Why choose Europe? New car-making forces open up overseas battlefields

[Autohome?Industry]?Instead of competing in China's new energy vehicle market, sailing overseas may not be a good idea. At least, the new car-making forces are working hard to open up overseas battlefields. New car-making forces have been coveting the European market for a long time. Recently, some media reported that Weilai is preparing to establish an overseas business unit, with the internal code name tentatively named "Project Marco Polo", and plans to sell 7,000 ES8 and ES6 models in Europe within two years. NIO founder and chairman Li Bin once revealed that in the second half of next year, it will enter some countries that are more welcoming of electric vehicles. From a time point of view, it coincides with the "Marco Polo Plan". In late September, AIWAYS and Xpeng Motors both announced that their products would be exported to Europe. Why are new car-making forces focusing on entering overseas markets at this time? Can they carve out a niche in the European market? How should they deal with powerful competitors such as Tesla, Volkswagen, and Mercedes-Benz?

◆? New car-making forces have already had “plans to go overseas.” Pushing back to five months ago, NIO had already revealed its plan to enter overseas markets. Qin Lihong, co-founder and president of NIO, revealed two important pieces of information in an interview with the media: First, if NIO wants to be profitable, its sales volume needs to at least double. At that time, Weilai delivered 3,436 new cars that month. Second, Weilai will take a global route, and markets outside China are of great strategic significance. "Europe is one of the potential markets we have been seriously considering." Qin Lihong said bluntly that Weilai originally planned to sell in markets outside China this year, but due to the outbreak of the epidemic, the plan was shelved. Of course, the barriers to the European market are also high. Based on various considerations, NIO has set its time to go overseas within one or two years. The latest news shows that NIO has established an export business team. While exporting ES8 and ES6 models, it will be equipped with services including worry-free service and one-click power-up. It is worth mentioning that NIO’s first overseas NIO House may be launched in Copenhagen, Denmark. NIO’s overseas plans are accelerating. AIWAYS, on the other hand, is a pioneer in opening up overseas markets. Even though the Geneva Motor Show in March this year was canceled and the European version of the AIWAYS U5 failed to debut as scheduled, AIWAYS President Fu Qiang still went to Europe in person and shouted the slogan "Europe, we are coming" with enthusiasm, regret and some unwillingness. In May this year, the first batch of 500 European-style AIWAYS U5s successfully landed in Corsica, France, and put into local travel rental services. On September 23, AIWAYS’ second batch of European version AIWAYS U5 was shipped to Europe again. So far, AIWAYS has exported 700 electric vehicles to the European market. The achievement of such good results also benefited from the early layout of AIWAYS. In October 2018, AIWAYS officially announced its overseas strategy in Germany. In September 2019, AIWAYS U5 obtained the EU WVTA certificate, which means it has obtained sales qualifications in the European market. In 2020, the official website of AIWAYS Europe will also be launched, allowing users to order cars online and choose the time to use the car. "Car companies going overseas is not a unique strategy for new car manufacturers. In the short term, cars will still be a product with stronger industrial attributes than consumer goods. Scale effect is still the key factor for any car company to win." Roland Berger, Executive Director Shuai told Autohome that in Europe, where traditional industries are developed, the Internet economy and user business concepts are relatively lacking. This is why new car-making forces enter overseas markets and hope to gain sales by educating users.

◆? The Chinese and European electric vehicle markets keep pace. As Shi Shuai said, scale effect is crucial to new car-making forces. Although China remains the main driver of global car sales growth, competition is becoming increasingly fierce. Therefore, based on the judgment of the growth potential of the European electric vehicle market, new car-making forces have regarded Europe as the second battlefield after China. Felix Kunert, head of PwC's global automotive business, predicted that China and Europe will compete neck-and-neck in electric vehicles in the next few years. The final victory or defeat will depend on policy promotion, improvement of charging infrastructure, electric vehicles, etc. Car quality and availability. This judgment is also supported by data. A survey by PricewaterhouseCoopers and its strategic consulting subsidiary strategy& showed that the total number of pure electric vehicle registrations in the five European countries in the first quarter of this year has exceeded that of China. Other data show that from January to October 2020, the cumulative sales of electric vehicles in Europe reached 920,000 units, a year-on-year increase of 115%.

According to such a strong growth trend, the industry predicts that the number of electric vehicles in Europe may exceed 1.2 million units throughout the year, a year-on-year increase of more than 120%, making it the world's largest new energy vehicle market. The growth is so fast, and the reversal of carbon emission policies has a lot to do with it. European governments and car companies are working together to promote the electrification process. According to the EU carbon emission assessment requirements, the average carbon emissions of 95% of models will be reduced to 95g/km in 2020, and a fine of 95 euros will be imposed for every 1g exceeded. By 2021, all models will meet this standard. According to such emission requirements, it can be calculated that the electrification rate in Europe will reach about 10% in 2021, and the sales volume of electric vehicles will reach about 1.6 million. On the one hand, there are mandatory emission requirements, and on the other hand, there are generous subsidies. In the German market, the subsidy for pure electric bicycles under 40,000 euros has been increased to 9,000 euros (originally 6,000 euros/unit), and the subsidy for plug-in hybrid bicycles has been increased to 6,750 euros (originally 4,500 euros/unit), and the subsidies have been postponed until 2025. France has raised its subsidy budget for 2021 to 400 million euros and made it clear that the subsidy will be extended to 2022. Zheng Yun, Roland Berger's global senior partner and vice president of Greater China, told Autohome that 24 of the 27 EU countries have introduced incentive policies for new energy vehicles. Among them, 12 countries adopt dual incentive policies of subsidies and tax preferences, while other countries provide tax exemptions. Zeng Yuqun, chairman of CATL, predicts that European electric vehicle sales will surpass China's in 2020. It is a general trend for China and Europe to keep pace with electric vehicle markets. For the new car-making forces, there are full of market opportunities behind the competition for the "big brother" position in the Chinese and European markets. Shi Shuai summarized several driving factors for new car-making forces to enter overseas markets. First, global sales growth; second, brand building; third, supply chain collaboration; fourth, Tesla effect. "It's easy to fight from the top down, but it's harder to fight from the bottom up. The new car-making forces hope to enhance their overall brand power through their success in overseas markets and feed back domestic sales."

◆? With local established brands Force "Hand-to-Hand Combat" Opportunity does not mean the end, but the beginning of everything. It is foreseeable that NIO, which is about to enter the European market in 2021, will not have smooth sailing. Qin Lihong bluntly said that Europe is a more mature market and consumers are very loyal to brands. NIO needs to increase brand awareness among consumers, and growth in the field of pure electric vehicles will also take time. On the other side, Tesla and local European brands are eyeing it. In the environment where the electrification process in the European market is accelerating, the European market is "full of experts." Data shows that Tesla’s Model 3 alone achieved sales of 57,000 units from January to September, ranking second in market share. After the Volkswagen ID.3 was delivered in Europe at the end of August, it surpassed the Model 3 in some European countries, and its electrification transformation has achieved remarkable results. After 2021, the European electric vehicle market will also be a year of competition. Tesla's Berlin factory in Germany will be completed and put into production in July next year, when the tariff cost advantage will be clearly reflected. Among traditional German car companies, whether they are Volkswagen, Audi, BMW, Mercedes-Benz, PSA, Renault and other companies, a large number of electric vehicle products will be launched after 2021, covering almost all market segments. According to industry insiders, at present, China's electric vehicles exported to Europe have filled the gap in the entry-level and mid-to-high-end markets in terms of price. At the same time, their relatively leading intelligent experience gives Chinese electric vehicles certain advantages in the market. Fu Qiang once conducted research on the European electric vehicle market and found that there are two major pain points in European new energy vehicle consumption. First, traditional electric vehicles are mainly small cars, but this does not meet the needs of multi-population families in some satellite cities; second, high-end electric vehicles such as Tesla model 3 and Audi e-tron are priced at more than 50,000 euros. Subsidy requirements are not met. Shi Shuai pointed out that from a hardware perspective, the products of new car-making forces must meet the OTA certification (SUMS) and automotive network security certification (CSMS) implemented in Europe in 2021, otherwise they will not be able to obtain type certification. From the perspective of software, consumers in the European market have very different needs from domestic consumers in terms of brand value, car model preferences, scene preferences, willingness to pay for functions, etc. "New car-making forces need to configure product lineages and functions according to local conditions in the process of going overseas. On the other hand, in the field of sales and services, such as battery replacement mode, construction of charging piles/stations, etc., companies need to make further adjustments based on the actual conditions of each country's inspections. Make entry decisions," Shi Shuai said.

Of course, going overseas may also face the problem of "acclimatization". Shishuai believes that localization adaptation is divided into three levels: compliance level, user needs and localized supply chain. Intelligent networking, new energy, and autonomous driving are all global innovation trends. Shishuai said that the key to the success of new car-making forces lies in local transformation. For example, Chinese consumers have become accustomed to usage scenarios such as WeChat and Alipay, and will require "getting on the bus" in payment scenarios, while European users are more concerned about the security of usage scenarios.

◆? Editor’s summary: Tesla’s success at the global level has set off a wave of new energy revolution. From the perspective of brand competition, the future automotive industry will accelerate reshuffle and innovation, leading to a head-gathering effect. It will continue to strengthen. It is imperative for new car-making forces to accelerate their global expansion to prevent Teslas from gaining greater first-mover and resource advantages too quickly. (Text/Autohome? Li Zhengguang)