Alternative to ＂old man music＂： new energy vehicles leverage the rural market
How big is the market for new energy vehicles going to the countryside? Recently, the China Association of Automobile Manufacturers (hereinafter referred to as the China Automobile Association) issued the "Notice on the Application of New Energy Vehicles Going to the Countryside in 2022" (hereinafter referred to as the "Notice"). According to this document, in order to continuously eliminate old and discontinued models and promote more new energy models that adapt to rural consumption characteristics into the model catalog for going to the countryside, car companies need to make a unified declaration for the models participating in the going to the countryside. The deadline for declaration is March 10, 2022. Fu Bingfeng, vice-chairperson and secretary-general of the China Automobile Association, said: "This is a critical period for the promotion of new energy vehicles. It is very important to sink into the fourth and fifth tier markets and help rural consumption upgrade. This is an incremental market." According to the data of the China Automobile Association, the cumulative sales volume of new energy vehicles to the countryside in 2021 was 1.068 million, an increase of 169.2% year-on-year. In addition, among the 66 models of new energy vehicles to the countryside in 2021, the vehicles were mainly small and mini vehicles with a price of less than 100,000 yuan and a cruising range of less than 300 kilometers. It is generally believed in the industry that the small and micro models of new energy vehicles to the countryside will replace low-speed electric vehicles such as "Laotou Le" and have good prospects in the rural market. Sinking or normalization, replacing rural "old man music" In recent years, the income growth and consumption expenditure growth of rural residents in China are faster than those of urban residents, and their motorized travel needs are urgent, but the overall vehicle penetration rate is low. The electric vehicle utilization rate of rural residents is less than 1%, which is only 1/3 of that of urban residents, and has sufficient room for growth. In the industry’s view, the current auto growth area in our country has begun to expand and transfer from the east to the central and western regions, from first- and second-tier cities to third- and fourth-tier cities, and from cities to rural areas. According to the "China Rural Electric Vehicle Travel Research" released by the China Electric Vehicle 100 People’s Association, by 2030, the number of cars per thousand people in rural areas in our country will reach 159, and the total number of cars will be 70.01 million; this figure also includes the rigid demand of consumers in rural areas for the first purchase, and also includes the replacement demand for low-speed electric vehicles. The industry believes that the electrification of the rural market has great potential. From the demand of third- and fourth-tier cities and rural markets, consumers travel radius is small, more than 80% of households overall average daily travel mileage of less than 50 kilometers, short and medium range new energy models will be able to meet the needs of mainstream consumer groups; from the product and price span, the mileage of 120 kilometers to 400 kilometers, the price of the model between 30,000 – 80,000 yuan is more in line with market demand; from the rural market as a whole, due to the driving license, driver’s license and other restrictions, commonly known as "old man Le" low-speed electric vehicles in the rural market more popular. Therefore, among the 66 models of new energy vehicles to the countryside in 2021, the vehicles are mainly small and mini cars with a price of less than 100,000 yuan and a cruising range of less than 300 kilometers, and the car companies make profits ranging from 3,000 yuan to 8,000 yuan. Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, believes that new energy vehicles have done better in terms of quality, handling, etc., with higher comfort and safety. The low cost of the A00 class, which focuses on the rural market, has also been highlighted to the greatest extent. The industry generally believes that A00-level new energy passenger vehicles are a substitute for low-speed electric vehicles such as "Old Man Le", and have a good development prospect in the rural market. Cui Dongshu, secretary general of the National Passenger Car Market Information Association, also has the same view. He believes that A00-level new energy passenger vehicles have a good market prospect in the rural market and can also help improve the travel environment in rural areas. Li Jinyong, president of the New Energy Vehicle Branch of the Automobile Chamber of Commerce of the All-China Federation of Industry and Commerce, once said, "In 2021, unrestricted cities contributed 70% of the sales of new energy vehicles, of which 58% of users purchased A00-class electric vehicles. A00-class electric vehicles will take the lead in replacing fuel vehicles of the same level based on the advantages of more than half the travel cost of fuel vehicles. If the lack of core is not serious, the production and sales will reach 1.50 million to 2 million vehicles in 2022." The industry believes that, although there are fewer A00-class models currently available, due to the fact that they have attracted more attention under the impetus of new energy going to the countryside, car companies are also harvesting sales performance in new energy vehicles going to the countryside, so there may be more products developed for third- and fourth-tier and township rural areas. The industry expects that in the next few years, if the motorized travel needs of rural residents can be met, it is expected that a 500 billion-scale super car market will be successfully leveraged, among which small economical electric vehicles will become the main new products in the rural market, or will be formed in third- and fourth-tier cities and rural areas. Sales of new energy vehicles to the countryside are growing faster than the overall market 2022 is already the third year for new energy vehicles to enter the countryside. In July 2020, MIIT, the Ministry of Agriculture and Rural Affairs, and the Ministry of Commerce jointly issued the "Notice on Launching Activities of New Energy Vehicles to the Countryside", which proposed to carry out activities of new energy vehicles to the countryside in China; thus also opened the curtain of new energy vehicles to the countryside. In March 2021, MIIT, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the Comprehensive Department of the National Energy Administration jointly issued the "Notice on Launching Activities of New Energy Vehicles to the Countryside in 2021", which made it clear that activities of new energy vehicles to the countryside would be carried out from March to December. In 2021, the area of new energy vehicles to the countryside will be further expanded, from 5 provinces in 2020 to 11 provinces. From the recommended list of two batches of new energy vehicles going to the countryside in 2021, the main enterprises and models are independent brands and new car-making forces, including SAIC Motor Group, Dongfeng Motor, Great Wall Motor, BYD, Jianghuai Automobile, Chery Automobile, Weimar Automobile, and Zero Run Automobile. According to the data of the China Automobile Association, the cumulative sales volume of new energy vehicles to the countryside in 2021 was 1.068 million, an increase of 169.2% year-on-year, and the growth rate was about 10 percentage points higher than that of the overall new energy vehicle market. From the beginning of 2022, new energy vehicles going to the countryside will once again be included in the key tasks of various ministries and commissions. In early January, the "Opinions" jointly issued by the National Energy Administration, the Ministry of Agriculture and Rural Affairs, and the National Rural Revitalization Bureau mentioned that it is necessary to guide charging business operators and new energy automobile enterprises to build charging and swapping power stations in large villages and towns, tourist attractions, and public parking lots. Priority is given to promoting the use of electric vehicles in official vehicles, buses, and taxis in counties, and promoting the application of new energy vehicles in tourist attractions and characteristic towns. Promote new energy vehicles to become an important part of rural microgrids, and vigorously support local development of new energy vehicles and home appliances to the countryside. On January 21, the National Development and Reform Commission and other seven departments issued the "Implementation Plan for Promoting Green Consumption", which proposes to carry out in-depth activities of new energy vehicles to the countryside, encourage automobile companies to develop and promote new energy vehicles that are suitable for the travel needs of rural residents, of high quality and low price, advanced and applicable, and promote the improvement of the rural operation and maintenance service system. Reasonably guide consumers to purchase lightweight, miniaturized, and low-emission passenger vehicles. According to the latest "Notice" issued by the China Automobile Association, the declared models of new energy vehicles going to the countryside still need to meet four conditions. First, the product quality is stable and suitable for rural consumption scenarios. Second, the price range of the model is basically the same as that of rural consumers. Third, there will be no suspension of production or sales of models in the next six months. Fourth, there is a suitable after-sales and sales network. The shortcomings need to be made up, and the supporting measures should also be submerged into the countryside It is generally believed that there are independent courtyards in rural areas, and the charging demand of new energy vehicles is relatively easy to meet. Consumers in rural areas can charge at home through slow charging. However, with the increase of vehicle mileage and driving radius, public charging piles also have an addressable market demand in rural areas. At present, domestic charging piles are mainly concentrated in first- and second-tier cities, while the proportion of public charging piles in rural areas has been hovering at a low level; at the same time, the power grid infrastructure in rural areas is relatively weak. Cui Dongshu said that the entire infrastructure and supporting services in the rural market are still lacking, and a large number of charging equipment needs to be built. In addition, the "Rural Electrification Survey Report" released by the China Electric Vehicle 100 People’s Association pointed out that although there are many models and versions of new energy passenger vehicles on sale in the domestic market, the sales of new energy vehicles to rural areas are still very limited. Existing models are greatly misaligned with the expectations of rural residents, and at the same time cannot meet the demand for light cargo in rural areas. Not only that, after-sales is also a major problem. From the perspective of after-sales network installation, fuel vehicles are more complete, while the after-sales network of pure electric vehicles is more complete in first- and second-tier cities, while rural areas are still relatively lacking. Xu Haidong said, "Car companies should further understand the needs of rural consumers, do a good job in cost control and quality control; in the current situation with a small number of outlets, do a good job in after-sales services and build infrastructure in rural areas." In addition, the level of subsidies will also become a factor affecting the deployment of new energy vehicles to the countryside. Xu Haidong analyzed that there is currently a lack of directly quantified state subsidies; while local government subsidies vary, and many fuel vehicles and new energy subsidies are not separated, and the time is not uniform. All of the above will reduce the degree of incentive for consumers. Although there are many shortcomings in new energy vehicles that need to be filled, it is undeniable that the third- and fourth-tier markets and rural markets are small in size but have great potential. They are one of the future incremental markets for new energy vehicles and will become a "booster" for the growth of the new energy vehicle market. Memorabilia of new energy vehicles going to the countryside ● July 15, 2020 MIIT, the Ministry of Agriculture and Rural Affairs, and the Ministry of Commerce jointly issued the "Notice on Launching New Energy Vehicles to the Countryside", proposing to launch new energy vehicles to the countryside in China. ● March 26, 2021 MIIT, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the General Department of the National Energy Administration jointly issued the "Notice on Launching New Energy Vehicles to the Countryside in 2021", specifying that new energy vehicles will be launched from March to December. ● January 7, 2022 The National Energy Administration, the Ministry of Agriculture and Rural Affairs, and the National Rural Revitalization Bureau jointly issued the "Implementation Opinions on Accelerating the Transformation and Development of Rural Energy to Help Rural Revitalization", which mentioned strong support for local development of new energy vehicles to the countryside. ● January 21, 2022 The "Implementation Plan for Promoting Green Consumption" issued by the National Development and Reform Commission and seven other departments proposes to carry out in-depth activities of new energy vehicles to the countryside, and encourage automobile companies to develop and promote new energy vehicles suitable for the needs of rural residents. February 17, 2022 The China Association of Automobile Manufacturers released the "2022 New Energy Vehicle to the Countryside Model Declaration Notice", launching a new round of new energy vehicles to the countryside in 2022. Wang Linlin, Shell Financial Reporter of Beijing News