Fuel cell vehicle demonstration policy boots fell to the ground, the amount of subsidy exceeded expectations. From the point of view of profit elasticity, we think that the system manufacturers with independent technology of stack and membrane electrode will benefit the most, with emphasis on recommending Yihuatong, Dongfang Electric (01072), Meijin Energy, Weichai Power (02338) and Xiongtao shares. It is recommended to pay attention to Tenglong shares, snowman shares, Dayang Motor. At the end of the hydrogen system, Jiahua Energy and Satellite Petrochemical with cheap industrial by-product hydrogen sources and complete hydrogen distribution are recommended, and Cryogenic shares and Zhongtai shares are recommended.

Fuel cell vehicle demonstration incentive policy boots fell to the ground, the reward range exceeded expectations.

On September 21, the Ministry of Finance and other five departments issued the Circular on the demonstration Application of fuel Cell vehicles (hereinafter referred to as "the notice"), the main contents of which include:

1) reward direction: key core technologies and demonstration applications shall not be used in the construction of new vehicle production capacity and hydrogenation stations

2) Application scenarios: focus on the development of long-distance, medium-and heavy-duty commercial vehicles

3) demonstration goal: relying on leading enterprises, focus on product promotion of superior enterprises, and form economies of scale to reduce costs.

4) demonstration object: the cities where the high-quality enterprises are located jointly form urban agglomerations to apply, and one city can participate in multiple urban agglomerations.

5) reward method: according to the demonstration results, the awards are calculated according to the car / core components / hydrogen consumption.

6) the total amount of awards for individual urban agglomerations is 1.7 billion, compared with 1.2 billion for cities / urban agglomerations before, and we estimate that the total national award budget is about 150-17 billion.

The whole vehicle: the reward threshold is raised, and heavy trucks and large buses are the ultimate guide.

The reward requires that the power requirement of fuel cell system should be raised from not less than 40kW to not less than 50kW, and the proportion of power output should be increased from no less than 40% to not less than 50%. The power density of passenger / commercial vehicle stack should be raised from 2.5 to 3/2.5kW/L, and the power density of fuel cell system of commercial vehicle should be raised from 250W/kg to 300W/kg. On the whole, it reflects the idea that the policy is tilted to high-quality products, and let the leader lead the efficient development of the industrial chain.

From the perspective of incentive intensity, the 80kW bus / 120kW heavy truck that meets the incentive threshold will be awarded about 25 / 500000 in 2021, compared with the highest 400000 in the transition period in 2019, and the New deal is inclined to high power and heavy load.

From the perspective of the speed of incentive slope decline, from 2021 to 2023, the year-on-year decline is 8.3%, 9.1% and 22.2%, which is smaller than the average annual decline of 30% of industrial costs, and there is a scissors difference.

Core components: reward non-retreat, policy maximum benefit link, good quality bibcock.

Compared with the draft for soliciting comments, the biggest highlight of the official draft is the confirmation of the amount of rewards for key components.

The key components include stack, bipolar plate, membrane electrode, air compressor, proton exchange membrane, catalyst, carbon paper and hydrogen circulation system. At present, the more difficult the domestic breakthrough, the higher the reward. For example, membrane electrode 0.25 min / set, and carbon paper 0.3 min / set. From the value point of view, if the system supplier stack, membrane electrode and bipolar plate are self-made, they will get 0.75 points, corresponding to a reward of 75000 yuan. According to the current average stack price of 4000 yuan / kW, the price of 80kW stack is 320000 yuan, and the reward brings profit elasticity of 23%.

It is worth noting that the rewards for key components will not decline within 4 years, assuming that the stack cost will drop by an average of 20% a year, and the stack price will be about 2000 yuan / kW,80kW stack price 160000 yuan by 2023. In the above case, the profit elasticity brought by the reward has increased to 47%.

Therefore, we believe that under the strong incentive range, high-quality leaders will be more able to reduce costs by virtue of independent technology and economies of scale, and profit flexibility will be further released.

Hydrogen system: solve the core pain point of hydrogen station construction, limit the price to promote the balance of oil and hydrogen.

Compared with the draft for soliciting opinions, the official draft cancels the reward for the construction of hydrogenation stations, but emphasizes that the demonstration area should introduce the construction and operation system of hydrogenation stations, clarify the energy orientation of hydrogen and lead departments for examination and approval management of hydrogenation stations.

We understand that the bottleneck of the promotion of hydrogenation stations at present is not the funds, because the hydrogenation stations are economical under the localization of equipment and the improvement of the utilization rate of single station, and the sticking factor is that there are too many regulations of hydrogenation stations. The official draft of this policy is to solve this pain point.

On the other hand, the official draft has a ceiling of 35 yuan / kg for the retail price of hydrogen in the demonstration area, which is exactly the upper limit of the price of hydrogen under the equilibrium point of oil and hydrogen. At the same time, there are incentives according to the actual filling volume, and the hydrogen with low cost, clean source and small transportation radius will receive a maximum reward of RMB 12, 11 and 10 per kg from 2020 to 2023, encouraging the industry to transform to a low-cost, green hydrogen source.

Risk factors:

The breakthrough of fuel cell localization is not as expected, the decline of hydrogen price is not as expected, and the policy landing is not as expected.

Investment logic:

Fuel cell vehicle demonstration policy boots fell to the ground, the amount of subsidy exceeded expectations. From the point of view of profit elasticity, we think that the system manufacturers with independent technology of stack and membrane electrode will benefit most, with emphasis on recommending Yihuatong, Dongfang Electric, Meijin Energy, Weichai Power and Xiongtao, and suggesting that we should pay attention to Tenglong, Snowman and Dayang Motor. At the hydrogen system end, Jiahua Energy and Satellite Petrochemical with cheap industrial by-product hydrogen sources and complete hydrogen distribution are recommended, and Cryogenic shares and Sino-Thai shares are recommended.