New energy vehicle subsidy policy stabilizes Tesla can activate the automotive industry chain?

At the beginning of the new year, the new energy vehicle industry came a good news. On the afternoon of January 11th, at the annual forum of the China Automobile 100 People’s Association, Minister of Industry and Information Technology Miao Wei said in a speech about the new energy vehicle subsidy policy, “I can tell you with certainty that there will be no retreat in July this year.” “

New energy vehicle subsidy policy stabilizes Tesla can activate the automotive industry chain?

“China has the world’s largest new energy vehicle market, the most complete industrial support system, the most perfect policy support system, but also a number of internationally competitive outstanding enterprises. Miao said that in the long run, China’s new energy vehicle industry has a better scale effect advantage and development environment, and will continue to adhere to the development of new energy vehicles in the future national strategy will not waver, consolidate and develop the hard-won good momentum.

Subsidy de-slope formulation is a twist and turn

For Miao’s statement, the industry generally understood that the 2020 new energy subsidies will not be further backward compared to 2019, and the previously expected second half of 2020 new energy vehicle subsidies completely eliminated rumors do not seem to be self-defeating.

However, a few hours later, the head of the ministry of industry and information industry press service issued a message that said: “Electric vehicle subsidies will not fall back the view please do not quote.” This year’s subsidy policy has not yet been finalized, thanks to understanding support. “Until that evening, the official statement was finally issued. The head of the Ministry of Industry and Information Technology’s bureau said the subsidy policy in 2020 will remain “relatively stable” and there will be no significant decline.

In this regard, senior auto motive analyst Lin Shi told the Securities Daily in an interview, the previous subsidy policy in the formulation until landing, the general use of vague language, the purpose is to give the industry appropriate guidance and reasonable expectations. Reporters note that January 11 for the new energy subsidies have emerged three statements, which shows the new energy vehicle industry for subsidies of the importance and dependence.

In fact, in this new car revolution race track, no country wants to be easily dropped. It has become an international trend to continue to support the development of new energy vehicles in their respective countries by continuing to support subsidies.

In Europe and the United States, according to the latest U.S. subsidy policy, the subsidy threshold from 200,000 vehicles to 600,000 vehicles, the amount of subsidies also changed to $7,000 per vehicle. That means Tesla will still be eligible for full subsidies until at least 2020, while Germany, a traditional powerhouse of the global auto industry, also extended the subsidy policy, which was due to end in 2020, until the end of 2025, by 50 per cent, and France, which also raises the subsidy budget.

To this end, on November 22 last year, China’s Ministry of Finance issued 31.3 billion yuan in advance subsidies to assist all independent car enterprises, December 3, the Ministry of Industry and Information Technology issued a new plan that by 2025, new car new vehicle sales will reach 25%, compared with the original increase of 5 percentage points, the industry constitutes a long-term positive.

On December 27, 2019, five years later, the Ministry of Finance again included new energy vehicles in its annual working meeting. The National Finance Work Conference made it clear: “Promote industrial transformation and upgrading and support the development of new energy vehicles.” “There is general agreement in the industry that so many positives are concentrated, meaning that not only will the subsidy policy not end in 2020, but it could also be increased in disguise through other policy packages.”

The development of new energy vehicles in reverse

As we all know, China’s electric vehicle industry chain in the weakest link is vehicle manufacturing, and this needs an entire industrial chain to support and complement. This has existed in the early Chinese home appliance industry, especially in the independent brand mobile phone industry for a long time.

Securities Daily reporter noted that in 2011, Apple mobile phone into the Chinese market, due to the lack of core technology and mature industrial chain, including waveguide, Xiaxin and other Chinese mobile phone brands have been hit. On the face of it, Apple, with its super-powerful supply chain management capabilities, has made hundreds of millions of dollars in profits from China’s cheap labor and its well-developed industrial chain. But in fact Apple is also helping China’s handset industry.

On the one hand, through Apple’s perennial domestic mobile phone industry chain finishing, so that China’s mobile phone industry chain is increasingly refined, on the other hand, the popularity of Apple mobile phones for the domestic market to cultivate a large number of smartphone demand, to give the domestic mobile phone and industry chain bigger and stronger opportunities.

In this regard, Lin said, the more open the development, the more prosperous the development. Liberalizing competition can force the development of new energy vehicles, so that domestic enterprises in the competition to grow up. In its view, Tesla is no less than or even superior to Apple in terms of industry disruption, product recognition, length and breadth of the industry chain. If Tesla does domesticate all its components, the impact on the supply chain will be “changed.”

In an interview with Securities Daily, Mei Songlin, chief data officer of Viama Automobile, also said that as the electric vehicle market expands rapidly, the scale benefits of components will gradually become available and costs will be reduced rapidly. Once China’s local component series achieves a technological breakthrough, it can produce the same products as international parts manufacturers, and the cost of key components will be significantly reduced.

“When (Tesla) sells, it will drive the expansion of the industrial chain, by spreading costs on a scale, and by compressing supply chain costs to levels that other countries can’t get into, building our unique strengths.” Lin told reporters.