Significant Growth Is Expected in the 2nd Quarter of 2022
According to statistics, in the first quarter of 2022, China’s electric vehicle (mainly refer to electric 2-/3-wheelers here) production and sales increased by 10.53% compared with last year. Although there is still an overall growth, but the increase is relatively concentrated. There are only a few enterprises that recorded real effective growth. Most of the brands show a decline or slight increase.
Although the growth rate is only 10.53%, it is very impressive compared with other industries. But there is still a big gap with the prediction of the major brands at the beginning of the year. The root causes include the following three aspects:
Purchasing power went down. Personal assets suffered passive depreciation. Whether it is the Russia-Ukraine war or the superpower games, in the complex international situation, the weakening of purchasing power brought by shrinking wallet is not a rare phenomenon among some people or in one country, but a collective one. For the electric vehicle industry which still depends on the core consumer group of the middle and low income people, delaying consumption has undoubtedly become the only choice to deal with the current situation.
Raw material prices are rising. According to the Ministry of Industry and Information Technology, the price of upstream raw materials of the electric vehicle industry rose more than 10% year-on-year in the first quarter, but the factory prices rose only 0.7% year-on-year. Profits are further squeezed, so OEMs must reduce market budgets to cope with the change.
Resurgences of COVID-19 cases in many places. The first quarter should be a peak season for the electric vehicle industry, but repeated outbreaks of the pandemic in Jiangsu, Tianjin, Guangdong and other major production bases impacted logistics and transportation, which not only affected normal production but also greatly restricted the transfer of products to the market. At the same time, consumer demand was not adequately released due to limited promotional activities.
In the first quarter, the electric vehicle industry saw mixed results, but from the moves of major brands and market feedback, the second quarter is still worth expecting.
Better growth is expected due to proper control of the pandemic
Since 2020, epidemic prevention and control has become routine work, which led to the surge in demand for dispersed mobility. Amid the pandemic, it has become a social consensus to avoid taking public transport for fear of infection and traveling by oneself. Such ideology affected consumers’ purchasing decisions for a relatively long time. Electric vehicles have become people’s priority for short trips.
With the resumption of normal life and work in Shanghai, the city will finally defeat the disease. Electric vehicles are expected to again usher in a new growth opportunity.
In addition, China’s customs statistics show that in 2021, China’s export of electric two-wheelers totalled 22.9 million units, a year-on-year growth of 27.7%. Under the impact of the pandemic, market demand in Europe and the United States is also increasing, and the overseas sales of electric two-wheeled vehicles are also increasing rapidly. Considering alto the recent fluctuations in international gasoline prices, experts also forecast that this growth trend will continue.
Another growth point lies in the massive replacement of old vehicles
Since the implementation of the new state standard, trade-in has become a new growth point of the electric vehicle market. For the trade-in in Zhejiang, which is widely concerned by the industry, 12 pilot counties (cities, districts) have been launched in March to carry out a comprehensive replacement of non-standard vehicles under the promotion of relevant government departments. According to the Zhejiang Electric Bicycle Management Regulations, non-standard electric bicycles shall not be used on the road from January 1, 2023, which will lead to the release of a huge market space of nearly 18 million non-standard electric bicycles in Zhejiang province.
In addition, according to public information, Guangdong, with the sales of about 8 million units in 2021, also ushered in a new wave of policy release and trade-in fervour. For instance, electric two-wheelers on the road without pre-registration or a license plate will be penalized from July 1; the transition period for non-standard electric bicycles will be ended until August 1. In addition, Shaanxi will also ban non-standard electric bikes on the roads starting from July 1.
With the end of the transition policies, replacement of old vehicles will become an important growth point in the second quarter for the electric vehicle industry.
Continuous advancement drives stable growth
Affected by the epidemic, several exhibitions of the electric vehicle industry were canceled in the first quarter, but the action of manufacturers has never stopped.
Driven by “fashion + Technology”, Aima recorded a significant growth in the first quarter, achieving a net profit of 317 million yuan in the single quarter. In the meantime, its A500 and E390 won the 2022 German iF Design Award by virtue of innovative technology and unique design aesthetics.
Aiming for“run father”, Tailg’s hot product the Biaobing recorded a sales volume of 150,000 units in 46 days. Tailg is said to be launching the V9, M511 and many other new products in the near future.
Luyuan focuses on “durable quality” and puts forward the new brand positioning of “riding for 10 years”. From “6-year guarantee for core components” to “riding for 10 years”, Luyuan’s “ruthless” strength in products is fully demonstrated. Its liquid-cooled ultra-endurance series have become the representative of hardcore technology in the industry.
From the performance of the head brand in the first quarter, it is not difficult to find that returning to product value is becoming the core strategy of OEMS. In the long run, this is more in line with the major tone of sustainable development of the industry.
With the effective regulation of administrative policies and the continuous evolution of the leading brands, the electric vehicle industry is ushering in a benign development period of internal and external harmony. At the same time, the large trade-in market is about to boom to bring a better second quarter.
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