1. New car sales: New energy sales hit a new high in 2023, and the penetration rate increased to 33.8%
New energy vehicle sales hit a new high, and the market penetration rate steadily increased to 33.8% in 2023, far exceeding the goal of 20% of new energy vehicle sales in 2025 in the "New Energy Vehicle Industry Development Plan (2021-2035)" issued by the State Council.
The operating market has basically achieved electrification, with new energy vehicles accounting for nearly 90%, and the head effect is significant. Aion and BYD occupy half of the industry.
BEV still occupies the mainstream of the new energy market, but the market concentration is relatively low, with the TOP3 car companies accounting for 47.3%; PHEV and REEV shares have steadily increased from 22.1% in 2019 to 32.4% in 2023, and the head effect is more significant. BYD and Ideal occupy more than 60% of the market in their respective fields.
After years of development, the competitive landscape of sedans and SUVs "dividing the world" has been initially formed. At the same time, MPVs have begun to exert their strength. In 2023, the penetration rate of new energy vehicles has increased significantly to 23.4%, a year-on-year increase of 12%.
Domestic brands are collectively moving upward. BYD, GAC Aion, and Geely have all achieved positive growth in market share. Ideal has taken the lead in emerging brands, and a market competition landscape of "one super and many strong" headed by BYD has been initially formed.
The speed of new energy vehicles sinking into low-tier cities has accelerated. In 2023, the proportion of 3-5 tier cities has increased to 44.5%. However, referring to the proportion of 3-5 tier cities in the traditional fuel vehicle market (52.3%), this proportion is relatively low, especially in 4-5 tier cities. It can be seen that low-tier cities still have a large room for development.
Affected by economic, climatic and geographical factors, the penetration rate of new energy vehicles has shown a characteristic of decreasing from south to north. The penetration rate of new energy vehicles in Zhejiang, Shanghai, Guangxi and Hainan has exceeded 40%, while the northwest and northeast provinces are less than 25%.
2. New power brands are increasingly eroding market share from traditional luxury car makers.
New power brands continue to erode the market share of traditional car companies. In the mainstream price segment (300,000-500,000 yuan), the share of traditional car companies has dropped from 92.9% in 2020 to 70.4% in 2023. The market has been losing ground, while the share of new power brands has been rising year by year; but in the 500,000-1 million market segment, traditional car companies still maintain a monopoly position, occupying more than 90% of the market.
As the competition in the mainstream market becomes more and more fierce, new forces will inevitably accelerate product layout and launch, expand to the market above 500,000, and the price war will intensify. It is expected that new forces may bring a new round of impact to traditional car companies.
Faced with the dilemma of continued decline in market share, traditional car companies hope to maintain the high-end market through "price strategy", but the effect is minimal. For example, the discount rate of BMW Brilliance and Lexus has increased by about 6% year-on-year. At the same time, new power brands adopt the dislocation competition strategy of "high configuration at the same price", which has formed a dimensionality reduction attack on traditional car companies.
3. Rise in new car sales boosts new energy second-hand car market growth.
With the surge in new car sales and the increase in the size of the industry, the sales of new energy second-hand cars have also grown steadily. In 2023, the sales of new energy second-hand cars will reach 531,000 units, a year-on-year increase of 49.2%, but the penetration rate of new energy is only 3.18%.
BEV occupies the mainstream of the second-hand car market, with a market share of more than 80%, but the market concentration is low, and the share of the TOP10 brands is less than 60%; the market share of PHEV is less than 20%, but the head effect is significant, and the share of the TOP10 brands is 88%, of which BYD occupies nearly 40% of the market.
Second-hand cars are mainly for the household market, and the price range is mainly distributed in 100,000-250,000, accounting for more than 70%, and less than 100,000 and more than 250,000 less than 30%; the age of the car is relatively low, and the age of the car within 6 years accounts for nearly 90%.
The source of cars in 1-2 tier cities mainly comes from internal sources, accounting for 88.8%; in 3-tier cities, nearly 40% of the sources flow in from 1-2 cities; in 4-5 tier cities, the inflow of cars from 1-3 tier cities has exceeded the local sources.
4. New energy vehicle discounts increase in 2023, leading to price drops.
With the decline in the price of power battery raw materials, the reduction in vehicle manufacturing costs, and the slowdown in the growth rate of new energy vehicles, the discount rate of new energy vehicles in 2023 showed a continuous upward trend, and the price also fell accordingly.
In order to seize the market, the price war between car companies is in full swing, and the industry is seriously involuted. For example, the discount rate of Dongfeng Nissan, FAW-Volkswagen, and SAIC Volkswagen increased by more than 10% year-on-year, and the discount rate of Brilliance BMW increased by 11.6% to 23.9%, but the effect was minimal, and the market sales volume was still inferior to that of independent brands. It can be seen that the product competitiveness of joint venture brands is still insufficient.
5. New energy used car values align with new car prices, set to decline.
Used cars closely follow the market price of new cars, and the value retention rate of new energy vehicles will continue to fall in 2023, and it will be lower than the same period in 2022.
Joint venture brands have failed to continue their advantages in the traditional energy track. The value retention rate of new energy vehicles is lower than that of independent brands. In 2023, the value retention rate of mainstream manufacturers' brands within 3 years is less than 70%. For example, the overall value retention rate of Dongfeng Nissan and SAIC General Buick is less than 50%.
6. New energy vehicle sales shift back to traditional 4S model for function.
With the explosive growth of sales in the new energy market, car companies are actively expanding network channels to meet the needs of market development. In the early stage of new energy development, large shopping malls with dense traffic are more conducive to improving brand exposure and influence and attracting more potential customers. However, as the volume of new energy vehicles increases and the industry begins to take shape, the functional shortcomings of supermarkets begin to emerge, such as the inability to provide comprehensive services such as repairs, maintenance, battery replacement, and charging to meet the diverse market needs. The new energy channel model is returning to 4S.
The 4S model still occupies a mainstream position among traditional brands. After experiencing a continuous decline in the proportion in 2022, this proportion began to rise in 2023.
After the third quarter, the number once again exceeded the total amount of 2S and supermarkets; new power brands are mainly supermarket models, accounting for nearly 60%, but the share of 4S is also growing steadily.
7. Lithium iron phosphate batteries surpass ternary lithium in installed capacity.
Benefiting from the rapid growth in sales of new energy passenger vehicles, the installed capacity of power batteries has soared from 34.1Gwh in 2019 to 322.9Gwh in 2023, an increase of nearly 9 times.
With advantages such as cost and safety, the installed capacity of lithium iron phosphate batteries has exceeded that of ternary lithium for two consecutive years, with a market share of 61.8% in 2023, and it has blossomed in the micro, compact and medium-sized markets, with a year-on-year increase of 20.9%, 18.5% and 1.6%, while in the medium and large markets and above, ternary lithium still occupies the mainstream, with a market share of 74.1%.
The head effect of the battery industry is significant, with the market share of the TOP3 manufacturers exceeding 70%. With the growth of BYD's vehicle sales, its share continues to rise, with a year-on-year increase of 2.6% in 2023. CATL's market share continues to decline, with a year-on-year decrease of 1.4% in 2023.
8. Motor installation volume
The motor installation volume has also increased from 921,000 units in 2019 to 8.322 million units in 2023, an increase of nearly 8 times; the single vehicle installation volume has also increased steadily, but the extended range has decreased year by year, mainly because the new models launched by late entrants such as Wenjie, Leapmotor, and Nezha are mainly single-motor.
Due to the surge in sales of Ideal L7/8/9, MODEL Y, and Denza D9 DM-i, the proportion of front + rear installation has steadily increased, surpassing rear installation for the first time in 2023.
Relying on the advantages of vehicle sales, self-developed enterprises such as OEMs or related suppliers occupy the majority of the market. Among the TOP10 motor manufacturers in 2023, self-developed enterprises occupy 5 seats, and their installed capacity accounts for nearly 50%, while third-party suppliers are relatively scattered, the industry concentration is not high, and there are no leading enterprises yet.
Mason Brown
Author
Mason Brown is a seasoned writer with deep expertise in the agricultural food industry. His extensive knowledge in this field allows him to provide valuable insights into purchasing strategies, industry trends, and market analysis, helping readers make informed decisions in the agricultural food sector.
