- Unexpected but Logical Market Growth
In 2021, the sales of new energy vehicles witnessed a rapid even explosive monthly increase. According to data from the China Association of Automobile Manufacturers, from January to October 2021, over 2.5 million new energy vehicles were sold. In November, some companies of new-energy vehicles witnessed 10%-100% sales increase. Some large companies didn’t sell that many due to their limited production capacity, but they all witnessed growth. It is estimated that by the end of November, 3 million new-energy cars will be sold and the overall sales of new energy vehicles in 2021 in China will be about 3.3 million.
This year’s new-energy vehicle market explosion in China should be attributed to technological progress, abundant products and government policy incentives. In terms of ev batteries, technology continues to improve, costs keep falling, battery system structure continues to innovate, such as wide applications of blade batteries and CTP, and lithium iron phosphate batteries equipped to large-scale cars. Besides, intelligent driving technology attracts customers to buy electric vehicles because of their superior performance in intelligent driving.
In terms of products, after years of promotion, electric vehicles have witnessed improved brand images. A large number of more fashionable ev models have been introduced. In particular, the more varied ev models cover all levels of passenger cars. A new phenomenon of “crowding at both ends” is observed in the market of electri vehicles. The miniature car market has been basically occupied by electric vehicles, and luxury cars are also dominated by electric vehicles. For mid-level mainstream sedans, plug-in electric vehicles with a pure electric range of 100 kilometers are available in the market, such as BYD Super Hybrid.
Policy incentives include subsidies, the dual-carbon strategy, etc. guiding both electric vehicle manufacturers and young buyers. At the same time, the subsidies-stimulated consumption is gradually fading, while the number of private car purchases out of real needs has risen to nearly 75%.
In short, this year’s market outbreak exceeded expectations, but it is logical.
From January to October 2021, the global sales of generalized new energy passenger vehicles reached 7.02 million with 51% of the electric vehicles sold in China. Judging from the S-shaped growth curve, the global vehicle electrification has broken through the critical point and entered a period of steep growth. It is estimated that China’s new energy vehicle sales will continue to grow to 5 million in 2022, a conservative assessment based on facts like shortage in battery supply and chip supply and capacity constraints. Without these constraints, the full demand may be higher than this. Due to limited production capacity, some big factories can hardly produce enough electric vehicles to meet the market demand. It is not uncommon to wait for 4 to 5 months to get a new-energy car after the payment is made.
- Future Vehicle Technology Trends: 1000km Battery Range and Skateboard Chassis
It’s not that it is impossible to achieve a battery range of 1,000 kilometers for electric vehicles, but it is impossible for the electric vehicle to achieve a range of 1,000 kilometers and be fully charged in a few minutes in a safe and low-cost way. A 1000km battery range can be achieved technically. From the perspective of luxury electric vehicles, this may be a trend. But the cost of a battery with a 1,000km range is relatively high, and may only be achievable on luxury SUVs. On an SUV, there is room for batteries, and buyers of them are willing to pay the extra charge. The development of 1000km-range electric vehicle batteries is mainly driven by the market. Of course, there are many difficulties in technology. For example, for the 1000km-range batteries, 800V high-voltage electrical framework and high-energy-density high nickel ternary lithium ion batteries will be used, and some manufacturers may also try to use solid-liquid mixed high nickel ternary lithium ion batteries. The requirements for safety technology will also be higher.
Another technology is the smart skateboard chassis. Recently, the American company Rivian has been highly sought after for its launch of a smart skateboard chassis. In fact, the concept of skateboard chassis has been known for quite a while. General Motors launched this concept in 2002 on a fuel cell car. Tesla also has a similar concept, but its car body is still semi-loaded. Since the battery system is usually a flat structure, platforms of pure electric vehicles are quite different from traditional fuel-powered vehicle platforms, and they will feature a flat skateboard chassis .
The electric vehicle platforms can be divided into three types: the first one basically originated from the fuel vehicle platform: there is no complete chassis, and the body is still loaded. The second one is Tesla’s flat chassis, but with a semi-loaded body. The third one is a fully skateboard chassis launched by Rivian, a non-loaded body which can withstand collisions, and can be very light using lightweight materials. The unchanged chassis means it will fit various vehicle models. This is the result of years of technological evolution and represents a technological trend. In particular, when the battery system is becoming flatter, the specific power of the motor is getting higher, and the motor/inverter/drive shaft three-in-one mechanism will be used more, realizing a real skateboard chassis platform. With the introduction of intelligent active collision avoidance technology, there will be fewer collisions in the future. The vehicle body can be lighter and lighter, and even plastic or cloth can be used. The resulted shorter model development cycles, unlimited patterns and personalized designs will bring a revolution in car design and manufacturing.
- Future Growth Forecast of New Energy Vehicles and Carbon Emission Reduction
International Energy Agency (IEA) released a global carbon neutrality roadmap in May 2021. According to this roadmap, from 2020 to 2030, the global sales of electric cars will increase by 18 times, reaching 55 million in 2030. This is a more radical forecast referring to the low-carbon development goals. According to a relatively conservative forecast from abroad, the global sales of electric vehicles will be 30 million in 2030.
Based on the calculation and comprehensive judgment by Ouyang Minggao’s team, there is an overall forecast for China’s electric vehicle market. It is estimated that in 2025, China’s new energy vehicle sales will be between 7 million to 9 million. By 2030, this figure will be roughly 17 million to 19 million. The number of new energy vehicle possessed will exceed 30 million in 2025, close to 100 million in 2030, almost 200 million in 2035, and around 300 million in 2040.
The transition to new energy vehicles will have an important impact on energy conservation and emission reduction in the automotive industry. For passenger cars, the carbon emissions per unit mileage ( kilometer) in 2021 were about 70 grams for electric vehicles, and about 176 grams for fuel vehicles. It is estimated that the carbon emission per unit mileage of pure electric vehicles will drop to 20 grams per kilometer in 2035, which is more than 70% lower than that in 2021, mainly because of changes in the energy structure (that is, the increase in the proportion of green electricity). The total emissions from passenger vehicles, including fuel vehicles and electric vehicles, are expected to peak in 2023, reaching about 600 million tons. Compared with fuel passenger vehicles, the carbon emission of pure electric passenger vehicles will drop rapidly, because of the ever-increasing proportion of green electricity.
- Future Industrial Pattern Evolution
The joint ventures will collectively exert their efforts in the next one or two years. Chinese and foreign brands of new energy vehicles will compete fiercely in 2023. From the perspective of core technology, Chinese brands stand in a favorable position in many aspects.
From the perspective of battery technology, battery technology accounts for 60% of the technical content of electric vehicles. At present, China dominates this generation of battery technology. Of course, Japan and other countries are now vigorously developing the next generation of all-solid-state batteries, which is not in China’s grasp now. However, it is estimated that it will take about 10 years for the all-solid-state battery technology to have an important impact on the market structure. Luckily China has in stock more R&D talents in the battery field than other countries and regions in the world. As long as we don’t give up, China will eventually be able to walk in the forefront of the all-solid-state battery technology. As for electric drive and power electronics technologies, China is on a par with foreign countries. In particular, companies with a full technology chain represented by BYD show the highest technical strength in the world.
From the perspective of supply chain, China has a complete power battery industry chain: with 70% of the world’s battery production capacity, China supply the batteries to the world. Although the United States and Europe are going all out to build their own battery industry chains, and Chinese batteries may also encounter certain obstacles to enter the United States market, the industrial competitiveness of China’s power batteries will be difficult to shake for a considerable period of time.
Undoubtedly, chip supply has become a bottleneck in the near future. But automotive chips only account for about 10% of all chips. At present, it is mainly a cyclical supply and demand imbalance. Moreover, automobiles have lower requirements for chip integration than mobile phones and other products. In the medium term, it is not difficult for China to solve the problem of new energy vehicle chip- shortage.
From the perspective of vehicle brands, electric vehicles pose a challenge for old brands and an opportunity for new brands. Because manufacturers of old car brands want electric vehicles to look the same as fuel vehicles for fear of being inconsistent with the previous brand images. If the vehicle images are changed, they will be at the same starting point as the new brands which is difficult to accept. Therefore, when talking about brand recognition, the old foreign brands are still in better positions. But in general, due to the vigorous development of the new energy vehicle industry in recent years, a new world has also been created for China’s new energy vehicle independent brands in terms of brand image. The upgrade of its own brand is also much better than expected. Under the new wave of electrification and intelligence, Chinese independent brands are expected to occupy a favorable position in the future competition in the auto industry. It is predicted that by 2030, Chinese auto brands will grab a 60% share in the Chinese market.
From the perspective of enterprises, the rise of new energy vehicles has triggered a technological revolution in the automotive industry. Many self-owned brand enterprises have emerged as global benchmarking enterprises such as BYD. The force of new energy vehicle manufacturing is fierce and energetic. Joint ventures are poised to take off and do something great in the market. The next five years will be a window period, when the market will grow rapidly and competition will continue to be fierce. There will be a major corporate reshuffle in 5-10 years, and some of current market players will be eliminated. It is impossible to predict who will die currently.
In a word, the automobile industry is going through great changes unseen in a century, ushering in a huge opportunity of the times. However, while meeting an explosive growth, the new energy vehicle market will also encounter a series of challenges, including the sustainable development of battery technology, industry and material resources, issues like fast charging, fast switching, vehicle-to-grid interaction and green smart energy, the development of hydrogen energy and fuel battery vehicles, etc.