New policies to support the export of new energy vehicles into the golden period

• High-end export models

If, in the early years, China's auto exports focused on "cost-effectiveness," then in recent years, the export of new energy vehicles has gradually developed into mid-to-high-end models with high added value, and the "gold content" of products has continued to increase. Statistics from the Passenger Federation show that the average export price of China's new energy passenger vehicles has risen from US$3,000 per vehicle in 2018 to US$22,000 per vehicle in 2022.
Not only has the product price increased, but many domestic brands such as BYD (002594), Weilai, and Xiaopeng are also trying to use their mid-to-high-end models as entry models for entering new markets. For example, BYD's first model to be exported to Norway is the BYD Tang, the flagship SUV model of the BYD Dynasty family, priced at NOK 619,900 (approximately RMB 405,800). As of the third quarter of 2022, models sold by Chinese car companies in Norway above 400,000 yuan accounted for 3.73% of the total pure electric vehicle registrations, a year-on-year increase of 3.43%.

At the same time, the premium capabilities of domestic new energy vehicle brands in overseas markets are also increasing. The overseas pricing of some models is significantly higher than that in China, and the range is as high as 30% to 50%. For example, the price of BYD Tang in China is about 300,000 yuan, and the price in Norway is about 400,000 yuan, similar to the price of the BMW ix3, a pure electric medium and large SUV sold in Norway. In addition to BYD, some models of MG, Xiaopeng, Euler, and other brands are also priced higher overseas than in China.

• Diversification of export targets

China's new energy vehicle export market is gradually expanding from a local market dominated by developing countries to a diversified market pattern in Europe, Asia, and Africa.
From 2020 to 2022, BYD, Xiaopeng, Weilai, and many other domestic brand car companies will begin to enter the mainstream overseas car market. In 2021, Europe will replace Asia as China's top export region for new energy vehicles. In Europe, 1 out of every ten new energy vehicles comes from China. The ASEAN market represented by Thailand and Malaysia, with its considerable population consumption potential and market prospects, is also a window for Chinese new energy car companies to "go global." According to data from the Thai Automobile Association, Chinese brands account for over 90% of Thailand's total sales of new energy vehicles.

At the same time, as brands such as BYD enter the African market, new energy vehicles made in China have become an important driving force for the electrification transformation of the African auto industry. Algeria's "Oriental News" commented that electric vehicles made in China occupy more market shares in Africa, and the cake is getting bigger and bigger, providing necessary technical and product support for Africa's electric transformation. 

• Chaining of export methods

Industry insiders pointed out to the reporter of "Outlook" News Weekly that at present, China's new energy automobile industry chain has generally shown a development from "electric vehicle export + lithium battery export" to "localization of overseas new energy industry chain" the trend of.

On the one hand, the rapid growth of exports of new energy vehicles has driven the growth of core components such as lithium batteries. In 2022, the total export of lithium batteries nationwide will be 342.65 billion yuan, a year-on-year increase of 86.7%, ushering in a growth window period. On the other hand, with new energy vehicles going overseas, related companies in the industrial chain have also gone overseas to build factories. Under the premise of protecting core technologies, Chinese car companies participate in international competition by building factories overseas, which will help to enhance China's participation and voice in the global supply chain, improve competitiveness, and further maintain the integrity of China's industrial chain and supply chain: resilience and stability. 

The complete industrial chain layout gives China's new energy vehicles multiple advantages.

First, the cost is lower. According to a French auto parts supplier report, Chinese automakers' cost of producing electric vehicles of the same type is 10,000 euros lower than that of European automakers, and the cost advantage is obvious.

Second, it is more resistant to market fluctuations. In 2022, in the context of supply chain crises such as chip shortages and battery price hikes that many car companies worldwide have suffered to varying degrees, BYD's sales will still maintain high growth. They will become the world's new energy vehicle sales champion in 2022. Its highly vertical, and The Independent and controllable supply chain system is indispensable.

Third, push the automobile industry towards a rapidly iterative "consumer electronics" model. Today, China has formed an industrial agglomeration area in the fields of new energy vehicles, power batteries, and key components and has the supporting capabilities of the entire industry.
The scale effect of industrial agglomeration enables the innovative design of new energy vehicles to be implemented quickly with low cost and high efficiency. It accelerates the iteration speed of products and technologies, closer to the rapid iteration mode of "consumer electronics," accelerating the technological innovation process of China's new energy vehicles.

"Engineer-oriented" technological innovation has effectively enhanced the endogenous power of industrial development.

In the new energy field, relevant Chinese companies have always adhered to "engineer-oriented" independent innovation and have achieved high levels of innovation in core components such as batteries, motors, and electronic controls. A technological breakthrough has been achieved, and considerable technological advantages have been achieved. Take the power battery, which accounts for about 40% of the cost of electric vehicles, as an example. China's power battery industry has developed rapidly in recent years, supporting new energy vehicles with longer mileage, faster charging speed, and more competitive market prices.

The obvious advantages of the original technology have greatly enhanced the endogenous power and discourse power of China's new energy vehicle industry, allowing China's new energy vehicles not to be afraid of competition in the international market, including developed countries, and have a certain premium ability. Become one of the "new three" leading China's foreign trade exports. 

What obstacles remain in the export of EVs

Although China's new energy vehicles export situation is gratifying, we still face some difficulties and problems to be solved.

1. It is urgent to build a complete service system

Unlike traditional export products such as home appliances and textiles, automobiles rely more on a complete set of supporting systems such as marketing networks and after-sales services. They need support, guidance, coordination, and regulation.

2. The problem of poor logistics needs to be solved as soon as possible.

Although the demand for China's new energy vehicles in foreign markets has increased significantly, the lack of capacity of China's car ro-ro ships will undoubtedly limit the export of cars.

3. Proactively pay attention to and pay attention to some trade frictions.

The most typical "trade war" between Japan and the United States that occurred from the mid-1980s to the mid-1990s was automobiles. The U.S. "Inflation Reduction Act" clearly states that the U.S. government will provide tax credits of US$7,500 and US$4,000 to consumers who purchase local, new, and used electric vehicles from January 2023. Moreover, for these cars produced in the United States, the batteries come from countries that have signed free trade agreements with the United States. This is clearly to protect the U.S. market. Now some European countries have indicated that they will take protective measures. The European Union has now introduced the "Battery and Waste Battery Regulations" and "carbon tariff" policies, which in a sense, also form barriers. It is not ruled out that China's large-scale auto exports will trigger trade frictions; we must pay attention to this.

4. Reliance on foreign countries in the field of computing power chips.

Chinese auto factories rely on foreign countries in automotive operating systems and high computing power automotive chips, and there is a risk of a "stuck neck." Leading industry companies have adopted extreme suppression measures, which will affect the development and internationalization of China's auto industry.

5. It is necessary to build a good reputation and reputation in the European market

The main problem facing exporting China's new energy self-owned brands is that the export market fluctuates greatly. The demand for new energy vehicles in Europe is still relatively large, which is also a good opportunity for China's exports. In terms of new energy vehicle products, much work must be done for localization, adaptation, and improvement to obtain better satisfaction. At the same time, corresponding sales and maintenance efforts should be made, and a good use environment must be established overseas. Effective guarantee mechanisms must be established to ensure car satisfaction, whether charging facilities or after-sales maintenance. Improve to prevent unfinished services exported to developing countries in the early stage. China's new energy vehicle exports must build a good reputation and reputation in the European market and reduce internal friction.

6. Enterprises expand market information channels are limited

Countries around the world have different certification regulations and access requirements for the import of passenger vehicles. For example, the European Union's chemical REACH regulations, vehicle E-MARK certification, the United States DOT certification and EPA certification, electric vehicle ECER-100 regulations, and technical barriers to trade such as electromagnetic compatibility, respectively, in the energy density and battery life of new energy vehicles. Mandatory specifications are made regarding mileage, charging rate, operation safety and failure protection, collision safety, etc., and are not regularly updated. If the cars entering the market do not meet the relevant regulations, they may face product recalls, high fines, administrative penalties, and delisting risks. 

Driven by technological innovation and policy support, China's new energy vehicle brands continue to expand overseas. In addition, the Ministry of Commerce stated that it would continue to work with relevant departments to support new energy vehicle companies to speed up the construction of overseas marketing and after-sales service networks and increase brand promotion. According to industry insiders, China's auto industry has given full play to the advantages of systemization and scale, continuously enriched the matrix of overseas products, and continued to increase its international competitiveness.