Thinking about the supply and demand of core automotive parts

According to the statistics of iResearch, 11 brands increased their prices by more than 10,000 yuan in 2022, among which Leapmotor had the largest price increase of 30,000 yuan; many brands have adjusted their prices more than once, with Tesla having the most, with a total of 4 times.

3.2 Supply chain issues have a serious impact on OEMs. How do OEMs deal with the impact?

Supply chain issues have disrupted the rhythm of everything from parts production to vehicle sales, and OEMs need to ensure the healthy operation of the supply chain.

iResearch believes that OEMs need to formulate short-term and long-term strategies to cope with the situation.

Within 1-2 years, OEMs need to play the role of "chain leader", strengthen upstream and downstream visibility and coordination, reduce supply chain uncertainty, adjust production and sales plans to balance production and sales, and create a healthy industrial chain ecosystem.

On the basis of short-term adjustment and recovery, OEMs should be prepared for long-term responses.

In the next 2-5 years, OEMs should build a capability-oriented network, strengthen supply chain risk management, promote smart manufacturing to improve flexibility, and build an industry win-win ecosystem. On the one hand, they should shape the flexibility of the supply chain and improve flexibility and agility; on the other hand, they should forge the resilience of the supply chain, enhance its resistance to risks, and create a "hard and flexible" supply chain of core components for smart electric vehicles.

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What impact does the supply and demand of core components have on the smart electric vehicle market?

4.1 Supply chain issues directly target consumers. What impact does the “chip shortage and power shortage” have on the smart electric vehicle market?

iResearch believes that the main impact of supply chain issues such as "lack of chips and electricity" on the smart electric vehicle market and consumer end is that consumers' choice of models becomes narrower, the waiting period for delivery is longer, and the discounts become smaller.

The development of the smart electric vehicle market will reduce the activity and enthusiasm of the buyer's market due to supply chain issues, but OEMs that can control the supply chain will have some advantages.

BYD performed well in the smart electric vehicle market in 2022, with annual sales reaching 1.784 million vehicles, achieving a significant lead. Tesla followed closely with 440,000 vehicles. Although there is a big gap between it and BYD, it is not easy for Tesla to achieve such results relying only on two mainstream models on sale. It is in the first echelon with BYD.

iResearch believes that BYD and Tesla have already formed a leading advantage through mature supply chain control capabilities, and occupy half of China's smart electric vehicle sales, with an obvious Matthew effect.

4.2 BYD: Building a vertical supply chain system, covering the entire industry chain to create integrated advantages

BYD has laid out the entire automotive industry chain and created a supply chain system that is highly vertically integrated and horizontally expanded across the entire industry chain.

BYD's layout in the midstream and upstream of the industrial chain can provide supply chain support for the company's rapid sales growth, reduce costs, and improve the competitiveness and profitability of terminal products.

As the epidemic becomes normalized, the vertical supply chain system reduces the risk of over-reliance on parts suppliers during the production process of automobiles, and the vertical integration model further highlights BYD's competitiveness.

Through a comprehensive industrial chain layout, significant synergy effects are formed.

Since December 2019, BYD has successively established Fudi Battery, Fudi Vision, Fudi Technology, Fudi Power, Fudi Precision and other Fudi-related companies, which are responsible for the research and development and manufacturing of power batteries, automotive lighting, automotive electronics, automotive powertrains, automotive molds and other components.

The BYD Group of companies, together with BYD Electronics and BYD Semiconductor, basically covers all aspects of self-research, production and sales of core components.

4.3 As the market competition landscape changes, which smart electric vehicles have greater development advantages in the era of "chip shortage and power shortage"?

iResearch has counted the relationship between sales volume and starting price of the top 20 smart electric vehicle models in China in 2022. Overall, models with sales of more than 200,000 units are more scattered and there are only 5 models, of which 4 are BYD and 1 is Tesla.

iResearch believes that BYD and Tesla have built a "moat" based on their huge advantages in controlling the supply chain of core components, and the competitive landscape among the top companies has become basically clear.

The concentration of models with sales volume within 200,000 units is relatively high, and the competitive landscape has not yet been formed. With the rapid development of the industry, the competition among models in this range is relatively fierce and there are many uncertainties.

iResearch believes that in the context of chip and battery shortages, models with a starting price of less than 200,000 yuan have more development advantages.

The main reason is that in the face of chip shortages, models in this price range do not have high requirements for the number of chips, computing power, etc., and have more cost advantages than models priced between 200,000 and 300,000 yuan; although the rise in battery raw materials further compresses the profit margins of models, their lower prices make it easier to attract consumers, thus ensuring demand.

OEMs will also focus on this range when formulating production and sales plans to counter the impact of "chip and power shortages".