China Automobile Industry Association and China au

2022-07-29
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On June 24, the Ministry of industry and information technology of China Association of automobile manufacturers and China Automotive Power Battery Industry Innovation Alliance announced that the standard conditions for automotive power battery industry (hereinafter referred to as the standard conditions) would be abolished from June 21, and the white list system would be officially abolished. The current four batches of 57 enterprise directories would also be abolished. It has to be said that this is an important progress in the policy environment

the cancellation of the power battery white list system has long been a clue. In may2018, the China Association of automobile manufacturers and the China automotive power battery industry innovation alliance jointly announced the white list of the automotive power battery and hydrogen fuel cell industry (the first batch), announced that this version of the white list is a follow-up to the catalogue of standard conditions, and announced that it is decoupled from subsidies. At that time, Samsung, LG, SK and other three Korean enterprises had all entered the list. Their senior executives all breathed a sigh of relief and quickly restarted their investment in Chinese factories

many people think that this is an important decision to promote the comprehensive opening up of China's power battery market and even the new energy vehicle market, which indicates that the decision-making departments represented by the Ministry of industry and information technology have full confidence in the competitiveness of local enterprises. However, there is a more important impact that has not been paid enough attention: this decision also promotes the diversification of China's power battery and even new energy vehicle technology routes. Together with the decline of the 6.25 subsidy, it marks the rapid withdrawal of the policy hand that once constituted a deep intervention in enterprise behavior

6.24 it is no coincidence that the white list has been abolished and the subsidy on 6.25 has declined significantly. In connection with the substantial opening up of new energy vehicle production access that began three years ago, the decentralization of approval of automobile investment projects by the national development and Reform Commission to the provinces for filing management in January this year, and the large-scale financial subsidies that began five years ago, they together constitute the basic logic of policy evolution: water storage and fish culture, introduction of competition, fish breeding, and the quality reform and opening-up that has seriously affected China's economic growth

since then, not only has the door of the market been accelerated to open to the outside world, but also enterprises in the market can choose the battery technology route according to their own market positioning and user scenarios. It is conceivable that full free competition will accelerate the innovation of enterprises and lay the foundation for the sustainable growth of China's new energy vehicle market

specifically, the abolition of the white list will bring several direct consequences

first of all, Samsung, LG, Panasonic, SK and other multinational companies will accelerate the release of production capacity in China, so as to quickly improve the competitive level of China's power battery market, resulting in a short-term decline in the gross profit margin of Chinese local companies represented by catl, but the whole vehicle and its supply chain will benefit from this. In the long run, local leading companies such as catl and BYD will also benefit from the improvement of competition

secondly, the capacity of lithium iron phosphate will accelerate the release. According to the observation in the previous period, if we switch from ternary (622) to lithium iron phosphate, the current cost can be reduced by 10%-15%, which is a very valuable starting point for automobile companies to cope with the withdrawal of subsidies. In addition, most of the recent intensive cases of electric vehicle spontaneous combustion are related to ternary batteries. It is estimated that after the launch of several brand vehicles, they will choose to switch. For different markets, they will launch versions of the same model with different endurance, and put their eggs in different baskets

third, price wars occur in the markets at the fourth and fifth levels (below prefecture level cities). With the release of the production capacity of the whole industrial chain, the strategic value of the fourth and fifth level markets with real capacity will quickly emerge. The competition between A00 and A0 small cars will rapidly upgrade. Products with short endurance (within 300km), high appearance, high intelligence and low price will experience a decline in subsidies in the fourth and fifth level markets Raw material 6 horizontal high-precision load sensor (1000KN on the horizontal loading device) 1 Putian, Fujian. The rising price of raw material and the pressure of downstream car enterprises have led to vitality. We expect that the models with the sales guide price of more than 50000 yuan will reappear and rekindle this real huge market, thus bringing hope to the new energy vehicle industry which is in a dilemma due to the withdrawal of subsidies

in general, the abolition of the white list, like the withdrawal of subsidies, is a policy arrangement that can bring long-term positive effects, which is fully in line with the reform spirit of deregulation and service emphasized by Premier Li Keqiang. The integrity and consistency shown by the Ministry of industry and information technology, the national development and Reform Commission, the Ministry of Finance and other ministries in these decision-making behaviors are commendable

however, there is still a long way to go before reform and opening up. In the future market growth process, it is still necessary to prevent excessive policy intervention due to emergencies or uneven local interests, be vigilant about the control of production access, market access and enterprise competition behavior, strengthen the legal environment and consumer protection, weaken industrial policies, weaken subsidies or blood transfusion for specific enterprises, guide the free flow of market factors, and follow the mind and principle of "lenient in and strict out" regardless of origin, Create a good competitive environment

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