacturers is not well digested. Will continue to be squeezed. With the forced release of excess production capacity, some small and medium-sized manufacturers may switch to areas with lower technical requirements, such as low-speed vehicles and small-capacity energy storage, and thus quit the competition in the field of power batteries.

Policy to cool cars

Although the "catfish effect" is conducive to the active market, the relevant state departments have noticed the signs of excess capacity in new energy vehicles. The policy has begun to shift, and the space for speculators has continued to shrink. The state issued a new subsidy policy for new energy vehicles for 2017-2018, which is generally 20% lower than 2016. In May 2018, the regulatory authorities cancelled the 1882 free vehicle purchase tax models for new energy vehicles.

Increasingly stringent policies have made some speculators unsustainable in the market. In September 2016, the Ministry of Finance penalized five “cheat up” new energy vehicle companies such as Jinlong Automobile (14.500, -0.55, -3.65%) and Shenzhen Wuzhoulong. The data shows that in the first half of 2017, the net profit of Jinlong Automobile dropped to RMB 38 million, a year-on-year decrease of over 70%; Shenzhen Wuzhou Dragon's operating revenue was RMB 4,862,200 and the loss was RMB 5,552,400.

The National Development and Reform Commission recently issued the “Special Regulations on the Investment Management of the Automotive Industry (Consultation Draft)” to establish a new independent pure electric vehicle company (including the production capacity of cross-submersible vehicles and commercial vehicle types for the construction of pure electric vehicles in the existing automobile manufacturers). The provinces where the investment projects are located should meet the following four conditions: 1. The proportion of new energy vehicle ownership is higher than the national average; 2. The charging infrastructure of electric vehicles is relatively complete, and the ratio of vehicle piles is higher than the national average; III. New energy vehicles The cleanup of zombie enterprises and zombie qualifications were all completed. IV. The existing investment projects for new-built pure electric vehicle enterprises have been completed and the output has reached the construction scale.

According to Jia Xinguang, an auto analyst, the relevant regulations are tantamount to closing the door for those new-build vehicle makers that aim at “circling money”. Only those new vehicle manufacturers that are pragmatic to build cars can expect to receive production qualifications.