Source: Titanium Media
Author: Chang Xiao

Recently, a set of official data was released, making export-related topics a hot topic again.In April of this year, China's total exports reached 2.02 trillion yuan, an increase of 16.8% over the previous year. The trade surplus was 618.44 billion yuan, and the expansion reached an astonishing 96.5%.

Under the trend of export recovery, nowPhotovoltaics, lithium batteries, new energy vehiclesThe performance of such products is particularly impressive, and it has also become an important growth engine for China's foreign trade under the challenge of weakening external demand.

Overall, China's total exports of mechanical and electrical products in the first four months of this year were 4.44 trillion yuan, an increase of 10.5% over the previous year, accounting for 57.9% of the total export value.Among them, export data from the automobile industry also saw the biggest increase.

Also,According to data from the General Administration of Customs compiled by the China Association of Automobile Manufacturers, in January-April of this year, China exported 1.37 million vehicles, an increase of 89.2% over the previous year; the total export value reached 204.53 billion yuan, an increase of 120.3% over the previous year.

What is even more exciting is that in the first quarter of this year, China's automobile exports were 1.07 million vehicles, an increase of 58.1% over the previous year, surpassing Japan's 954,000 vehicles during the same period to become the quarterly global automobile export champion.According to the CPC's forecast, China's automobile exports may reach the level of 4 million vehicles this year.

In other words,We are expected to surpass Japan this year and truly become the world's largest automobile exporter.

New energy vehicles reshape the pattern of going overseas

An upward level that can be called a “transition” is the fundamental change in China's automobile exports over the past two or three years. At the same time, we have also seen corresponding changes in the structure of China's automobile exports.

Looking back at China's automobile export path, in 2001, China's automobile ushered in its first batch export, with the destination being Syria; when it first joined the World Trade Organization (WTO) in 2002, its annual automobile exports were only 22,000 vehicles; in the following ten years, China's automobile exports exceeded one million vehicles (1.06 million vehicles) for the first time, and remained hovering around 1 million vehicles for many years thereafter.

After 2020, China's automobile exports began to explode, maintaining an annual growth rate of 1 million vehicles. In 2021, with domestic NEV production and sales exceeding 3 million units, China's automobile exports also passed the 10-year million-scale platform period.

That year, China's automobile exports also surpassed 2 million vehicles for the first time, reaching 2015,000 vehicles, surpassing South Korea and second only to Japan and Germany.In 2022, China's automobile exports went one step further, exporting 3.11 million vehicles throughout the year, surpassing Germany and becoming the second largest automobile exporter in the world after Japan.

It is easy to see that for every 1 million vehicle exports that grew before 2020, it took an average of 10 years, maintaining a relatively slow growth curve. The reason is that at the time, China's automobile exports were mainly fuel models, but if they wanted to break through the global sales channels and supply chain systems that foreign car brands had already established, the breakout speed seemed a bit slow.

However, after 2021, with the rapid growth of the domestic NEV industry, China's automobile exports, represented by new energy vehicles, have not only developed more overseas market resources, but also upgraded the industrial chain from vehicle exports and CKD (full component assembly) to full local production.

On the one hand, new energy vehicles have broken the original ecological pattern of overseas brands, and the strong rise of independent brands has become the main factor driving the growth of China's automobile exports. On the other hand, the healthy competitive environment in the domestic NEV sector has also prompted more and more foreign investors and joint ventures to produce new energy vehicles in China and export them to overseas markets.

Meanwhile, while China's automobile exports continue to grow, the average export price is also rising.According to statistics from the CPC, the average export price of Chinese automobiles was 12,900 US dollars in 2018. By 2022, this figure had reached 18,900 US dollars, an increase of 6,000 US dollars in four years.

Furthermore, as the strength of new energy vehicles drives efficiency on the export side, exports of core components such as lithium batteries and solar cells, which are closely related to them, are also showing a trend of continuous growth.

Regarding the growing trend of China's automobile exports in recent years, Cui Dongshu, Secretary General of the CPC, said, “New energy vehicles are the core growth point of China's automobile exports, changing the passive situation where automobile exports depend on some poor and irregular countries such as Asia and Africa.”

In the past, China's automobile exports could only go to the Asian, African, and Latin American markets; before 2018, the share of exports was over 80%.

In stark contrast to this, in the first quarter of this year, the top ten countries in terms of export value of Chinese auto products were Russia, the United States, Mexico, the United Kingdom, Belgium, Japan, Australia, Germany, the United Arab Emirates, and South Korea. The total export value of automobile products from these ten countries was 22.74 billion US dollars, accounting for 48.5% of total automobile exports.

Looking at it now, Russia has become the biggest market for China's overseas automobile exports, and it is also a new breakthrough point. As of the first quarter of this year, sales of Chinese cars in the Russian market have achieved impressive results, reaching a total of 66,000 vehicles, accounting for 43% of Russia's overall market share, which is basically equivalent to nearly half of the entire Russian market.

In the field of new energy vehicles, China is actively promoting the development and application of electric vehicle technology, and has now become the world's largest NEV market. China is at the leading international level in terms of battery technology, electric drive systems, and intelligent connectivity technology.

Strong product competitiveness has allowed Chinese brands to begin to hold the right to define and price new energy vehicles. As the European market with the most mature development and a long history in the automotive sector, it is also favored by China's new energy vehicles, and the price is even double that of the domestic market.

From “exchanging the market for technology” to today's “export at a higher price”, the competitive positions of Chinese car companies and the world's auto giants are undergoing a historic shift.

Traditional car companies are still the main exporters

Specifically, in terms of sales share, the performance of major car companies was beyond the expectations of many people. It was not the strong rise of various new powerful brands, but it was still the major traditional car companies that played the main role in vehicle exports.

According to data from the China Automobile Association, the leading companies in China's automobile exports in 2022 were SAIC, Chery, and Tesla. Judging from the specific export volume, SAIC Motor became a well-deserved hegemon in China's automobile exports, with annual exports of 906,000 vehicles; Chery ranked second with 452,000 vehicles; while Tesla's third place was Tesla's 271,000 vehicles.

According to SAIC Motor Group data, SAIC Motor's exports and overseas base sales reached 25,7053 vehicles in the first quarter of this year, a year-on-year increase of 49.56%. According to statistics, SAIC Motor's MG ZS, the MG (MG) brand of passenger cars, became SAIC Motor's most popular model overseas. The export volume in 2022 was 123,500 units, followed by the MG 5, which exported 97,000 vehicles.

In terms of brand genes, MG is indeed a famous century-old British factory. However, it was incorporated into the SAIC Motor system through a merger and acquisition in 2007; in terms of technical sources, it is an independent brand developed and designed by SAIC Motor.

SAIC used MG's brand influence to successfully knock on the door to the European market, then spread to countries such as Australia, New Zealand, Mexico, and Thailand, becoming the car brand with the highest local sales volume. It can be said,This was also the most successful time for a Chinese automobile company to break into the international market using European and American brands.

The second-ranked Chery Group is currently showing impressive performance in Russia, South America, Africa, Central Asia and other regions. At the beginning of this year, Chery set a sales target of 500,000 “overseas” in 2023. From the current perspective, if there were no large-scale force majeure events, Chery's exports would exceed the set target, and exports would also account for more than half of Chery's annual sales volume.

The reason it was able to reach more than half of exports is, on the one hand, because Chery laid out its automobile export strategy earlier and has sold it to more than 80 countries and regions around the world. More importantly, Chery's current exports are still mainly fuel vehicles, which is in line with the current car buying habits of the vast majority of countries.

Exported at the same Shanghai port as SAIC Motor$Tesla (TSLA.US)$It also means that the new power brands have handed over a good “questionnaire.” At the same time, Tesla's Shanghai Gigafactory also played the role of Tesla's main export center. The plant delivered 710,000 new Tesla vehicles last year, of which 270,000 were exported overseas.

Recently, the Shanghai Gigafactory opened another new market — delivery to the Thai market.According to Musk, the Shanghai Gigafactory currently has an ultra-efficient cost structure, which is the best of all Tesla factories.

In addition to this, other domestic automobile brands are also actively expanding overseas markets.

For example, the Changan brand unveiled its overseas strategy “Hina Baichuan” plan at the Shanghai Auto Show, pressing the “fast forward button” for Changan Automobile to go overseas. In response, Chairman Zhu Huarong of Changan Automobile said, “By 2030, Changan Automobile's overseas market investment will exceed 10 billion US dollars, annual sales in overseas markets will exceed 1.2 million vehicles, and the number of overseas business employees will exceed 10,000, making Changan Automobile a world-class automobile brand.”

It is also a traditional independent manufacturer$GEELY AUTO (00175.HK)$It also reaped impressive results in 2022. According to annual financial data, Geely exported 198,000 vehicles in 2022, an increase of 72.4% over the previous year. At present, Geely has deepened its presence in various regions such as Eastern Europe, the Middle East, Asia Pacific, Africa, Latin America, and Europe. Actual terminal sales in the Middle East, Asia Pacific, Latin America, and Africa have all increased by more than 48% over the same period last year.

Furthermore, with the further expansion of Linkker's “European Strategy” layout, Geely has normalized vehicle exports to Europe. At this stage, Linker has successively explored the Israeli and Saudi markets, and will continue to explore the Middle East and Gulf countries to enter new markets in Southeast Asia.

However, after looking at the overseas results of the major traditional car companies, it is not difficult for careful friends to find that BYD did not appear on this list.

Actually, starting in the second half of last year,$BYD COMPANY (01211.HK)$It is also accelerating the development of overseas markets, and is also the automobile brand with the fastest year-on-year growth in exports. Data shows that in April this year, BYD exported 14,800 vehicles, an increase of 15.5 times over the previous year. In January-April of this year, BYD sold about 53,600 vehicles overseas, which is close to 55,900 vehicle exports for the whole of last year.

In addition to products going overseas, BYD is also speeding up the pace of building factories overseas. In March of this year, BYD officially laid the foundation stone for its Rayong plant in Thailand. Production is expected to begin in 2024, with an annual production capacity of 150,000 vehicles. The cars produced at this plant are expected to be exported to Europe and ASEAN countries. In addition, BYD is also planning to build a factory to build cars in Vietnam.

Although, whether in terms of brand perception, marketing channels, or consumption habits, we seem to prefer to classify BYD as a traditional independent brand. However, in reality, BYD is still somewhat “maverick” in the export sector, and it will not be until the second half of 2022 to start boosting overseas markets.

So the question is, how much turbulence will BYD, which can be said to be popular domestically, stir up the international market with its new energy products? At the same time, let's not forget that BYD also has the killer weapon of exporting power batteries. Although it can't really match the Ningde era, it has gradually gained an advantage in competition with South Korea and Japan.

All of this makes people look forward to the extent that BYD will reach after boosting its export business? After all, at this stage, it is basically possible to “challenge” Tesla by the domestic market alone.

New car builders are “setting sail” one after another

Moreover, regardless of whether BYD can be considered a new power brand, at least in terms of “going overseas” time point, many new power brands were also selected in 2022.

Last year,$NIO-SW (09866.HK)$,$XPENG-W (09868.HK)$New car builders and other powerful brands have also taken steps to expand overseas. Among the new powerful brands, Xiaopeng is considered the earliest to go overseas and the fastest paced. As early as the end of 2020, Xiaopeng sent the first batch of G3 cars to Norway, but the operating system for overseas markets was not set up until early 2021.

However, in mid-2022, Xiaopeng unilaterally cancelled all pre-orders for P5 in Europe, while IUDS began layoffs. Since then, Xiaopeng's overseas business has basically come to a standstill. It wasn't until January 2023 that Xiaopeng announced that it would launch two new flagship models in Europe and that it would set up new delivery centers in Norway, Sweden, Denmark, and the Netherlands.

Similar to Xiaopeng, when Chinese car companies go overseas to Europe, they usually choose to enter from Northern Europe and then develop neighboring countries to radiate Western Europe.

As early as August 2020, Li Bin announced to the outside world that NIO plans to go overseas in the second half of 2021, with Europe as the first stop. However, it wasn't until September 2021 that NIO's first model to go overseas, the ES8, went on sale in Norway and began delivery.

Since then, NIO has been committed to building a service system similar to that of a local country in Europe. Currently, NIO has only 11 power exchange stations overseas. Due to labor, rent, electricity and other cost issues, NIO's overseas links are bound to be lengthened by realistic factors.

And Nacha and$LEAPMOTOR (09863.HK)$These are two new powerful car building brands that focus on high cost performance. Although the positions of the two are similar, the choice for the first exit stop is far different. One chose Thailand, which is a “regular customer” from Southeast Asia, while the other looks at Israel, which has high consumer demand.

Looking at it now, in December of last year, the first batch of more than 200 Zero-Run T03s arrived in Israel, and sales are expected to double this year; in Thailand, Nacha V has been ranked in the top three local pure electric car licenses for 3 consecutive months, and 10,000 units are planned to be delivered this year.

Overall, unlike traditional car companies that invest aggressively at the export level, many new brands are still in the “setting sail” stage, and at the same time, the difficulties they face are more complicated.

For new car builders, the first challenge facing them is cost pressure.

You need to know that as a leading car company representing the new car builders, “Wei Xiaoli” actually didn't have a very good time.Faced with Tesla's first-mover advantage, the global market, and the “New Year Price War” initiated by the effects of scale, the “Wei Xiaoli” companies all experienced growth in overall revenue, but none of the “Wei Xiaoli” companies actually “went ashore” in terms of profit and were still in a state of loss.

According to financial data, Wei Xiaoli's net losses in 2022 reached 14.437 billion yuan, 9.14 billion yuan, and 2,032 billion yuan respectively. It is worth noting that Wei Xiaoli's vehicle gross margin all declined by varying margins — NIO dropped from 20.1% in 2021 to 13.7%; Xiaopeng dropped from 11.5% to 9.4%, and ideally from 20.6% to 19.1%. This is not an optimistic sign for Wei Xiaoli; to a certain extent, it reflects its lack of cost control and vehicle profitability.

However, when it comes to developing overseas markets, if you choose the relatively developed European and American markets. Not to mention, how much is the one-year rent to open a decent experience store in a city like Paris? Just the series of compliance certifications that commodities must go through before entering Europe, including security performance, network environment, etc., plus expenses such as purchasing data servers, etc., the upfront investment is sky-high, after deducting costs, freight, tariffs, etc., even after the price increases, bicycle profits are still not high.

Looking at the world's mainstream NEV companies, only Tesla and BYD can actually make a profit. Faced with the two-way pressure of costs, choosing Thailand, which has a lower threshold, and even Israel, I believe brands such as Nacha and Zero Run made careful choices.

However, the second major obstacle facing the new car builders is the difference in consumption habits.

The export structure of Chery has also been explained above. Currently, global consumption intentions are still dominated by fuel vehicles. Coupled with the inherent perception of many foreign consumers that the so-called new energy vehicles are the “old man” of electric vehicles, it has also invisibly increased education costs for new power brands. In addition to this, very different marketing models also pose a certain “communication barrier.”

Marco Saltalamacchia, CEO of Italy's Koelliker Group, once said during the Shanghai Auto Show: “For the Italian market, selling cars online is inappropriate. Most consumers of new energy vehicles in Italy are 50-60 years old, and their acceptance of online sales channels is very low.”

On this point, although the age groups of buyers may be different, people in China 35 years ago generally had similar views on this.

Regardless of what, however, in the face of increasingly intense domestic “internal” competition in the new energy market. When the production capacity of the industry is gradually liberated, and under the premise that manufacturing demand can still be further tapped, boosting overseas markets can not only absorb and transfer excess domestic production capacity, maintain the manufacturing capacity of car companies, maintain the healthy operation of the supply chain, etc.

The “transitive” growth in export data has also strengthened the determination of manufacturers to expand overseas markets, and has formed a positive driving force that cannot be ignored. In the long run, this will also be the general trend in the development of China's mainstream car companies.

epilogue

What cannot be ignored, however, is that although China's automobile exports have achieved remarkable results in recent years, there is uncertainty about issues such as economic growth, geopolitics, trade barriers, power supply safety, and cost pressure. These are all challenges that the global automobile industry must face together.

However, the reason why the localized development strategy has taken root is widely admired by major global car companies. This is because most multinational car companies recognize that relying on a large-scale pure export model is unsustainable and cannot achieve a win-win economy with the local community.

In response, Wang Xia, chairman of the Automobile Industry Branch of the China Council for the Promotion of International Trade, said that “market for technology” is the 1.0 era of Chinese automobile navigation. In the next 2.0 era of sailing, the Chinese automobile industry and the global automobile industry need to “go both ways.”

You need to know that established developed countries in the automobile manufacturing field, such as Japan and Germany, have been working globally for half a century. To break into the sizable automobile markets of these developed countries and gain a foothold, it is necessary to share benefits with local industries along the value chain, rather than rely on a win-win model for exports.

For Chinese car companies, the name “world's number one automobile exporter” is probably just the beginning; stories based on the global market will continue to be written.

Editor/Hoten