How do you view the increasingly competitive new energy vehicle market today? Is there still room for new car-making startups? What is your opinion on the state's tightening of new energy vehicle manufacturing qualifications? Currently, it is basically very difficult to obtain independent applications. The NIO-style contract manufacturing model may also not work with the Ministry of Industry and Information Technology's requirement for 'dual qualifications.' Some mergers and acquisitions related to qualifications have also been halted. What are the reasons behind this? Is it very difficult for technology companies to enter the car-making industry? What is the biggest obstacle? What are your expectations for the future new energy vehicle market?
Zhang Zhiwei, Executive Director of Partnerships for Greater China at Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan'), and Xu Guangcan, Consulting Director for Greater China, were interviewed by Bloomberg to discuss the development of China's new energy vehicle market.
Bloomberg
How should one view the increasingly competitive new energy vehicle market today? Is there still room for new car-making startups?
Xu Guangcan
Frost & Sullivan Greater China Consulting Director
The new energy vehicle market is indeed highly competitive at present, mainly due to policy incentives and technological advancements that have reduced the cost of new energy vehicles and increased consumer acceptance. Coupled with the accelerated transformation of traditional automakers and the entry of new force brands, the market has become even more competitive.
Despite the increasingly fierce competition, there is still some room for new car-making startups. Baidu, for example, is a company with a deep accumulation in autonomous driving and artificial intelligence. Luo Ke or Jishi Auto also carry the entrepreneurial genes of the internet and high-tech fields. They basically have their own characteristics and advantages, such as unique insights in autonomous driving, intelligent cockpits, and in-car services.
Firstly, from the perspective of policy environment, governments around the world have introduced strict emission restrictions for traditional fuel vehicles and a large number of subsidy policies for new energy vehicle manufacturers in order to encourage the development of new energy vehicles. This is very beneficial to new car manufacturers. In addition, the growth of the new energy vehicle market has also promoted the improvement of the supply chain and the reduction in battery costs to a certain extent, creating a better market environment for new car manufacturers.
Secondly, the founding teams of new car-making forces generally have a strong technical background. For example, Baidu has a profound accumulation in artificial intelligence and big data, which gives them more possibilities in areas such as autonomous driving and intelligent connectivity. They can introduce products that are more technologically advanced and offer a better user experience through bold innovation, thereby attracting consumers.
However, the new energy vehicle market is a capital and technology-intensive sector, and new car-making forces need more time and substantial resource investment to succeed in this area. At the same time, they must also face many challenges, such as obtaining market access qualifications, consumer acceptance, brand building, after-sales service, etc.
Overall, competition in the new energy vehicle market is becoming increasingly fierce, but there is still a certain market space for new car-making forces with innovative capabilities, technological backgrounds, and the ability to precisely solve user pain points.
How do you view the state's tightening of new energy vehicle manufacturing qualifications? We understand that it is basically very difficult to pass the independent application process. The NIO-style OEM model may also not be viable with the Ministry of Industry and Information Technology's requirement for 'dual qualifications,' and some mergers and acquisitions related to qualifications have also been halted. What are the reasons behind this?
The state's tightening of new energy vehicle manufacturing qualifications may be due to various considerations. Firstly, this measure can effectively control the development speed of the new energy vehicle market, to avoid overheating and potential risks in the market, and to prevent some companies from becoming overly dependent on subsidies. Therefore, strict qualification control has been implemented.
Secondly, tightening qualification requirements may be aimed at encouraging innovation and technological progress. By raising the entry barriers, it can prompt enterprises to increase investment in research and development, improve product quality and technical standards, ensure the safety and quality of new energy vehicles, enhance the reputation of new energy vehicles in China, and thereby promote the development of the entire industry.
In addition, the government may also have taken into account factors related to national industrial policies and strategies. The new energy vehicle industry is regarded as an important direction for national development. The government may hope to guide the industry towards a healthier and more sustainable development by tightening qualification requirements, in order to avoid excessive low-price competition and resource waste.
Regarding the dilemmas of self-application and contract manufacturing models, this may be because the government hopes to encourage enterprises to develop independently and innovate rather than relying on contract manufacturing models. The government may place more emphasis on the technical strength and independent intellectual property rights of enterprises to ensure the sustainable development of the new energy vehicle industry.
In summary, the state's tightening of new energy vehicle manufacturing qualifications may be due to various considerations, including market risk control, technological progress, and industrial policies. These measures will increase the difficulty of market entry but are also aimed at guiding the healthy development of the new energy vehicle industry and ensuring the protection of product quality and consumer rights. Enterprises should closely monitor policy changes, adapt to new rules, and continue to strive to improve their technical level and market competitiveness.
Is it very difficult for technology companies to enter the car manufacturing industry? What is the biggest obstacle?
For technology companies, entering the automotive manufacturing industry is indeed a formidable task. Here are some of the main factors that may hinder technology companies from entering the automotive manufacturing sector:
1. Technical barriers: Automotive manufacturing involves complex engineering and manufacturing technologies, including chassis design, power systems, body structure, etc. Technology companies often lack the technical strength and manufacturing experience related to automotive production, which may lead to difficulties in manufacturing and mass production.
2. Capital requirements: Automobile manufacturing requires a large amount of capital investment, including research and development, production facility construction, supply chain management, etc. Technology companies may need to invest heavily in establishing manufacturing bases and supply chain systems, which can be a huge challenge for some startups.
3. Market Competition: The automotive market is highly competitive, with many traditional automakers and new energy vehicle brands already in existence. On one hand, traditional automakers possess a large market share and brand influence. On the other hand, emerging new forces are gradually maturing in terms of technology and market. Technology companies need to find their position in this highly competitive market and compete with other competitors.
4. Regulations and Compliance Requirements: The automotive industry is subject to strict regulations and compliance requirements, including safety standards, emission standards, etc. Technology companies need to understand and comply with these regulations and standards, investing time and resources to ensure the legality and compliance of their products.
5. Supply Chain Management: Automotive manufacturing involves complex supply chain management, including parts procurement, production planning, quality control, etc. Technology companies need to establish a stable and reliable supply chain system to ensure the smooth progress of production.
In summary, technology companies entering the automotive manufacturing industry face challenges in multiple aspects such as technical barriers, capital requirements, market competition, regulatory compliance, and supply chain management. However, if technology companies can overcome these challenges and possess innovative technologies and business models, they still have the opportunity to succeed in the automotive manufacturing industry.
What are the expectations for the future new energy vehicle market?
Regarding the future new energy vehicle market, there are several expectations as follows:
1. Continuous growth momentum: With the increasing awareness of environmental protection and the government's continuous support for clean energy, the new energy vehicle market will continue to maintain its growth momentum. Moreover, as production scales expand and technical costs decrease, the prices of new energy vehicles will become more competitive.
2. Technological Progress and Innovation: The new energy vehicle market will continue to embrace technological progress and innovation. Developments in battery technology, charging infrastructure, autonomous driving technology, etc., will drive the improvement of new energy vehicle performance and provide a safer and more convenient travel experience.
3. Diversified product choices: With intensified market competition, consumers will have more options. Traditional automakers, new energy vehicle brands, and technology companies will introduce a wider variety of new energy vehicles to meet the needs of different consumers.
4. Charging infrastructure construction: With the popularization of new energy vehicles, the construction of charging infrastructure will be further advanced. The government and enterprises will increase investment, improve the coverage rate and charging speed of charging facilities to solve the charging problem.
5. Policy Support and Incentive Measures: The government will continue to introduce policies and incentive measures to support the development of new energy vehicles. This includes purchase subsidies, free parking, and exemptions from vehicle purchase taxes, among others, in order to promote the sales and popularization of new energy vehicles.
Overall, it is expected that the new energy vehicle market will continue to grow in the future, with more technological innovations and product choices emerging. With the improvement of charging infrastructure and enhanced policy support, new energy vehicles will become one of the mainstream choices for future travel.
*This interview was published in Bloomberg, with reporter Cao Dong. The original title was: 'China's Push to Cool EV Growth is Upending Big Tech's Ambitions'.
