Gu Huinan: It is not certain whether the "vehicle-battery separation" model will become the direction of industry development.

On September 5, 2020, the China Automotive Industry Development (TEDA) Forum was held in Tianjin Binhai New Area. The theme of this year's forum is "Dual Upgrade of Industry and Consumption to Reconstruct a New Ecological Pattern", and discussions will be held in the fields of policies and standards. The main contents include in-depth interpretation, research progress and implementation trends, implementation effect evaluation, future adjustment direction judgment, corporate response measures and suggestions, etc.

During the meeting, Gu Huinan, General Manager of GAC New Energy Automobile Co., Ltd., also accepted interviews from a number of media outlets including First Electric Network. The following is the transcript:

Media: I would like to ask questions related to new energy vehicles. What are the pain points of new energy vehicles at present, and how does GAC New Energy solve them?

Gu Huinan: This is a very good topic. I mentioned in my report just now that the main pain point of new energy vehicles was the range before. Now the range itself is not a particularly big problem, because most cars exceed 600km. I think if people still feel worried about the range after 600km, it is more of a psychological problem. I drove a car with a range of 650km to travel 400km away. It was the first time I drove so far and I was also worried. It turned out that there was no problem at all. For example, the distribution of provinces in our country, except Xinjiang and Inner Mongolia, generally speaking, cross-regional travel within the province or near provinces is not a problem. This pain point has now been effectively solved.

The second pain point is charging. In the past, we solved the problem of battery life. The previous cars only had a battery life of 200-300km, and no matter how many charging piles there were, they could not travel very far. Now the pain point has shifted to the convenience of charging. In the past, we had a PHEV plug-in hybrid car, which only had a dozen degrees of electricity and took about 10 hours to charge once. But now, after charging for an hour or half an hour, we can travel hundreds of kilometers. Therefore, fast charging is not the core issue now. The core issue is the convenience of charging.

The so-called convenience means that I can find a place to charge when I need it. Why has this become a core pain point? You see, although State Grid and China Southern Power Grid have laid charging piles on major highways to solve the problem of long-distance travel, many times the locations of the charging piles are occupied and there is no place to charge when you go.

There is another problem. Now many places do not build charging piles for you. Some communities say that it is for safety reasons, but I think it is more of a profit issue. As you know, after the developer hands over the property, the profit goes to the property company. If the property company has no profit, why would it build this for you? And it also bears the risk. Now we need to solve the problem of profit distribution. How to popularize charging piles in large quantities is a pain point nowadays. This problem is the core issue of solving the convenience of charging, and this pain point must be effectively solved by the government.

Another pain point is the residual value issue. A few years ago, people who bought electric cars were particularly worried about one issue: the battery decayed very quickly. But in recent years, battery technology has made a lot of progress, and this progress will exceed your imagination. Our current cars have run 200,000 to 300,000 kilometers, and the battery has not decayed much. But if you consider that the car will be used for 10 years, decay may still be a pain point. There is also the issue of winter endurance. As we all know, heating is needed in the north in winter, which consumes part of the mileage, which is also a pain point.

The problem of battery degradation is not the biggest problem now, but it still needs to be improved. How to solve the problem of battery degradation in winter should be a pain point. If this problem is solved, the residual value problem and the application problem will be solved simultaneously.

Another issue is cost. As you know, the new energy industry in the world still relies on government subsidies . This is an indisputable fact. As I mentioned in my report just now, the cost is decreasing. In addition to the improvement of the body, technology, motor efficiency, etc., it is very important to make progress in batteries.

This cost improvement has two aspects: On the one hand, the mileage does not need to be so long. For example, as I just said, if there are more charging stations, there is no need for such a long range. The GE3 we first launched only has a range of 310 kilometers, but it is now very popular in the market, and those people have not complained about the insufficient range, of course, the premise is that they do not drive too far.

This is a good way to reduce costs. Compared with 400 kilometers and 600 kilometers, the cost of the battery is almost halved. 400 kilometers and 600 kilometers are not just a matter of battery capacity ratio. When the battery is smaller, the car is lighter, and when the car is lighter, the mileage is longer. The relationship between them is not a 6 to 4 ratio. When the battery of 400 kilometers is lighter, the car can run farther, so not letting people buy cars with such a long range is a good way to reduce costs.

Another thing is that the cost of batteries themselves needs to be reduced. In another three years, by 2023, the cost of batteries can be expected to drop by more than 30%. If this aspect is improved, electric vehicles will not necessarily rely on government subsidies to survive at least three years later. The government subsidies will last until 2022, and the cost issue may not be so prominent in 2023. It will take several more years to solve the cost issue.

The last one is the pain point of quality and safety. Nowadays, safety problems occur from time to time. Of course, it is not only a problem with the car itself, but also related to the owner's usage habits and insufficient anticipation of application scenarios. For example, there have been many standards for charging piles in the past, and now they are gradually being unified. In fact, charging has a great impact on battery safety. Now it is required to further unify the charging end and further improve the quality of the charging end. In addition, upstream and downstream industries, such as how to improve the quality of battery raw materials and how to improve the quality of the manufacturing end.

As you all know, batteries are now installed at the bottom of the car. The passability of new energy vehicles is originally worse than that of ordinary cars. Because the chassis is closer to the ground due to the installation of batteries, the bottoming situation often occurs. For example, when crossing bumps, people who drive electric cars often have not changed their habits. As you all know, electric cars accelerate quickly, and many people like to accelerate and rush through, which can easily cause bottoming. Therefore, usage knowledge and safety knowledge should also be popularized. In addition, the environment on the application side should also be improved. Combining these two aspects, I think through the efforts of the past one or two years, it should be greatly improved.

Media: One of the ideas at this TEDA Forum is to advocate the separation of vehicle and battery. How feasible do you think it is?

Gu Huinan: Yes, this is a hot topic. There are two ways to separate the car and the battery: one is physical separation, that is, the battery can be removed and replaced. The other is a commercial model. Have you noticed that the separation of the car and the battery in the market often makes you confused, for example, the battery can be taken out for leasing or installment payment, but the battery cannot be replaced, which is a commercial separation. There is also a separation in which the battery can be replaced. Because this commercial separation model is often changing, I think the issue you are concerned about is still the model of complete physical separation of the car and the battery.

Our current Aion S also has a battery swap version, and I have this technology myself. But I think that a completely physically separated model can solve the promotion and application of electric vehicles? This path is still being explored. Is it definitely the direction of the future? Because everyone knows that batteries are developing very fast now. The batteries we see now will be updated in two or three years. Semi-solid batteries and solid-state batteries are updated very quickly. In the future, after the battery is miniaturized and lightweight, it will not decay. After the problem of winter endurance is solved, it will definitely be improved in the next few years. What kind of revolution will it bring? I think there will still be a process of exploration in the industry, and it is not possible to completely conclude that this approach is definitely good or bad. But as a new thing, as an attempt, I think it might as well be done, but to be realistic, the cost is not low.

Media: The direction is certain, but the specific operations still need to be studied?

Gu Huinan: I am not sure yet whether this is the right direction or not. It still needs further exploration.

Media: First question, we just talked about the separation of vehicle and battery. In the past two years, there are more and more products from new start-ups. Traditional car companies are making high-end electric vehicles, and the competition is quite fierce. GAC New Energy is already very advanced in high-end layout. However, with more and more new start-ups, the competition has entered another stage. How do you think GAC New Energy will play a good card in terms of competitiveness in the future, and what work will it do in terms of marketing? Because new start-ups are not as good as traditional car companies in technology and products, but they are still doing relatively well in user operations.