FAW-Volkswagen/Shanghai General Motors/Great Wall/Beijing Hyundai may now be large-scale negative integration of new energy

FAW-VW, Shanghai General Motors, Great Wall, Hyundai and other car companies may not be able to meet the new energy vehicle points (hereinafter referred to as NEV points) requirements if they fail to achieve exponential growth in production and sales of new energy vehicles in the short term. Recently, the Innovation Center for Energy and Transportation (iCET) released "2019-2020 China Passenger Vehicle Compliance and Forecast of New Energy Vehicle Integral" (hereinafter referred to as the iCET report), predicted the industry-wide and different companies' NEV integration compliance prospects. NEV scores for some traditional car companies are growing very slowly due to a small production base for new-energy vehicles, the report said. FAW-Volkswagen, in particular, is likely to become the largest traditional car company with negative NEV scores in 2019 and 2020, with NEV scores accounting for 0% of the total in both scenarios. The iCET report also suggests that the cost for auto companies to offset negative average fuel consumption (CAFC) scores with positive NEV scores drops as oversupply leads to lower NEV scores, making it difficult for companies to unleash the incentive to upgrade energy-saving technologies for internal combustion engines. NEV points forecast high and low scenarios, industry standards without difficulty CAAA released data show that in 2018, domestic production and sales of new energy vehicles completed 1.27 million and 1.256 million vehicles, respectively, year-on-year growth rate of 59.9% and 61.7%. According to the "Energy Saving and New Energy Vehicle Industry Development Plan (2 012-2020) "By 2020, the production and sales of new energy vehicles will reach a scale of 2 million vehicles, which, based on the existing base, will only need to increase by 25% annually to reach the expected growth rate, which is far lower than the growth rate of the existing market. Therefore, the iCET report divides the forecast scenarios into two categories: low scenario, which is based on the National New Energy Vehicle Industry Plan of "Energy Efficiency and New Energy Vehicle Technology Roadmap", that is, the production scale of new energy vehicles will reach 2 million by 2020; High scenario is based on the current market development inertia to predict the development scale of new energy vehicles in the next few years. Year-on-year Growth Forecast of New Energy Vehicle Production Capacity under High and Low Scenarios The Measures for Parallel Management of Average Fuel Consumption of Passenger Car Enterprises and Integral Points of New Energy Vehicles (hereinafter referred to as the Management Measures) stipulate that For passenger vehicle enterprises with annual production or import volume of more than 30,000 units of traditional energy vehicles, starting from 2019, the integral proportion requirements for new energy vehicles shall be set. In 2019 and 2020, the integral proportion requirements for new energy vehicles shall be 10% and 12%, respectively. With the size of the conventional energy passenger vehicle market remaining unchanged (at the same level as in 2017), NEV integral demand from 2019 to 2020 was 2.41 million points and 2.89 million points, respectively. Calculations show that the industry as a whole needs 620,000 and 710,000 passenger vehicles for new energy in 2019-2020. Minimum New Energy Passenger Vehicle Demand vs. Forecast Output 2019-2020 Even under low scenarios, new energy in the industry in 2019-2020 Production of source passenger cars also far exceeded demand. That is, as long as the market for new energy vehicles is growing steadily, it is not difficult for the industry to achieve NEV compliance. On the other side of the coin, due to the excess of NEV positive integrals, less than one-third (8% in high scenarios) of NEV positive integrals will be used to offset NEV negative integrals in 2019-2020, while the remaining positive integrals will only be used to offset CAFC negative integrals, on the premise of full utilization. Note: Assuming that NEV positive integral is not wasted, NEV positive integral can not be sold due to over-supply of double integral compliance, plus CAFC positive integral carry-forward factor in past years, the enterprise can offset the negative integral of CAFC pulled up by high energy consumption in the current year at little cost. As a result, the incentive for companies to upgrade energy-saving technologies for internal combustion engines may be difficult to unleash. The industry can easily complete NEV compliance requirements, enterprise-level NEV points compliance, is the ice fire double days. FAW-Volkswagen Bottom, Difficult to predict the NEV Points Compliance Prospects of Major Traditional Automobile Companies, the iCET report selected the top 10 traditional automobile companies in 2017, which accounted for 51.9% of the total sales of passenger vehicles in the country. Most of these companies produce only a tiny handful of new-energy vehicles, some with zero production and a large compliance base, according to the iCET report. Therefore, the above auto companies to achieve NEV points compliance in the short term, not small. How difficult is it? 2017 Has Born For companies that produce new-energy vehicles, the iCET report assumes that their production will expand at the same rate set in both high and low scenarios; For companies that do not produce new energy vehicles in 2017, the production of new energy passenger vehicles is projected as a percentage of total passenger vehicle production as shown in the table below. For the enterprises that have not yet produced new energy passenger vehicles, the forecast of the proportion of new energy passenger vehicles in 2019-2020 shows that the proportion of NEV points of all enterprises except Haoqing Automobile and Chongqing Chang'an will not exceed 8% in 2020, which is lower than the compliance requirement (12%). Among them, FAW-Volkswagen and Beijing Hyundai because of the small production base of new energy vehicles, NEV points accounted for a very slow growth. Under the low scenario, the top ten enterprises of traditional energy vehicles NEV score development trend forecast high scenario, the top ten enterprises of traditional energy vehicles NEV score development trend forecast high scenario, there are still half of the enterprises do not meet the requirements of compliance proportion. FAW-Volkswagen in particular, in high and low scenarios, NEV points accounted for 0% of the bottom. NEV scores, low scenario, there are eight enterprises in 2019 and 2020 are negative NEV scores, integration gap as high as 650,000 and 700,000. Under the low scenario, the top ten enterprises of traditional energy vehicles NEV integral development trend forecast high scenario, the top ten enterprises of traditional energy vehicles NEV integral development trend forecast high scenario, Shanghai Volkswagen, Dongfeng Motor and Changan Ford began to accumulate NEV positive points from 2019. Number of enterprises generating negative NEV scores in both 2019 and 2020 Down to five, from low to high: GM Shanghai Wuling, Great Wall, Beijing Hyundai, Shanghai General Motors and FAW-Volkswagen. NEV Positive Points Shortage, "Buy Buy Buy" or "Manufacture Manufacture"? The iCET report compares the 2017 production of new energy passenger vehicles from non-new energy vehicle companies with the production required to meet NEV standards. Statistics show that Haoqing automobile and Changan automobile can reach the standard as long as they maintain the existing production scale of new energy passenger vehicles; There is a big gap between the existing production level and the target level of other enterprises. In particular, Shanghai Volkswagen, Dongfeng Motor and Changan Ford, which did not produce new-energy passenger vehicles in 2017, are struggling to meet their 2019 and 2020 production targets. Major Conventional Vehicle Companies' 2017 New Energy Passenger Vehicle Production vs. NEV Points These companies, which desperately need new energy vehicles to meet NEV points, are clearly reluctant to buy too many NEV Positive Points and pay their competitors. In November 2018, Zheng Gang, then general manager of Beijing New Energy, told reporters that "we are one of the companies with the most carbon credits in China, but so far we have not sold any of them" because of the severe oversupply in the credits market. Do not want to buy NEV points, CAFC positive points can not offset NEV negative points, only one way to build their own cars. Taking Volkswagen as an example, it is planned that Volkswagen (China) and its partners will jointly invest more than 4 billion euros in 2019 to ensure electric vehicles, connectivity, mobile travel services, research and development, efficient production processes and new technologies. Transformation in areas such as product development. In SUV year, the opening year of Volkswagen's new energy vehicle offensive, Volkswagen will add more than 30 new energy vehicles in China in the next two years, 50% of which will be localized. In October 2018, SAIC Volkswagen opened its new energy vehicle plant in Anting, Shanghai, which is expected to have an annual capacity of 300,000 vehicles when it goes into operation in 2020. In addition, Beijing Hyundai, which is also extremely short of NEV points, has also set an ambitious target of selling more than 10% of nine new energy vehicles by 2020. From a result-oriented perspective, the impact of the management approach of "establishing a long-term mechanism for energy-saving and new-energy vehicle management" has begun to emerge--non-new-energy vehicle companies can no longer remain indifferent to the need for double points, especially NEV points. If you don't want to "buy and buy", you have to "build and build".