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As the penetration rate of new energy vehicles has reached 30%, the industry is faced with increasingly intense challenges and competition. In March, well-known car brands including BYD, Li Auto, and Leapmotor have successively launched their new products, some of which have substantially improved performance, yet surprised consumers with their prices, but have not incited a similarly positive reaction in the investment market.
Despite the launch of new car models sparking consumer interest in purchases, the stock market reaction has been tepid, with investors harboring doubts about the long-term performance and market acceptance of the new products. For instance, Li Auto’s market value fell sharply by 10.71%, while Leapmotor also faced an 11.07% decline in stock price. One reason for the concern is that many fear the “increase in features without price hike” strategy may exacerbate existing homogenization competition.
Industry analysts point out that the release of new vehicles is often the result of competitive learning among enterprises. Although it includes the advantages of competitors, it is generally lacking in innovation, thus contributing to fierce price competition. Meanwhile, according to recent monthly data, the market penetration rate of electric vehicles has not shown a notable increasing trend as expected, even leading companies like BYD have experienced a year-on-year decline in sales.
In launching new products, different brands have displayed their respective strategies, attempting to capture market share with more attractive prices or product renewals. For example, Li Auto launched its first pure electric product, the Li One MEGA, and set an ambitious goal of delivering fifty thousand units in one month. Leapmotor not only listed its global model C10 but also plans to launch a new six-seater SUV. Zeekr and Chery iCAR both introduced new vehicles at competitive prices. In response to the market, BYD introduced a Glory model lineup with more affordable pricing for its new Han, Tang, and Song DM-i versions.
Securities analysts and fund managers have given different interpretations of this market phenomenon. On one hand, it is believed that under the dual influence of continuously declining industrial chain costs and intensifying competition, automakers are particularly fierce in price strategizing. On the other hand, the market is also concerned about whether the new car models will successfully translate into orders. Since the new products lack significant breakthroughs in performance and design, investors are now focusing on the delivery data of the new models, as well as their ability to form effective competitiveness in the market.
For the new energy vehicle market, continuous product updates and price wars have become the norm. Each participant is striving to create a moat for their products and brands, and the intense competitive situation will evidently force enterprises within the industry to continuously innovate themselves in order to maintain and expand their market share.
New energy vehicle market share has seemingly encountered a growth stagnation after breaking through the 30% threshold, sparking industry discussion on whether the development of the industry has reached a bottleneck. Against this backdrop, including BYD, several car manufacturers have started to adopt pricing adjustment strategies, such as Wuling, Leapmotor, Nezha, and Changan Automobile, which have all implemented price reductions on some of their models.
According to BYD’s production and sales report, the cumulative sales of new energy vehicles in January and February this year amounted to 323,800 units, presenting a negative growth of 6.14% compared to the same period last year. Earlier data released by the China Automobile Manufacturers Association showed that in January 2024, automobile production and sales volume saw a significant month-on-month decline, but the year-on-year growth was still substantial. Particularly, the production and sales performance of new energy vehicles in January showed that their market share reached 29.9%, reflecting a continuous growth trend. Overall, in 2023, new energy vehicle sales increased by 37.9% year-on-year, with the market share rising to 31.6%.
Expert analysis shows that although the penetration rate of new energy vehicles is currently slowing down, overall, with the improvement of infrastructure such as charging piles and the enhancement of battery endurance, the penetration rate still has the potential to achieve further increases. Intensified industry competition may lead to changes in brand shares, but this phenomenon is a common adjustment in a growing industry. Regarding how to improve the market penetration rate of electric vehicles, experts indicate that lowering the price is an important factor to balance consumer market choices. Currently, the market penetration rate of new energy vehicles in some cities has already exceeded half, but issues with battery life in winter and the retention of value remain key factors restricting their wider promotion.
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