Evergrande, Huawei, Baidu, and Xiaomi are moving frequently, and the giants are ＂building cars＂ one after another. What are the odds？
On April 19, Hengda, Huawei, Baidu and other "new car-making forces" moved frequently, or released new cars or announced intelligent solutions for automobiles. On the same day, the class A share auto index sector rose by more than 6%, of which driverless concept stocks and automotive electronics concept stocks set off a daily limit.
Wen, Table/Guangzhou Daily All Media Reporters Ni Ming, Zhang Lu, Chen Lili?, Xu Xiaofang
Mobile phone end point business declines in 2020
Huawei switches to car racing
On April 19, all media reporters learned from an internal Huawei employee that on April 20, "Huawei’s flagship store will have huge new partners." At the same time, the video released clearly shows the outline of a car, with the caption "On April 20, Huawei’s flagship store welcomes new partners, Shanghai, Shenzhen and Chengdu." The reporter noticed that the Sailis Huawei Smart Selection SF5 had appeared on Huawei’s official website that day, but as of press time, Huawei had not provided the purchase entrance.
Regarding cross-border vehicle manufacturing, Huawei has stated many times before that it will not enter the field of vehicle manufacturing. At the recent Huawei 2020 annual report, rotating chairperson Hu Houjun reiterated that Huawei’s positioning in the field of smart cars is that the parts supplier has not changed.
Industry insiders told reporters that Huawei’s active rush to the automotive industry is not unrelated to the current decline in its mobile phone end point business. The reporter observed Huawei’s recent financial reports and found that in 2020, Huawei’s revenue growth slowed to 3.8%, the lowest in the past ten years. For the annual report data, Hu Houqian, chairperson of Huawei, said that the growth rate of consumer business did not meet expectations last year, and admitted that last year due to supply problems, mobile phone sales were affected. In this case, industry insiders told reporters that the decline in Huawei’s mobile phone sales is not only related to the separation of Honor mobile phones, but more importantly, the current Huawei mobile phone production capacity is restricted by the lack of "core" factors.
As for when Huawei’s intelligent driving department will be profitable, Su Qing, chief architect of Huawei ADS and president of intelligent driving product line, said that autonomous driving does not have to worry about profitability. It is reported that Wang Jun, president of Huawei Smart Car Solutions BU, said that this year’s investment in research and development will reach 1 billion US dollars (about 6.50 billion yuan).
But according to the financial report, Huawei’s cash flow has shrunk at present. According to the financial report, Huawei’s cash flow from operating activities in 2020 was 35.20 billion yuan, down 61.5% year-on-year. In this regard, Huawei said that this is due to increased investment in supply, research and development, material reserves and other aspects.
Compared with Xiaomi, which announced at the end of March to join the ranks of car manufacturing, its cash reserves in 2020 are as high as 108 billion yuan. Industry insiders told reporters that with Huawei’s capital, such as investing in the vehicle manufacturing industry with a long manufacturing cycle and high capital occupation, the pressure is obvious. At present, Huawei chooses to layout the intelligent driving industry or as a stopgap measure.
Class A share auto index sector rose more than 6%
On the same day, the 19th Shanghai International Automobile Industry Exhibition in 2021 (hereinafter referred to as the 2021 Shanghai Auto Show) opened, which is also the first A-level auto show held as scheduled in the world this year. At this Shanghai Auto Show, on the one hand, the independent brand product brands continue to rise and rise in the process of change; on the other hand, the joint venture foreign investment up the ante electric, under the entry of new and old forces and tech giants, the rise of electric intelligence.
Among them, Baidu’s Apollo Lego-style automotive intelligent solution was fully unveiled, and the two products of Smart Driving and Zhiyun ushered in a heavy upgrade. Its Zhiyun products can support car companies to quickly build intelligent capabilities, shortening the autonomous driving research and development cycle that originally took at least 7 years to complete to 6 months. After 100 days of official announcement of car building, Baidu CEO Robin Li and Geely CEO Li Shufu gathered. According to people familiar with the matter, the meeting between the two was not at the Shanghai Auto Show, and Jidu Automobile will announce a big cooperation. In addition, Wuling New Energy’s first convertible, Hongguang MINIEV CABRIO, made its world debut. Hengda Motor made its debut with nine models of Hengchi, covering all grades from A to D, as well as a full range of models such as sedans, coupes, SUVs, MPVs, and crossovers.
On April 19, the class A share auto index sector rose more than 6%, Dongfeng Motor, GAC Group, Changan Automobile and other stocks rose by the limit. In the Hong Kong stock market, as of the close, Wuling Automobile rose 27.53%, and the intraday increase was over 30%; Geely Automobile rose 4.82%; BYD shares rose 4.77%, Beijing Automobile rose 4.14%.
The reporter also noticed that the automotive industry chain has strengthened, including driverless, complete vehicles, automotive electronics, automotive parts, lithium batteries and other branches, among which driverless concept stocks and automotive electronics concept stocks have set off a rise in the limit.
New forces should overcome capital barriers, production capacity barriers and market barriers as soon as possible
The reporter observed that at the end of March and the beginning of April, China’s "new car-making forces" continued to move: on March 30, Xiaomi, a cross-border car manufacturer, announced "the first investment of 10 billion yuan, and the investment amount in the next 10 years will reach 10 billion US dollars"; on April 7, the 100,000 production car of NIO was mass-produced in Jianghuai NIO Hefei Advanced Manufacturing Base; on April 8, the Management Committee of Wuhan Economic and Technological Development Zone and XPeng Motors officially signed an investment agreement for the intelligent networked car manufacturing base and R & D center project…
The "14th Five-Year Plan" clearly focuses on strategic emerging industries such as new energy vehicles, and organizes future industry incubation and acceleration plans in hydrogen energy and other industries. The market believes that this is a strong support for the development of the new energy vehicle industry; not only that, peak carbon dioxide emissions and carbon neutrality targets have become national strategic goals, which has also injected strong impetus into the development of the new energy vehicle market.
Not only that, in terms of smart cars, the "14th Five-Year Plan" also makes it clear that vehicle to everything will be actively and steadily developed. The three departments have issued the "National Vehicle to Everything Industry Standard System Suggestions Guide (Intelligent Transportation Related) ", and the construction and development of vehicle to everything related systems continue to accelerate. The reporter observed that the cooperation between car companies and high-tech enterprises is also accelerating. For example, Huawei and BAIC’s new energy brand JIHU have cooperated to launch intelligent luxury pure electric sedan BAIC α coefficient S, and Hengda Automobile has established a joint venture with Tencent’s companies. In this regard, Bohai Securities released a research report and believes that it is optimistic about the trend of intelligent automobile networking, and smart cars are expected to appear "explosive" mass-produced models this year.
Zhong Shi, an auto industry analyst, believes that now Chinese and foreign automakers have seen the big trend of industry transformation and entered the new energy automobile industry, which will bring new survival challenges to the "new car-making forces". They must survive capital barriers, production capacity barriers and market barriers as soon as possible. He also said that in the end, to achieve the growth of China’s new energy automobile industry, it depends on the comprehensive competition of car companies in terms of advanced technology, cost control, supply chain improvement, excellent quality, safety and reliability. "Objectively speaking, the technical challenges faced by the’new car-making forces’ are still huge, and domestic car companies in our country need to redouble their efforts to seize the opportunities brought by this industry transformation."
Fu Yuwu, honorary chairperson of the China Society of Automotive Engineers, also emphasized in an interview that "new car companies should respect the objective laws of technological development, and maintain respect for the automotive industry while making efforts on the new track of intelligence and electrification."
Sales of new energy vehicles are expected to grow rapidly in 2021
In the face of joint venture car companies up the ante and our country’s own brand car companies expanding production capacity, is the supply of new energy vehicles oversupplied? On the production side, the industrial added value of the automobile manufacturing industry in the first quarter of 2021 increased by more than 50% year-on-year; while the data of the China Association of Automobile Manufacturers shows that Quarter 1, China’s new energy vehicle production was 533,000, and sales were 515,000, an increase of 3.2 times and 2.8 times year-on-year respectively. For the future market, some car companies told reporters that they are currently expanding their plants to increase production capacity. Among them, Guangzhou Automobile Aian is expected to invest about 500 million yuan and plans to double production capacity in early 2022.
On the sales side, the retail volume of narrow passenger cars in the first quarter of this year totaled 5.092 million, an increase of 68.8% year-on-year, a record high growth rate. For the sharp increase in retail volume of passenger cars in the first quarter of this year, the Passenger Association explained that in addition to being affected by the low sales base in the same period last year, another major driving factor is the increasing contribution of new energy vehicles. According to the data of the Passenger Association, in the first quarter, the retail volume of new energy vehicles was 437,000, an increase of 302.9% year-on-year. The retail penetration rate of domestic new energy vehicles in the first quarter was 8.6%, which was significantly higher than the 5.8% in the same period last year. Among them, the penetration rate of new energy vehicles among independent brands in March was 20.5%.
Some industry analysts believe that production capacity does not mean actual supply. In the face of changes in fuel vehicles and new energy vehicles in the market, in addition to adjusting the product structure of automobile companies, they will also re-target the marketization goal of new energy vehicles according to their own advantages, and create a marketing method for electric vehicles, which will affect the sales strategy and consumers are expected to benefit.
Huaxi Securities believes that with the continuous improvement of the sales structure and quality of new energy vehicles, as well as the continuous launch of high-quality new models such as the Model Y series, supply will drive demand changes, and the penetration rate of new energy vehicles is expected to accelerate. It is expected that sales will grow rapidly in 2021.