Entering March, BYD (002594. SZ), Ideal Automobile (02015. HK), Zero Run Automobile (09683. HK) and others have successively released new products. Some products have significantly reduced prices compared to the old models, which has excited consumers but did not surprise investors.
On March 4th, the stock price of Ideal Automobile plummeted by 10.71%, while the stock price of Zero Run Automobile plummeted by 11.07%. Many investors did not agree with the news related to the new product, but instead worried that the new car would be "upgraded without increasing its price," intensifying homogeneous competition.
Some industry insiders believe that the release of new products includes factors for car companies to learn from the strengths of their competitors, and overall there is not much novelty, which has intensified the already raging price war; On the other hand, recent monthly data shows that the penetration rate of electric vehicles has not significantly increased, and leading companies such as BYD have even seen a year-on-year decline in sales.
"Add configuration without price increase": competition intensifies
In March, many brands, such as BYD, Ideals and Zero Run, launched their own preferential policies and new models, fully opening the "roll price" and "roll product" mode of the the Year of the Loong auto market. Some industry insiders believe that "adding configurations without increasing prices" or even lowering prices will make competition more intense.
On March 1st, Ideal Automobile released its first pure electric product, Ideal MEGA, with a price of 559800 yuan. Li Xiang, Chairman and CEO of Ideal Automobile, stated that with the release and delivery of new models, Ideal Automobile's goal is to return to the monthly delivery level of 50000 vehicles by March.
On March 2nd, Zero Run's first global model C10 was launched, and in addition, Zero Run plans to launch a new six seater SUV model this year; On February 27th, Jike officially released its new luxury hunting coupe, the all-new Jike 001, with an official retail price starting from 269000 yuan; On February 28th, Chery iCAR 03 was officially launched with an official retail price of 109800 to 169800 yuan, consisting of six models. Recently, BYD has also launched multiple low-priced "Honor Edition" models, including the all-new Han, Tang, Song DM-i Honor Edition, etc.
Huaxin Securities analyst Lin Zijian stated that car companies have recently launched competitive new products, with no price increase for additional configurations, coupled with replacement cycles and policy support. It is recommended that investors prioritize high value component suppliers with fast production capacity and high performance certainty.
Cheese fund manager Fu Wenhao told First Financial reporters that as the cost of the industrial chain gradually decreases, coupled with the intensification of competition among various industries in the new energy vehicle industry, the game between brands at the price level is more intense. Lin Jiayi, CEO of Xuanjia Fund, stated that the supply of new energy vehicles will continue to increase in the short term, while prices of other competing products have dropped more than expected. The market is concerned about the conversion of orders.
Some Hong Kong analysts have also stated that the previous ideal performance exceeded expectations, causing a short-term surge in stock prices. However, the new product belongs to pure electric vehicles. With other new pure electric vehicle manufacturers losing tens of thousands of yuan by selling a car, this strategic direction of stepping into pure electric vehicles has raised questions for investors. Whether the new car can sell well also depends on monthly data after delivery. Currently, consumers are more enthusiastic about discussing the ideal appearance of the new car; On the other hand, competitors such as Zero Run and Wenjie also have many extended range new products, posing a comprehensive challenge to Ideal Automobile. Each new car making force does not have a deep moat, and competition will further intensify.
Has the industry encountered bottlenecks after a penetration rate of 30%?
Has the industry development reached a bottleneck as leading enterprises experience negative growth and the market share of new energy vehicles exceeds 30% before temporarily stagnating? Recently, driven by BYD, car companies such as Wuling, Lingpao, Nezha, and Changan Automobile have successively lowered the prices of related models.
According to the production and sales report released by BYD, the cumulative sales of new energy vehicles in January and February were 323800 units, a year-on-year decrease of 6.14%.
Previously, the China Association of Automobile Manufacturers (CAAM) released data showing that in January 2024, the production and sales of automobiles reached 2.41 million and 2.439 million respectively, a decrease of 21.7% and 22.7% month on month, and a year-on-year increase of 51.2% and 47.9%, respectively. In January, the production and sales of new energy vehicles reached 787000 and 729000 respectively, a decrease of 32.9% and 38.8% month on month, and a year-on-year increase of 85.3% and 78.8%, with a market share of 29.9%.
In 2023, the sales of new energy vehicles increased by 37.9% year-on-year, with a market share of 31.6%.
Fu Wenhao said that currently, the penetration rate of electric vehicles is still in a gradually increasing stage. With the continuous improvement of supporting facilities such as charging stations and the improvement of battery endurance, the penetration rate is still expected to reach a higher level. In the context of relatively fierce competition, there is a possibility of alternating brand share, so the decline in sales for some car companies is a normal phenomenon during the growth stage of the industry.
Lin Jiayi believes that to solve the problem of low penetration rate in the electric vehicle market, it is still necessary to reduce prices to drive the market to choose gasoline and electricity to achieve relative balance. The penetration rate of the new energy vehicle market in some cities has reached 50%, but the winter range and resale value of new energy vehicles will affect the increase in penetration rate.