These factors suggest spectacular explosive growth for 2023 Nio Shanghai sales.
Editor's note: This is a guest post from Rafi Khan, an Nio investor, and does not represent the views of CnEVPost.
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For illustrative & entertainment purposes. What's happening on January 1st, 2023?
On January 1st, in Shanghai, China's largest auto market, you will no longer be able to go to BYD, Geely, Li Auto showrooms & buy PHEVs as easily as before.
Rather you have to:
- Wait for the next Shanghai bid/auction lottery
- Probably hire a specialist agent for RMB 10,000
- Apply for a blue vehicle plate license
- Recognize you only have an 11 percent chance of success
- Try again the following month if you lose the lottery
- Be prepared to pay RMB 90,000
An alternative, of course, is to buy green vehicle plate BEVs.
Who truly knows what adding RMB 90,000 to:
- BYD RMB 200,000 PHEV
- Li Auto RMB 450,000 PHEV
- OR to any other PHEV sold in Shanghai in 2023
Will do to growth on approx. 150,000 PHEVs sold in Shanghai in 2022.
To extra monies now needed to buy PHEV, add all the uncertainty.
Current State of Affairs
Jan to October 2022 Shanghai car sales: Total 474,146, NEVs 218,4044 (46 percent of total).
In September NEVs sold were 41,063 or 53.5 percent of total sales of 76,733. In October NEVs sold were 30,751 or 49.4 percent of total sales of 62,238.
KISS Shanghai estimated numbers for 2022:Total vehicle sales 600,000, NEV sales 300,000. (Rough estimates used for illustrative purposes).
NEV sales comprise BEV & PHEV sales.
Take 2022 Shanghai sales to be 150,000 BEVs & 150,000 PHEVs.
Estimated 2023 Shanghai NEV sales could be 450,000 up 50 percent consistent with analyst 2023 estimates of 9 million NEV sales.
The savings rate in the US is at its lowest 2.3 percent level since 2007. During the same period, China has been the highest-saving nation in the World.
This augurs well for the government to use auto incentives to spur retail sales as a key policy plank for economic stimulus which arguably makes 50 percent growth in Shanghai NEV sales conservative.
You can take Chinese EV stocks down so far because of the US recession but ultimately fundamentals will prevail for sound stocks having 50 to 100 percent growth in a recession-resilient economy that has built up a multi-trillion war chest, amongst consumers, to fend off an economic downturn.
YTD 2022 NEV numbers 6.067m up 100 percent YoY.
Note that ICE sales in November were down 11 percent YoY.
2023 growth may be higher, than the average 50 percent expected, for Shanghai being further along NEV S-curve.
Shanghai numbers in June 2022 were 53.5 percent BEV & 46.5 percent PHEV with a total NEV parc being 710,000.
So 50/50 split is suitable for illustrative purposes. Shanghai sales universe is about to change for PHEV companies.
From January 1, 2023, Shanghai buyers of PHEVs will:
- Participate in Bid / Auction along with ICE for blue vehicle plates
- Typically pay RMB 90,000 to win at bid/auction
How Shanghai ICE blue vehicle plate bid/auctions work:
- Conducted third Saturday of every month
- In November 158,693 applied & 18,129 (11.4 percent) were successful
- RMB 91,600 was paid by “lucky” winners
- Typically pay an agent RMB 10,000
- The price range for winning bids is controlled by government
- Applications must bid in the “guided” price range to have a chance of winning
- Approx. RMB 90,000 winning bid/auction price has been pretty stable for many years
- Numbers bidding has been slowly trending lower, but this may change when the new cohort of PHEV buyers are added to bid/auctions
Shanghai is not the first major city to have a restrictive PHEV policy.
Beijing requires PHEV purchasers to initially acquire approval for blue vehicle plates through the city lottery.
In Beijing wait for the list to own a blue vehicle plate is 3 million & chances of winning the lottery are 2-3 percent.
- Win the lottery in Beijing.
- Pay RMB 90,000 Bid / Auction “tax” on buying PHEV in Shanghai.
Restrictive PHEV policies in its 2 largest showpiece cities. It is pretty clear in which segment the central government wants NEV growth.
In BEVs – NOT in PHEVs.
Additional taxes transform the relative attraction of PHEVs Vs BEVs.
Why buy RMB 200,000 BYD PHEV for RMB 290,000 (in 2022 you also got approx. RMB 11,000 subsidy on that PHEV) when you could buy BYD BEV or BaaS Nio ET5 (for RMB 258,000) with pretty much all of Shanghai covered with battery swap station to reduce customer range anxiety concerns.
One thing is for sure, the Chinese consumer is super smart in tech / EV purchases.
This is why they have rejected the en masse EV offerings of BBA giving Nio a massive 77.6 percent market share in EV offerings of over RMB 400,000 in November 2022.
Rather than facing just 11 percent chance of success plus paying RMB 90,000 bid/auction fee, potential PHEV buyers may simply switch to buying BEVs
The above may result in estimated 450,000 Shanghai NEV sales in 2023 being:
- 400,000 BEV (Up 166 percent)
- 50,000 PHEV (Down 67 percent)
My Numbers JMHO – make your own assessment.
No doubt RMB 90,000 is a huge levy/tax/price increase on PHEVs – Tough to determine how much PHEV sales will be decimated.
ICE vehicles face an even tougher relative attraction problem also having to pay VPT which is 5 percent until YE 2022 but may revert to 10 percent in 2023.
Shanghai PHEV policy impact on Nio
Shanghai is a crucial market for Nio, which has the No. 1 market share of 23 percent of all fuel and electric SUVs priced above RMB 350,000 in 2021 in the city.
As of the end of last year (2021), Nio had 30 sales outlets in Shanghai, according to the information posted on its mobile app.
Since then Nio has:
- Expanded age range attraction with ET5 (now from ages 25 upwards)
- Expanded price range attraction with ET5 (with Baas now from RMB 258,000 upwards)
- Increased Nio Houses in Shanghai from 5 to 8
- Increased battery swap stations & fast charger infrastructure
- Introducing 5 new models by 1H 2022
Major 2022 PHEV producers in China are BYD (approx. 900k) Geely (approx. 90k) & Li Auto (approx. 120k) representing 70 percent of the market.
Total 2022 PHEV sales may approx. 1.45 million.PHEV sales will be significantly impacted in 2023 in Shanghai
For Nio – Why not more than the 166 percent growth in BEV sales that Shanghai may experience courtesy of new restrictive PHEV regulations given Nio:
- Expanded Product Line with next-gen EC6, ES6, ES8 plus EC7 & perhaps ES5 all expected to be unveiled by 1H 2023
- Premium Luxury is a fastest-growing segment
- Expanded age range attraction (from 25 upwards)
- Expanded price range attraction (from RMB 258,000 upwards)
- Expanded Nio House & Nio Space outlets
- Expanded Battery Swap Station & Charger infrastructure reducing range anxiety
The above factors suggest spectacular explosive growth for 2023 Nio Shanghai sales.
Not an auto analyst nor financial advisor JMHO DYODD
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