New Energy Vehicle Market's Turbulent Waves

2024-07-25 119 Comments

Recently, the "big gun" in the power battery industry—lithium carbonate—has seen its prices plummet, directly breaking through the "cost line" of 80,000 yuan/ton.

This drop is no less than an earthquake, shaking the entire new energy vehicle industry chain. Some see the dawn of new energy vehicle prices reaching new lows, while others sense the impending storm.

For battery giants like CATL, this is undoubtedly good news. In the first half of the year, although CATL's revenue decreased by 11.88%, net profit actually increased by 10.37% against the trend. Behind this seemingly contradictory phenomenon is the credit of falling raw material prices.

However, for upstream lithium battery companies, this is a heavy blow. Companies such as Tianqi Lithium and Ganfeng Lithium have all predicted losses, as if they were on a roller coaster, falling from the clouds to the abyss.

Of course, the biggest beneficiaries are still our广大消费者. With the reduction of battery costs, the prices of new energy vehicles naturally have to follow suit. CATL's newly launched lithium iron phosphate battery cells have directly dropped to 0.4 yuan/Wh, more than half cheaper than last year!

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This scene can't help but remind people of the famous "butterfly effect"—when a butterfly flaps its wings in South America, it may cause a tornado in Texas.

Here, the decline in lithium prices is like the butterfly's wings, and the entire new energy vehicle market is the upcoming "tornado."

With CATL taking the lead, BYD, Tesla, and other car companies have also followed suit, triggering round after round of price wars.

This has been a tough time for those high-end joint venture car companies, whose days of "making money while lying down" in the Chinese market are gone.

Just as sleep meets a pillow, as new energy vehicles are fighting fiercely in price wars, the decline in battery-grade lithium carbonate prices undoubtedly gave car companies a strong stimulant. Does this mean that the prices of new energy vehicles will fall again?The answer is affirmative!

In July of this year, the penetration rate of new energy vehicles in China broke through 50% for the first time, which means that new energy vehicles have transitioned from a "niche product" to a "mainstream choice."

BYD fired the first shot, prompting other automakers to join the fray, either willingly or reluctantly. However, contrary to expectations, it was the once high-flying joint venture automakers that fell first.

The once unassailable BMW, Mercedes-Benz, and Audi (BBA) also had to lower their stance and join this war without smoke. Yet, accustomed to high profits, how could they endure such a "grievance"?

BMW was the first to crack, announcing its withdrawal from the "price war," and there are rumors that Mercedes-Benz and Audi are also considering "calling it quits."

It's not just BBA; Volkswagen, Toyota, and Honda, these former "sales kings," have also expressed their intention to "rein in their horses," no longer lowering prices.

It seems that these joint venture automakers are determined to "protect their profits."

But can they really achieve their wishes? The answer is likely no.

Faced with such a situation, some joint venture automakers have chosen to "exit" the price war. They claim to want "dignity," "brand," and "price increases." This inevitably recalls the old saying: those who can't afford to lose always find various excuses.

However, this kind of "exit" is essentially equivalent to surrender, equivalent to withdrawing from the Chinese market. In the blue ocean of new energy vehicles, not advancing means retreating.Taking advantage of his illness, we can demand his life. With the help of the price drop of lithium carbonate, Chinese car companies can definitely launch another round of price wars to completely rewrite the market pattern.

BYD Chairman Wang Chuanfu once predicted that in the next 3-5 years, the share of joint venture brands will drop from 40% to 10%. However, the pace of reality seems to be faster than the prediction - joint venture car companies have already begun to lose, unable to bear the "pain" brought by low profits.

All this inevitably reminds people of the development process of China's automotive industry over the past few decades. We used to have no technology and no choice, and could only be forced to accept the high prices of joint venture car companies, "mowing leeks", and could only use the market to exchange technology, accumulating our technical system bit by bit, and improving our manufacturing capabilities.

But now, we have a large number of excellent independent brands such as BYD, Geely, Changan, NIO, and Li Auto. Their products, whether in terms of technology, quality, or cost performance, are enough to compete with joint venture brands, and even surpass them.

The most important point is that China's new energy automotive industry has formed a complete industrial chain and strong competitive advantages. From the upstream raw materials, to the midstream batteries, motors, and electric controls, and then to the downstream整车 manufacturing, Chinese companies have taken the lead.

We have finally achieved overtaking on the curve, and have emerged in the field of new energy vehicles, possessing the ability to compete with car companies from various countries.

From "lithium" to "profit", this is not only a homophonic word, but also a microcosm of an era. The decline in lithium prices has triggered a series of butterfly effects, which may ultimately completely reshape the automotive market pattern in China and even the world.

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