In China, two wheeled electric vehicles have already become the daily means of transportation for many residents. Whether in bustling metropolises or quiet rural areas, it is not difficult to see the presence of two wheeled electric vehicles.
According to data from the China Cycling Association, the total number of two wheeled electric vehicles in China in 2022 is about 350 million, which means that every four people have one two wheeled electric vehicle, surpassing that of automobiles.
However, the Red Star Capital Bureau has noticed that the overall price of two wheeled electric vehicles in China has significantly decreased since the beginning of this year. On e-commerce platforms, some models have seen a decrease of over 1000 yuan, and corporate financial reports show that the average price of a single car has also declined since the beginning of this year.
Luo Qingyi, Acting President of Emma Technology (603529. SH), stated that in 2023, the two wheel electric vehicle industry has experienced tremendous competition, and some leading companies are willing to initiate a "price war".
This also makes people curious, what are the reasons behind the price war of two wheeled electric vehicles? What is the impact on each enterprise? And how will the industry develop in the future?
(1)
Big price war, inevitable stock competition
From the current competitive landscape of the two wheeled electric vehicle market in China, according to data from the Prospective Industry Research Institute, based on sales in 2022, Yadi (01585. SH) and Emma jointly occupy 43.2% of the market share, with Tailing electric vehicle ranking third in sales, with a market share of approximately 14.1%.
It can be seen that the leading effect of China's two wheel electric vehicle industry is relatively obvious, with a high market concentration, and about 85% of the market share is occupied by the top ten enterprises in the industry.
Regarding the price war of two wheeled electric vehicles, according to previous media reports, this year's large-scale price reduction has already been carried out simultaneously in offline stores and online platforms.
During the Double Eleven period this year, two wheeled electric vehicle companies are also actively participating, with price reductions of more than 1000 yuan for several key products.
For example, the top brand Yadi's DV1 model, according to data from Yadi's Tmall flagship store, saw the highest drop of 1800 yuan during this year's Double 11 period. The original price was 4599 yuan, and the final price can be as low as 2799 yuan.
Waist brands such as Xiaoniu Electric (NIU. US), according to data from their Tmall flagship store, during this year's Double 11 period, the best-selling product "Xiaoniu B2 Power Edition" can save up to 1212 yuan, with a decrease still exceeding a thousand yuan.
The two rounds of price reduction promotions by electric companies are also reflected in their financial reports.
According to Yadi's financial report, the average bicycle revenue of enterprises in the first half of 2023 was 1379 yuan, a decrease of 4.37% from 1442 yuan in the same period last year; The average bicycle income of electric scooters was 1713 yuan, a decrease of 5.72% from 1817 yuan in the same period last year.
According to the prospectus of Lvyuan Electric Vehicle, the average selling price of its electric vehicles in the first four months of this year was 1193 yuan, a decrease of 4.2% compared to the same period in 2022.
In terms of Emma, according to the research report of Open Source Securities, the overall development trend of the industry is weak, and the intensity of price war is greater than that of the same period last year. In the second quarter of 2023, the overall factory price and single unit profit of Emma's two wheeled electric vehicles decreased.
It can be seen that the main reason for the price reduction trend of two wheeled electric vehicles since the beginning of this year is that the domestic two wheeled electric vehicle industry has entered the stock market, and industry competition has become increasingly fierce.
According to data from iResearch Consulting, it is expected that the sales growth rate of domestic two wheel electric vehicles will decline to 7.8% in 2023, while the growth rate will reach 15.2% in 2022.
At the same time, research data from Huachuang Securities shows that after 2024, as most of the old two wheel electric vehicles are gradually replaced and related demand decreases, the renewal dividend of China's electric two wheel vehicle industry will be quiet.
Overall, facing the weakening demand side, many companies have chosen to trade price for quantity, and the price war for two wheeled electric vehicles has once again begun.
(2)
Is the high-end development of two wheel electric vehicles a pseudo proposition?
The price war of two wheeled vehicles this year has led to a decrease in the average price of individual vehicles, which will directly affect the profitability of enterprises.
For example, Yadi's financial report shows that in the first half of 2023, Yadi's gross profit margin was 16.9%, a decrease of 1 percentage point compared to the same period last year.
This is clearly not what companies are willing to see.
In fact, domestic two wheel electric vehicle companies have been trying to achieve a high-end layout. After all, only by doing so can companies avoid disorderly competition in the low-end market and enjoy more brand dividends.
For example, Yadi has launched the high terminal brand VFLY series, with prices ranging from 6999 yuan to 19800 yuan. The main selling point of this brand's series of products is that they have LCD screens and built-in voice assistants.
Emma has also launched its high-end brand, Xiaopa Electric, targeting the urban high-end white-collar population, following a path of light luxury and retro fashion. According to public data on pricing, there are three versions available for sale of the Xiaopa C1. The entry-level Vitality version is priced at 4999 yuan, while the Luxury version C1 is priced at 9999 yuan.
In addition to the high-end brands launched by established electric vehicle companies, emerging players such as Xiaoniu Electric and No.9 Company have directly targeted the high-end market.
However, it is embarrassing that currently, most of the two wheel electric vehicle brands with high sales rankings are "entry-level models" priced between 1000 yuan and 4000 yuan; The high-end path of the enterprise's two wheeled electric vehicle is not smooth.
Source: iResearch Consulting
To some extent, the high-end trend of two wheel electric vehicles seems to be a false proposition.
Firstly, from the perspective of users, most consumers who purchase electric vehicles are more price sensitive.
Secondly, considering the product itself, it is difficult for two wheeled electric vehicles to have high-end or luxurious attributes.
Because in essence, electric vehicles are only a means of transportation, and consumers mainly consider driving habits and range. For "high-tech" applications such as app unlocking and voice assistance, many users say it is unnecessary and unwilling to pay high fees for them.
So ultimately, in the low threshold two wheel electric vehicle industry, cost-effectiveness is always the first decisive factor for consumers to purchase, which makes it difficult for this industry to move towards the high-end.
(III)
Can going to sea become the optimal solution?
As the domestic two wheeled electric vehicle industry enters stock competition and high-end development is hindered, overseas markets may become another choice for enterprises.
According to the "Electric Two wheeled Vehicle Market Information Report" released by the research firm Market Research Fund, the market size of two wheeled electric vehicles will exceed 100 billion US dollars (approximately 700 billion RMB) by 2030, with a compound annual growth rate of 34.57% from 2022 to 2030. This will be a new opportunity for Chinese two wheeled electric vehicle enterprises.
At the same time, many Southeast Asian countries have also begun to introduce policy guidance for motorcycle electrification.
For example, in March this year, the Indonesian Minister of Finance announced the allocation of 7 trillion Indonesian rupiah (455 million US dollars) to subsidize 1 million electric motorcycles by 2024, including 800000 new cars and 200000 fuel modified electric motorcycles.
In this context, domestic two wheeled electric vehicle companies have also begun to expand their overseas market layout.
For example, in 2021, the intelligent factory of Lvyuan located in Guigang, Guangxi was completed and fully launched, becoming its main production base for entering the Southeast Asian market. In 2023, Lvyuan and local partners in Thailand officially launched marketing plans and factory construction to promote the development of the brand in the local area.
Yadi also established an overseas production base in Beijiang, Vietnam in 2019, and subsequently began to comprehensively expand its overseas market.
Xinri stated that its company has initiated the investment and construction of intelligent chemical plants in Southeast Asia through the establishment of overseas wholly-owned subsidiaries and controlling subsidiaries, as well as the construction of overseas sales channels.
Obviously, for various enterprises, seeking opportunities overseas is indeed a new opportunity at present. On the other hand, based on the current progress of various enterprises entering the Southeast Asian market, most of them are still in the stage of market development. Faced with many uncertainties in policies and other aspects of overseas markets, in order to achieve breakthroughs in scale, various difficulties still need to be overcome.
Summary:
The smoke between two electric vehicles never stops.
The transportation attribute makes it difficult for players of two wheeled electric vehicles to avoid falling into a price war. At the same time, they have also launched a new battle in overseas markets. Who can laugh until the end, this still needs time to verify.
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