Why are all domestic cars striving to become high-end when BYD pushes for supercar in the pure electric market?
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发表于 2024-3-9 10:26:17
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Recently, the most discussed car companies in the market are undoubtedly Ideal.
Last week, Ideal Automobile just released its financial report on turning losses into profits. The heat has not yet faded, and on March 1st, Ideal Automobile held a new car launch event at the Shanghai World Expo Center. A pure electric MPV priced at 559800 yuan, the Ideal MEGA, exceeded market expectations and sparked a new round of debate in the automotive industry.
The price war in the car market is raging, and whether the upgrade strategy of Ideal Automobile will be effective still faces many uncertainties. At present, the market is waiting for the first sales data of Ideal MEGA to be released. Generally speaking, brands will simultaneously disclose pre-sale data or big order data when new cars are launched. The delayed release of sales data has led to many doubts in the market about Ideal MEGA.
It is difficult for Ideal Automobile to enter the high-end pure electric market, but it is a must answer question for Ideal Automobile. It can be anticipated that in 2024, as the elimination race in the car market is in full swing, more and more Chinese car companies will also embark on a high-end process and release astonishingly priced products. But high prices do not necessarily mean high-end. There are still many deep questions to be answered regarding the transformation and upgrading of Chinese automobiles.
Why should Ideal do pure electricity?
The spring press conference held in Shanghai this time is the most important press conference held by Ideal in recent years. As the focus of the press conference, the Ideal MEGA is the most expensive model priced by Ideal to date, and also the first pure electric model launched by Ideal.
Previously, Ideal had always focused on incremental programming technology as its main selling point. Since 2018, Ideal has launched four extended range electric vehicles, the Ideal ONE and Ideal L series. According to Li Xiang, the founder and CEO of Ideal Automobile, extended range is the most practical solution for electric SUVs. In reality, the extended range route has indeed hit the market demand, and there are many customers who want to try new energy vehicles but also have mileage anxiety. In just a few years, the ideal delivery volume has rapidly risen to the top of new power car companies.
According to the 2023 financial report data, Ideal Automobile achieved a revenue of 123.85 billion yuan last year, a year-on-year increase of 173.5%. The annual delivery volume was 376000 vehicles, a year-on-year increase of 182.2%. Both revenue and delivery volume are the highest among new energy vehicle companies. Ideal Automobile stated that in the first quarter of this year, with the large-scale delivery of Ideal MEGA and 2024 Ideal L7, L8, and L9, it is expected that the delivery volume of Ideal Automobile will reach 100000 to 103000 units.
Why did Ideal Automobile start promoting pure electric vehicles when the extended range is selling so well? On the one hand, this is because the dividend period of the extended range will pass, and on the other hand, pure electric models will also help car companies further achieve brand high-end.
It is widely believed in the industry that extended range or plug-in hybrid vehicles are just transitional products for new energy vehicles, and their energy efficiency is not as high as that of pure electric vehicles. Although they enjoy transitional benefits, with the construction of charging networks, maturity of electric technology, and increased market acceptance, the advantages of pure electric vehicles will become increasingly apparent. More importantly, pure electric technology is also a direction encouraged by policies. Starting from January 1, 2023, Shanghai has stopped giving new energy vehicle licenses to extended range electric vehicles. As the first city of new energy vehicles, Shanghai's new energy policies serve as a benchmark for national policies.
High end is the ambition of the ideal to pursue success. Ideal Automobile was originally positioned as a mid to high end product, but specifically, most of its previous products focused on household use scenarios, with SUVs as the main model and the target audience being the "new middle class" in the sinking market. To enter a more high-end market, Ideal will change its operational approach in first tier cities.
However, users in first tier cities have the highest preference for pure electric vehicles. According to the 2022 New Energy Vehicle Consumption Insight Report, the acceptance rate of pure electric vehicles among users in first tier cities has reached 56%, while the penetration rate of pure electric vehicles in second tier cities is 42%. However, there is not much difference in the preferences of users in third tier cities for pure electric, plug-in, and extended range vehicles.
A corresponding detail here is that Ideal Automobile, which has always been striving to reduce costs, has for the first time held a key product launch event in Shanghai. Coincidentally, on the second day after Ideal released its new car, the Shanghai Municipal Commission of Commerce issued a new round of subsidies for replacing old fuel vehicles with new ones and a new energy vehicle replacement policy. At the same time, it announced that Shanghai has a total of 1.288 million new energy vehicles, ranking first among cities in the world. The Shanghai market has a high acceptance and strong consumption capacity for new energy vehicles. In a sense, Shanghai has become a must compete destination for high-end pure electric vehicles worldwide. Behind the high-profile actions of Ideal Automobile in Shanghai is its commercial appeal to further upgrade its brand.
On March 1st, Ideal Automobile held its spring 2024 press conference in Shanghai.
The high-end market is entering an explosive period
Setting aside the success or failure of the ideal high-end upgrade, a certain fact is that more and more Chinese car companies hope to get a share of the high-end market.
The most obvious manifestation is that many car companies have started releasing segmented market models such as MPVs and supercars in recent years. These segmented markets do not have a significant market share, but their profit margins are relatively high. For example, MPVs, also known as multi-purpose vehicles, are often used for high-end business purposes due to their large size. MPV has become one of the springboards for many Chinese car companies to become high-end due to its ability to add more luxury configurations and interiors, providing greater pricing space for its products. Before the ideal, Xiaopeng also launched the MPV model Xiaopeng X9 at the beginning of this year, priced at 388000 yuan, with the intention of once again hitting the high-end market.
In terms of supercars, the BYD Look Up U9, which was just released at the end of February, has already begun to sprint into the luxury market. Last April, BYD's mid to large-sized SUV, the Looking Up U8, was launched at the Shanghai Auto Show and priced at 1.098 million yuan, attracting a lot of attention. BYD has once again set a new ceiling on the price of domestic new energy vehicles, starting from 1.68 million yuan for the pure electric supercar U9.
In addition, it can be observed that in first tier cities like Shanghai, the competition among high-end car brands is becoming increasingly fierce. At the end of February this year, NIO announced that its sales in the Shanghai region officially exceeded 70000 units, ranking first among brands with an average transaction price of over 300000 yuan. It is the best-selling domestic high-end automotive brand in the Shanghai region. But since the second half of last year, more and more high-end brands have started to accelerate their layout in the Shanghai market. For example, starting from September last year, BYD's first nationwide direct operated store and central store have successively opened, and they have all chosen to open in Shanghai. For example, SAIC's high-end brand Zhiji had a monthly sales volume of over 10000 at the end of last year, and its largest customer source also came from the Shanghai market.
On one hand, there is an increasingly fierce price war, and on the other hand, there is an endless stream of high-end car models. Why is there such a contradictory phenomenon in the Chinese car market? Li Qingwen, Chairman of the China Automotive Enterprise Innovation Conference and President of the Automotive Evaluation Research Institute, stated that in fact, 10 years ago, when China formulated policies to develop the electric vehicle industry, it had already planted seeds for the concentration and high-end development of Chinese automotive enterprises.
"Unlike the choices made by Chinese automotive companies at the beginning of this century, as they enter the era of electrification and intelligence, startups like 'Weixiaoli' mostly choose to enter the market from the high-end and mid to high end, participating in market competition. Such strategic decisions have affected the entire market and contributed to the current situation where Chinese automotive companies concentrate on launching high-end brands," said Li Qingwen.
Specifically, high-end not only brings stronger brand influence and bargaining power to enterprises, but more importantly, it can also force enterprises to develop new technologies. In fact, many traditional car companies are pushing for high-end development, hoping to lead by high terminal brands, improve their technological level, and accelerate the overall transformation towards electrification and intelligence.
Li Qingwen believes that with the promotion of the concentration and high-end of Chinese automotive enterprises, the global high-end brand landscape of automobiles will also be restructured. In the Chinese market, the era when high-end cars were monopolized by foreign car companies such as BBA has passed. Chinese car companies dominate, and the situation of German and American high-end cars coexisting will gradually form.
At the Geneva International Auto Show, which opened on February 28th, BYD also brought its high-end product lineup to the booth. Photo by Xinhua News Agency reporter Meng Dingbo
High end is not just about high technology
But it is important to be aware that high-end automotive brands are not an easy task, especially for Chinese car companies. Whether it is new forces or traditional car companies, most Chinese car companies are beginners in the operation of high-end products. How to break away from the path dependence on past joint venture models and form the brand power of Chinese enterprises still needs more exploration.
Experts believe that technology is not the main factor limiting the current high-end development of domestically produced cars. "The high-end brands that are currently doing well have basically formed a consciousness of innovation technology as their core competitiveness, with long-term goals of persistence and struggle," said Li Qingwen.
The electrification and intelligence level of domestic cars is relatively advanced, and the high-end development of domestic cars requires more attention to deeper issues. For example, automotive industry analyst Guo Huaiyi gave an example that some traditional car companies did not have experience in operating high-end products in the past. Although they were transitioning towards high-end products, their distribution system still used the network and model of low-end products in previous joint ventures, which to some extent would limit their marketing and service level improvement.
For example, in the context of the current price war, maintaining good cash flow is also an urgent issue that high-end brands need to pay attention to. Li Qingwen believes that in the medium to long term, the trend of high-end Chinese automotive brands will not change, and the high-end attempts of car companies will not stop. But the emergence of price wars may slow down the high-end process of Chinese car companies in the short term. Intense price competition leads to a decrease in corporate profitability, reduced investment in research and development, and undermines the development of high-end products. Once the funding chain breaks, high-end brands may fall into a vicious cycle of "having technology but not money to invest".
On the other hand, only when car companies have more abundant cash flow can their technological research and development sustainability be stronger. From this perspective, if Ideal can truly transform its early capital advantages into technological advantages, it can have a greater chance of winning in the fierce competition in the future high-end car market.
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