Second-tier new forces collectively counterattack Nio, XPeng, and Li Auto | Insight Research

In March this year, the morale of the new energy vehicle industry rebounded, with a considerable improvement in production and sales volumes driven by the release of a large number of new models and promotional activities. In March, the overall production and sales volume of domestic automobiles showed a synchronized increase. The production of passenger vehicles was 2.192 million units, an increase of 5.3% year-on-year and a 77.5% increase month-on-month; the retail sales volume of passenger vehicles was 1.687 million units, an increase of 6% year-on-year and a 52.8% increase month-on-month. The growth rate of new energy vehicles was even more rapid, leading to a historic high in the penetration rate of new energy vehicles. In March, the production of new energy vehicles reached 788,000 units, an increase of 25.2% year-on-year and an 84.9% increase month-on-month; the sales volume was 709,000 units, an increase of 29.5% year-on-year and an 82.5% increase month-on-month. The market penetration rate of new energy vehicles reached 41.6%, an increase of 7.6 percentage points year-on-year. 1. Price promotions and new model launches led to an early entry into the peak season for new energy vehicles in March In March, with collective price promotions by many new energy vehicle companies and the launch of new models, production and sales volumes rebounded. Popular new models that attracted market attention such as Li Auto MEGA, Xiaomi SU7, Leapmotor C10, Geely Galaxy L6, and Deep Blue G318 all made their debut in March, directly boosting the prosperity of the new energy vehicle market in March and increasing market attention. At the same time, the price reduction efforts of many new energy vehicle companies in March almost reached the peak of the first quarter. Starting from March 1st, more than 10 car companies including BYD, Tesla, XPeng, and SAIC-GM-Wuling all announced price reductions or limited-time promotions. Tesla offered an 8000 yuan subsidy for on-the-spot insurance and a maximum of 10,000 yuan for paint reduction. After BYD's "big move" in February, it continued to reduce the price of the Seagull Honor Edition by 0.4 yuan, while XPeng directly reduced the price of the G6 by 20,000 yuan. It is worth noting that the price reduction wave in March extended to April. Under the impact of Xiaomi SU7, many new energy vehicle companies such as Aito and XPeng once again offered price discounts, reducing the prices of their products M7 and G9 by 20,000 yuan respectively. In the short term, the price war in the new energy vehicle market will not stop. In addition, except for a few cities such as Shanghai, where the new energy vehicle subsidy policy was clarified in March, other places will see the expiration of the new energy vehicle subsidy policy. This has to some extent advanced the demand of some consumers, allowing buyers to complete their purchases before April. 2. The traditional fuel vehicle market is facing an accelerating trend of blood loss From December 2023 to February 2024, the mismatch between the price reduction activities of traditional fuel vehicles and new energy vehicles caused fluctuations in the penetration rate of new energy vehicles. However, in March, the price reduction activities of traditional fuel vehicles almost came to a halt, while the intensity of price reductions for new energy vehicles intensified In March, the sales volume of gasoline-powered passenger cars was 978,000 units, an increase of 38% compared to the previous month, but a decrease of 6.3% year-on-year. This led to a new high in the penetration rate of new energy vehicles in March, reaching 41.6%. Gasoline vehicles, especially low-end vehicles below 100,000 RMB and mid-range vehicles priced between 100,000 and 200,000 RMB, will continue to be eroded by new energy vehicles, and this trend is irreversible. Wall Street News·Jianzhi Research believes this is mainly due to two factors: Firstly, new energy vehicles can still maintain price reductions in 2024 due to the decrease in raw material costs and government subsidies, while gasoline vehicles have no room for price reductions. In March, the number of gasoline vehicles with price reductions was limited, and the price reduction was not significant, only SAIC Volkswagen's Touareg, Chery's Tiggo series, and some models of Lynk & Co had price reductions. Therefore, in terms of price, gasoline vehicles no longer have an advantage. Secondly, the update and replacement of gasoline vehicle models is slow, and the gap in intelligence compared to new energy vehicles is widening. Price reductions and promotions have become one of the few effective measures for gasoline vehicles to attract customers. 3. Second-tier New Forces in Car Manufacturing Counterattack against Weixiaoli Weixiaoli faces a counterattack from second-tier new forces in car manufacturing. Li Auto has lagged behind Aito in sales volume and growth rate for three consecutive months, with the gap widening from 1,808 units in January to 2,743 units in March. Due to the new model MEGA of Li Auto not becoming a sales engine, the full-year sales guidance has been lowered by 20%-30% to 560,000-640,000 units. As a new competitor to Li Auto, Aito's order volume continues to grow, while offering greater discounts. Orders for the M9 have exceeded 60,000 units, and the new M7 Plus offers a 20,000 RMB discount, which is expected to further increase sales. Meanwhile, the sales volume of Nio and XPeng is only around tens of thousands of units. XPeng G6 and G9 offer a 20,000 RMB discount, with the new X9 selling 3,964 units in a month, a 29% year-on-year increase, and doubling to 9,067 units month-on-month. Nio's BaaS models have reduced prices by 70,000-128,000 RMB, and with incentives such as battery swap vouchers, sales have reached 11,866 units, a 14.3% year-on-year increase and a 46% month-on-month increase. However, the sales growth of Nio and XPeng is far behind that of second-tier brands such as Deep Blue, ZEEKR, and Leapmotor, which have only slightly surpassed Nezha. In addition, the most market-focused Xiaomi SU7, which has been well received since its launch, has received orders for over 150,000 units, with over 40,000 units locked in, posing significant competitive pressure on XPeng P7i and Nio ET5. In March, various car companies competed to seize the market through price reductions and other means, leading to a significant rebound in overall car sales and a revitalization of the automotive market. However, with new players entering the market, industry competition pressure continues to grow. The competition in 2024 is just beginning