Looking at the transformation of China's auto industry from the exit of Iran nuclear agreement

A few days ago, US President Trump announced that the United States withdrew from the Iranian nuclear agreement signed during the pre-President Obama era and plans to impose "the highest level" economic sanctions on Iran. Affected by this, the market worried that the short-term international oil price may soar. From the perspective of the domestic oil price market, the National Development and Reform Commission issued a message on the 11th of this month that according to the current mechanism for the formation of refined oil prices, domestic gasoline and diesel prices have risen by 170 yuan per ton since May 24, 2018. And 165 yuan.

In fact, before Trump announced its withdrawal from the Iran nuclear agreement, global oil supply was already tightening. As the largest buyer of Iranian crude oil, China has drastically increased its imports of Iranian crude oil before the United States resumed sanctions against Iran. The analysis report of the National Development and Reform Commission's Price Monitoring Center predicts that the exit of the United States from the Iranian nuclear agreement will have a continuing impact on international oil prices. The Organization of Petroleum Exporting Countries will also hold a mid-term meeting in June to discuss the extension of production cuts, comprehensive judgments, and short-term international Oil prices may hit new highs.

The importance of oil to traditional automobiles is self-evident. China has long been a major consumer of automobiles and imports most of its oil. The Research Institute of China National Petroleum Corporation noted that in 2017, the apparent consumption of CNPC was approximately 588 million tons, with a growth rate of 5.9%; of which the national crude oil output continued to decline, at 192 million tons, which means that imported crude oil accounted for 67%, China's strong demand for crude oil caused China to surpass the United States in 2017 to become the world's largest crude oil importer.

With the growing demand for auto consumption in the Chinese market, Xu Changming, deputy director of the National Information Center, made predictions on the future auto market: “It is expected that auto sales in the Chinese market will increase by another 50% in the future, reaching a peak vehicle sales of 42 million vehicles.” At the same time as sales growth, China’s car ownership will continue to grow. Xu Changming pointed out that according to the multiple relationship between car ownership and sales, it is expected that when the car sales volume reaches 42 million peaks, China’s car ownership will also reach 630 million peaks. In 2020, China’s car ownership will surpass that of the United States and become the world’s number one.

Xu Changming, Deputy Director of the National Information Center

New energy and fuel-efficient cars take on mission

Against the backdrop of RM 630 million in ownership, if all rely on the popularization of traditional fuel vehicles, the future will inevitably face the serious problem of fuel shortage. From the wave of the United States exiting the Iranian nuclear agreement in the oil market, the necessity of rethinking the transformation and upgrading of China’s auto industry is by no means a worry. Although Iran is not China’s largest source of crude oil imports, China’s dependence on imported oil remains high. It is an indisputable fact that once the international oil price fluctuates greatly, it will have a significant impact on our country.

Concerning the contradiction between future fuel supply and auto consumption demand, Xu Changming pointed out that “the solution we already have is to vigorously develop new energy and fuel-efficient cars.” Wang Binggang, director of the Technical Committee of the Strategic Alliance for Technological Innovation in the Electric Vehicle Industry also had On many occasions, it has repeatedly stressed the importance of developing new energy vehicles to solve energy security issues.

In 2015, the State Council issued the Action Plan for “Made in China 2025”. In 2016, the “Energy-saving and New Energy Vehicle Technology Roadmap” was published, and the development of energy-saving cars and new energy vehicles became a consensus of the industry. Especially in recent years, China's new energy automotive industry has indeed made remarkable achievements. As we all know, in 2017, the production and sales volume of China’s new energy vehicles were close to 800,000 vehicles (source: China Association of Automobile Manufacturers, referred to as “China Automobile Association”), which reached 774,000 vehicles and 777,000 vehicles, respectively. Growth of 53.8% and 53.3%, which is China's new energy vehicle sales for the third consecutive year to obtain the world's first. According to the latest data from the China Automobile Association, in April 2018, a total of 82,000 new energy vehicles were sold in China, a year-on-year increase of 138.4%. Combined with data from January to April, cumulative sales of new energy vehicles reached 225,000, an increase from the same period of last year. 149.2%.

The revolution has not yet succeeded and all circles still need to work hard

From the data point of view, the rapid development of new energy vehicles to describe the progress can not be overstated, but from the perspective of market acceptance, new energy vehicles seem to have a long way to go. Especially when the price of oil rose, some car owners prefer to walk or use public transportation, and they have never moved their "partial selfishness" toward electric cars. On the one hand, the policy encourages the promotion of electric vehicles. On the other hand, consumers are still skeptical. In the final analysis, it is the charging anxiety of electric vehicles and the pain points in various aspects that are always lingering in the hearts of consumers. In response to the pain points of consumers, car companies are also striving to increase the mileage of electric vehicles, especially after the adjustment of the new energy subsidy policy in 2018. High-end mileage models have become the focus of support, but the cost issue still discourages consumers. .

In the sales of new energy vehicles, the impact of policies has always been the majority of pure electric vehicles, plug-in hybrid models only occupy a small number. According to the data from the China Automobile Association, in the new energy passenger car in 2017, the proportion of plug-in hybrid passenger cars was only 19%. Wang Chuanfu, chairman of BYD Co., Ltd., publicly stated that “after the introduction of the post-subsidy era and the introduction of the double-integration policy, how will the new energy private car achieve good and rapid development? After we study it, we believe that plug-in hybrids will be available for some time to come. The power car is still the mainstream of global private car development.” He also said that PHEV can not only meet the dual-integration requirements of enterprises, but also solve the market's high expectations for new energy vehicles' driving range, and resolve the subsidy and downgrading of new energy automotive industry. With negative effects and other issues, Wang Chuanfu suggested that the state give more policy support to plug-in hybrid vehicles.

BYD Co., Ltd. Chairman Wang Chuanfu

With the tightening of emission regulations and the implementation of the double-integration policy, many car companies use plug-in hybrid vehicles as shortcuts to relieve pressure under the stimulation of negative integration of fuel consumption. In the past Beijing auto show, a variety of plug-in hybrid models, including the lead-gear 01 PHEV, WEY P8, a new generation of BYD Tang DM, and Dongfeng scenery 580PHEV, were unveiled and received high attention from consumers. In April this year, domestic sales of new energy vehicles, plug-in hybrid vehicles "brightly rise." According to data from the China Automobile Association, in April, the production and sales of plug-in hybrid vehicles were all 17,000, which was a year-on-year increase of 143.4% and 194.6%, respectively. From January to April, the production and sales of plug-in hybrid vehicles reached 59,000 vehicles and 57,000 vehicles respectively, an increase of 239.6% and 226.7% over the same period of the previous year. Xu Haidong, Assistant Secretary-General of the China Automobile Industry Association, believes that “the faster growth in the sales of plug-in hybrid vehicles is mainly a result of market selection because the blended models are closer to the experience of traditional fuel vehicles.”

Whether it is environmental pressure or energy crisis, the development of new energy vehicles is a general trend. However, the market share of new energy vehicles is still very small. The market acceptance of new energy vehicles is still a bottleneck restricting its development, and it has a policy-driven impact. Next, the development of the new energy automotive industry is highly dependent on subsidies. After the subsidies are withdrawn, how new energy vehicles continue to maintain rapid growth is a common concern of the industry. In addition, the plug-in hybrid market has what kind of potential, how car companies will be laid out, have to be answered by the market.