China’s new energy vehicles have great potential in “going global”
DATE : Dec 26th, 2023
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On February 23, people visited the newly launched upgraded version of the sports sedan P7 at the Xpeng Motors store in Rotterdam, the Netherlands.
The global new energy vehicle market still has a lot of room for growth. For China's new energy vehicles, which have strong technology, industrial supporting systems and production capacity advantages, there is great potential for breaking the waves to "go overseas".
China's new energy vehicles are making rapid progress in overseas markets. Data from the China Association of Automobile Manufacturers shows that from January to September this year, China exported 3.388 million complete vehicles, a year-on-year increase of 60%. Among them, 825,000 new energy vehicles were exported, a year-on-year increase of 1.1 times. It is basically not a problem for China to surpass Japan and become the world's largest annual export volume of complete automobiles. The growth in exports of new energy vehicles is indispensable for achieving a significant increase in exports of complete automobiles.
It is worth mentioning that on the one hand, China's new energy vehicles have made remarkable achievements in "going overseas" and have been sold to more than 160 countries and regions. They are becoming representatives of green, intelligent, high-quality, personalized, convenient and applicable models. On the other hand, the international automobile market is complex, and some developed countries, in particular, are constantly raising the bar and setting up various obstacles for China's new energy vehicle exports.
As the world attaches increasing importance to environmental protection and sustainable development, the new energy vehicle market has broader prospects. The International Energy Agency's "Global Electric Vehicle Outlook 2023" report predicts that global electric vehicle sales will exceed 70 million units in 2030, with ownership reaching 380 million units. The global annual new car penetration rate is expected to reach 60%. It can be seen that the global new energy vehicle market still has a lot of room for growth. For China's new energy vehicles, which have strong technology, industrial supporting systems and production capacity advantages, there is great potential for breaking the waves to "go overseas".
The strong rise of new energy vehicles in China.
If China is the biggest success story of globalization since the 1990s, and the development and transcendence of the automobile industry is China's top success story in the more than 20 years since China joined the World Trade Organization, then the sudden rise of new energy vehicles is the biggest success of the Chinese automobile industry. story. China's automobile industry, which has been the most worrying on the long road to WTO accession negotiations, has achieved the leap to becoming the world's largest in terms of total production and sales volume after joining the WTO.
In 2001, China's automobile production reached 2.34 million vehicles, and in 2022 it has reached 27.18 million vehicles. So far, China's total automobile production and sales have ranked first in the world for 14 consecutive years. In terms of output and sales, China far exceeds the entire Europe, and also greatly exceeds the entire North and South America including the United States combined. In the foreseeable future, China's absolute advantage in automobile production and sales will continue to be maintained.
If in the field of traditional fuel vehicles, compared with their Western counterparts, there is still a big gap between Chinese domestic car companies and their Western counterparts, which are "big but not strong" in many aspects, in the field of new energy vehicles, Chinese local car companies have achieved large-scale " "Overtaking in corners" and taking a larger lead. China's new energy vehicles started later than the West. Many people in the industry believe that 2014 was the first year of the marketization of China's new energy vehicles. In the first 11 months of that year, domestic pure electric vehicles sold 29,000 units; by 2022, according to statistics from the Ministry of Industry and Information Technology, The production and sales of new energy vehicles in China were 7.058 million and 6.887 million respectively, a year-on-year increase of 96.9% and 93.4% respectively. They accounted for 63% of the global new energy vehicles, and they are mainly self-owned brands, with extremely outstanding advantages. In the same year, China exported 679,000 new energy vehicles, a year-on-year increase of 1.2 times.
From January to September this year, China's automobile production and sales completed 21.075 million and 21.069 million units respectively, a year-on-year increase of 7.3% and 8.2% respectively; of which new energy vehicle production and sales completed 6.313 million and 6.278 million units respectively, a year-on-year increase of 33.7% and 37.5% respectively. %; new car sales of new energy vehicles accounted for 29.8% of total new car sales.
The high growth of China's new energy automobile industry is based on a series of independent technological innovations that lead global peers. This has been recognized by global peers and major automobile producing countries. What is certain is that even if subsidies for new energy vehicles are completely abolished, China's own brand new energy vehicles will continue to rapidly expand the domestic and international sales markets. At present, China's emerging new energy automobile industry has passed the cultivation period and entered a stage of high growth. Even if it competes with some traditional automobile powers, China's new energy automobiles will not fall behind.
Two challenges cannot be ignored.
Despite this, China's new energy vehicles "going abroad" face a dilemma to a considerable extent: on the one hand, markets with relatively mature conditions and large sales tend to have strong trade protectionism; on the other hand, markets with weak trade protectionism tend to The conditions are not mature enough and the sales volume is not very large.
In the final analysis, global fuel vehicles have experienced hundreds of years of development, and the automotive fuel supply networks in countries around the world are generally quite mature; the application of electric vehicles requires that the target market has sufficient and cheap power supply, and a large number of charging piles and other infrastructure must be built.
A strong power network and well-developed charging infrastructure are important factors for the rapid development of China's new energy vehicle industry. However, outside China, Western countries and newly industrialized economies with relatively good power supply and charging infrastructure and strong policy support for new energy vehicles tend to have strong trade protectionism. The EU has launched countervailing measures against Chinese electric vehicles. The investigation was the first shot in the overseas market to block China's new energy vehicle exports. The EU is precisely the economy with the greatest support for new energy vehicles in the West and the most infrastructure such as charging piles. Therefore, it is logical that China's new energy vehicle companies will Listed as the first choice market for export planning.
As for the United States, the largest car sales market outside of China, not to mention that the total number of public charging piles in the country is less than 1/3 of that in Guangdong Province, China. The strong trade protectionist tendency of China's new energy vehicle industry alone is enough to make people wonder. Few Chinese new energy vehicle companies are deterred.
As for whether people in developing countries accept China's new energy vehicles, it depends more on personal consumption preferences and the cost-effectiveness of the cars themselves. After all, these countries' own automobile manufacturing industries are not yet competitive enough, and there is no need to develop local manufacturing industries by restricting the import of Chinese automobiles. Moreover, due to the huge power gap in some countries, the progress of power infrastructure is generally slow. To open these markets, various power-related problems must first be solved.
Sustainable development.
The international automobile market is difficult to overcome, but the competitiveness of enterprises is precisely tempered by overcoming numerous difficulties. Faced with the dilemmas and other risks on the road to "going overseas", Chinese new energy vehicle companies should do the following work well.
On February 15, 2023, workers at Li Auto’s Jiangsu Changzhou base were stepping up production.
The first task is to strengthen the foundation and strengthen the country's position as the center and highland of the world's automobile manufacturing industry. To this end, Chinese new energy vehicle companies need to continuously promote technological innovation and strive to be the first to solve a series of major technical problems that hinder the development of electric vehicles, including battery energy density and endurance, especially in cold areas and weather, etc. Maintain and expand China’s technological advantages in new energy vehicles. At the same time, we will implement the newly released policy of comprehensively canceling foreign investment access restrictions in the manufacturing industry, attract the international automobile industry production capacity and technology research and development to China, attract capital from non-automotive industry powers to participate in China's new energy automobile industry, and expand capital investment in China's new energy automobile industry. sources, and weaken and resolve the motivations of trade protectionism in overseas markets against China.
In addition, as new energy vehicles move towards overseas markets, more efforts should be made in overseas infrastructure construction. After all, the prerequisite for the development of new energy vehicles is the large-scale development of power plants, power grids, charging piles and other related infrastructure. Strengthening investment in this field will not only give full play to China's infrastructure advantages, but is also expected to drive the export growth of China's related products.
Statistics show that at the end of 2014, China had built 26,000 electric vehicle charging piles (State Grid data), and the United States had a total of more than 50,000 electric vehicle charging piles in use, which is roughly twice that of China. As of the end of 2021, China has built 1.15 million public charging piles, while the number of public charging piles in the United States and Europe is only 112,900 and 442,000 respectively. The gap between other countries lagging behind China is an opportunity for China to export infrastructure and related equipment.
In response to the market protectionist tendencies of some countries, China can curb its negative impact by further opening up, including expanding imports and expanding foreign investment access. China's initiative to expand opening up can strengthen its confidence and negotiating position in demanding that its trading partners open up to China. For example, among China’s eight actions to support high-quality joint construction of the “Belt and Road”, “comprehensive elimination of restrictions on foreign investment access in the manufacturing sector” is placed under the second item “supporting the building of an open world economy”, together with “working with more countries” Negotiating and signing free trade agreements and investment protection agreements are interconnected and have their own internal connections. Countries with huge export interests to China will suffer much greater loss of profits or opportunity costs when taking protectionist measures against China than countries with negligible exports to China, so they will not easily restrict Chinese goods and investments.
In addition, learn from risk prevention experience in global international investment practices and develop according to the situation of Chinese enterprises to avoid, reduce, and resolve political risks of overseas investment, especially potential expropriation risks, such as moderately increasing local financing from financial institutions in the host country, moderately Increasing the debt ratio of overseas subsidiaries, etc., are all experiences worth learning.
