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What if the new energy vehicle subsidy is cancelled now?

What if the new energy vehicle subsidy is cancelled now?

  • Categories:Industry News
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  • Time of issue:2019-04-17 14:48
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(Summary description)The delay in the introduction of subsidies for new energy vehicles may be related to the Sino-US trade negotiations under negotiation. This speculation stems from a report in the Wall Street Journal on February 14th, in which it said that in the latest round of high-level trade negotiations between China and the United States, China proposed to cancel the subsidy policy for domestic new energy vehicles

What if the new energy vehicle subsidy is cancelled now?

(Summary description)The delay in the introduction of subsidies for new energy vehicles may be related to the Sino-US trade negotiations under negotiation. This speculation stems from a report in the Wall Street Journal on February 14th, in which it said that in the latest round of high-level trade negotiations between China and the United States, China proposed to cancel the subsidy policy for domestic new energy vehicles

  • Categories:Industry News
  • Author:
  • Origin:
  • Time of issue:2019-04-17 14:48
  • Views:
Information

The delay in the introduction of subsidies for new energy vehicles may be related to the Sino-US trade negotiations under negotiation. This speculation stems from a report in the Wall Street Journal on February 14th, in which it said that in the latest round of high-level trade negotiations between China and the United States, China proposed to cancel the subsidy policy for domestic new energy vehicles.

According to the original plan, subsidies for new energy vehicles will retreat year by year, and will completely withdraw by 2021. The current situation is that subsidies may be cancelled in advance. If the subsidy is cancelled in advance, it is likely that the car company is caught off guard.

Even if it is not completely cancelled, the increase in subsidies will be a high probability event. Previously, a subsidy policy document published by the Internet showed that the country subsidy fell by 50% or even more in 2019. The land patch is likely to be completely cancelled.

When it comes to the new energy vehicle subsidy policy, which car company does not love and hate?

Now the pressure to cancel subsidies will be great

"Substantial and rapid adjustment of subsidy policies will have different degrees of impact on the operation and planning of enterprises within the industry, resulting in an increase in operational pressure. The direct impact is pricing and sales, and the indirect impact is the need for corporate development strategies. Quickly adapt and adjust.” Li Yixiu, general manager of Beiqi New Energy Marketing Co., told Automotive Business Review.

Beiqi New Energy sold 158,000 vehicles in 2018. The production and sales of new energy vehicles have already formed scale. It should be said that there is sufficient anti-risk capability. Even so, companies are still feeling a lot of pressure when subsidies are going down.

In contrast, if the subsidy is cancelled in advance, the pressure on the new product that has not yet formed a sufficient scale for the product has just been listed is even greater.

The CEO of Xinte Automobile first bluntly said, “Now the subsidy will be very big for the industry, and it will basically hit the cash flow and profit loss of all new energy companies.”

According to Liu Yang, dean and vice president of Xinte Automobile Research Institute, the industry has not yet matured. At present, the comprehensive cost optimization of pure electric vehicles at the product level of enterprises cannot compete with traditional models. The early retreat of subsidies may cause many companies to fail to operate normally, and some truly innovative companies are likely to fall before the industry changes.

The uncertainty of subsidy policy has caused problems for enterprises, and the R&D positions are also deeply felt, because it is impossible for enterprises to make product development plans without considering the national policy orientation.

Xie Shibin, executive vice president of the Geely Automobile Research Institute and dean of the New Energy Research Institute, told the auto business commentary that if the subsidy is cancelled, “the vehicle development plan and technical plan will be disrupted, and the huge development costs invested in the previous period will be Water drifting, companies can't stand it."

Price increase and cost reduction

For the problem of rising costs after the subsidy is cancelled, the company either bears this part of the rising cost itself, or spreads the pressure to the supplier, or let the user bear it. The most likely is to spread the pressure of rising costs everywhere.

Although the current new energy vehicle subsidy rules have not come out in 2019, many car companies have already responded to the measures and raised the price of the models. This round of price adjustment is most active in new car companies.

Xiaopeng Automobile took the lead in announcing the price adjustment: Since February 1, 2019, after the comprehensive subsidy, the national unified price was 158,800 yuan for the enjoyment version, 178,800 yuan for the intellectual enjoyment version, and 1.998 million yuan for the exclusive version. Compared with the initial price of the listing, the price was raised by 20,000 yuan, 28,000 yuan and 34,000 yuan respectively.

DEV1, the first model of Xinte Automobile, raised the price of the subsidy: the price of the Chuangzhi version subsidized from the previous 66,900 yuan to 71,900 yuan, and the price of the Chuangrui subsidy increased from 71,900 yuan to 7.79 yuan. Ten thousand yuan.

Weimar Automobile also launched the “Weima EX5 Insured Preferred Through Train” activity. Users who participated in the big payment from February 25th, if the national subsidy in 2019 is reduced by more than 10,000 yuan, Weimar will subsidize more than part. The limited number of activities provides the preferred model, while stocks last.

The policy of zero-running cars is that as long as the S01 advance payment is paid before May 31, you can enjoy the comprehensive subsidy price of 109,900 to 139,900 yuan.

A self-owned brand company told the auto business comment that the profit of the products under the existing subsidy standard is still ok. If the subsidy is cancelled, the existing electric vehicle price will not simply return to the pre-subsidy pricing, but will have a rebalancing. Pricing.

Take the current market sales price of about 120,000 models, the battery cost is still about 60,000 yuan, plus the cost of motor, electric control, body and so on, and then consider the sales policy, the estimated price will be 150,000 yuan. about. In other words, if the subsidy is completely abolished, the model will increase by about 30,000 yuan, or 25%.

Because the subsidy rules have not yet come out, it is a very nerve-racking problem for companies to re-price products. The price is high, consumers can't buy it, affecting sales; if the price is low, the company will have to bear more costs.

However, compared with the simple price increase, cost reduction is the key.

BYD insiders said that they are ready for subsidy cancellation, will strive to upgrade technology to a higher level, further improve the supply chain system, and at the same time reduce costs internally, and the greater the output, the lower the cost will naturally.

Li Yixiu also said that in the era of subsidies and subsidies, enterprises should accelerate technological upgrading, accelerate business model innovation, and pay attention to the improvement of cost control capabilities. First said that Xinte has rapidly developed targeted vehicles that do not consider subsidies.

For enterprises, accelerating product innovation, improving product competitiveness, reducing costs by technology, and reducing costs by scale, this is the most secure path. Of course, it will not happen overnight.

It is good to cancel subsidies in the long run.

Subsidies are double-edged swords, and the same is true for subsidies. If subsidies are now abolished, the most direct impact in the short term may be the increase in corporate costs, the decline in profitability, and even the existence of enterprises.

However, short-term bearishness is good for the long run.

"Policy subsidies are like opium. The price of sales must be paid off, but the industry will really return to market orientation and be healthier." Wang Chiyin, co-founder and CEO of Green Chi, also gave the following reasons.

First of all, many of the business operations under subsidies have accumulated a large amount of subsidies that have not been received. Although users enjoy subsidies, this is a great pressure on cash flow and business operations.

Second, subsidies have been supplemented by the past and the country, which has resulted in a strong regional concentration of new energy sales. After cancellation, it can help the new energy sales in various regions to be more balanced.

Third, in the past, subsidies favored high-endurance mileage and high-energy-density products. After the cancellation, the demand for new energy products will be more diversified, and hybrid models will be more popular in the market.

Gu Huinan, general manager of GAC New Energy, told the auto business comment that after the subsidy has subsided, the country will be able to invest to improve the environment of the current charging environment and the environment for attendance, and continue to adhere to special policies such as unlimited tax exemption for new energy vehicles. Then the subsidy cancellation is beneficial to the industry in the long run.

He also believes that subsidies will slow down the collapse of a group of companies that are not strong enough. "What are the benefits of their collapse? Now the cost of electric vehicles is so high, that is, the raw materials of the upstream. They have been hyped up, and they have been turned up to 10 times 10 times in a few years. If this part of the enterprise goes bankrupt, can resources be relatively focused? Returning raw materials to the original position, so that the surviving enterprises also have a good development condition."

He judged that with the subsidies going downhill, powerful companies will survive, and companies without strength may be eliminated.

The subsidy is backed up, and the test is the ability of the company to resist risks. For the current new energy automobile industry, the process of survival of the fittest is also an industry purification.

In addition, for the enterprise, the subsidy is completely canceled, and it is not loose in some sense.

Because state subsidies can take up to two years to get, and before that, companies need to advance this part of their own funds. For example, on February 21 this year, Beiqi New Energy just got a subsidy of about 1 billion yuan, which is the central financial subsidy for 2016-2017.

Xiaopeng Automobile Chairman He Xiaopeng recently accepted an interview with the automotive business commentary and said that it is a good thing to deliver too much for the new forces that have just begun to deliver. "For example, a new power company sold 100,000 vehicles at once. Cars, the state's subsidies will owe it to five or six billion yuan, so, in the early stage of delivery, too much delivery and too little delivery can die.

Xiaopeng Automobile has just begun to deliver new cars. He Xiaopeng said, "Our task now is to lay the foundation. After 2020, the subsidies will be relegated and there will be no pressure."

In the future, if subsidies are completely abolished, market-based and fair competition will be truly achieved, there will be no monopoly, and there will be no government protection. Enterprises will no longer bear the huge capital turnover pressure and the risk of not receiving subsidies for many years.

Standing in a fair position, the new energy vehicle subsidy policy has indeed promoted the development of the industry and allocated a large part of the cost to enterprises. Without a subsidy policy, the industry is likely to not develop at all, let alone China can become the world's first market for new energy vehicles.

At the "China Electric Vehicle Hundred Peoples Forum (2019)" held in January, the Minister of Industry and Information Technology, Miao Wei, revealed that the relevant departments are working hard to study and formulate the 2019 new energy vehicle subsidy policy. The general principle is to ensure that all subsidies are withdrawn after 2021. The industry does not experience major fluctuations, and the pressure brought about by the retreat is released in stages.

It can not bring too much financial pressure to the country, but also properly produce the effect of survival of the fittest. It is necessary to protect the fruits of the new energy victory in the front, and to link up with the double-point policy in the future. For policy makers, The grasp of the scale of such subsidies is also an art.

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