Prospect of electric vehicle replacement business in China From Mckinsey

The following is the Prospect of electric vehicle replacement business in China From Mckinsey recommended by recordtrend.com. And this article belongs to the classification: New energy vehicle industry, Mckinsey .

How to make the power exchange service itself a sustainable business model, enterprises need to continue to make more in-depth exploration in terms of cost, power exchange efficiency, pricing model and so on.

Great progress has been made in the construction of electric vehicle charging infrastructure in China. By the end of December 2021, the number of public charging piles has increased from 520000 at the end of 2019 to 1.15 million, and the scale has doubled. Even so, charging anxiety is still one of the main factors restricting consumers from buying electric vehicles. According to “2021 McKinsey’s insight into Chinese automobile consumers”, up to 72% of respondents believe that the lack of charging facilities is the main reason why they are unwilling to consider pure electric vehicles; This proportion is even higher than the survey results in 2019 (61%). During the national day, Spring Festival and other long holidays, reports about “long queues” of electric vehicle charging have attracted much attention.

In order to solve the “charging difficulty”, the core pain point of consumers, major car enterprises have taken various positive measures. In the layout of various charging businesses, although the network scale of electric vehicle power exchange is far smaller than that of charging pile, so far there are few enterprises applying this mode; However, due to its novelty and topic, the development of power exchange business is still attracting the attention of all walks of life.

The power exchange business has also received policy support from the government. For example, vehicles in power exchange mode can be exempted from the requirement that the selling price of new energy passenger vehicles must be less than 300000 yuan before subsidies; The 2021 government work report takes “increasing power stations” as an important part of “steadily increasing automobile and other bulk consumption”; In the first half of 2021, the national development and Reform Commission and the national energy administration clearly proposed to “accelerate the popularization and application of power exchange mode”; At the end of October 2021, the Ministry of industry and information technology will include 11 cities in the pilot application scope of new energy vehicle power exchange mode. At the same time, the formulation of general national standards in the field of power exchange mode is also actively promoted.

The power exchange mode can generally be divided into three categories: first, the commercial vehicle power exchange station, which is usually suitable for heavy-duty electric commercial vehicles with relatively fixed lines in (semi) enclosed areas; The second is the centralized power station that mainly serves electric taxis. This kind of mode does not have high requirements for the number of outlets, and usually does not involve special occasions such as highways. The representative enterprises include BAIC, Aodong new energy, etc; Finally, it is applicable to the power exchange service of private pure electric passenger cars. Due to the randomness of the driving track of private cars, this kind of service has high requirements for the number of outlets, and must take into account urban areas, highways and other occasions. Typical enterprises such as Weilai. Recently, the power battery giant Ningde times has also launched the passenger car power exchange business, and plans to open the power exchange service to different car enterprises at the same time, which has won the general attention of the industry.

Our research focuses on the power exchange service in the field of private pure electric passenger vehicles, and will discuss the preconditions, economic rationality, indirect benefits and growth of power exchange service.

Prerequisites for switching services

We believe that a successful power exchange service system must have the following prerequisites: standardized battery packs, efficient data infrastructure, and “rechargeable and replaceable”.

Standardization of battery pack: the standardized size of battery pack can undoubtedly greatly reduce the difficulty of battery resource allocation and reserve conditions for later battery pack upgrading. Whether it is the “chocolate battery replacement block” recently launched by a power battery giant or the standardized battery replacement package launched by a new force of car manufacturing, it is the implementation of this principle.

Efficient data infrastructure: This includes app, battery resource monitoring and tracking system, intelligent algorithm system, energy supplement business platform and other modules. Through this complete set of infrastructure, the operator of power exchange business can fully grasp the demand characteristics and use of users’ energy supplement, and then allocate battery resources efficiently; At the same time, key decision information is continuously input for the technical iteration of various energy supplement schemes, and the optimal layout of energy supplement network is supported.

Rechargeable and exchangeable: changing electricity and charging are not opposite technical routes. The operator of power exchange business should adhere to the organic combination of the two and give the option of energy supplement mode to consumers.

Economic rationality of power exchange service

At present, the power exchange service in the field of private pure electric passenger vehicles is dominated by a new domestic car manufacturing force. By the end of December 2021, there are more than 1000 power exchange stations in China, most of which are invested and operated by the vehicle enterprise, which can be called the “main force” of China’s electric vehicle power exchange business. Therefore, our discussion on the economic rationality of power exchange service will also take the enterprise as a reference.

The power exchange business has a significant scale effect, that is, the unit cost of power exchange service will decrease with the improvement of the utilization rate of power exchange station. According to the data released by the car company on its official app (December 10, 2021), at present, its average daily power change service times exceed 20000, and its daily service capacity can reach 176000. Under this utilization rate, according to our preliminary estimation, the annual investment of single vehicle for electricity exchange service is more than 5000 yuan. In view of the free power exchange strategy adopted by the enterprise for first-hand car users, it is obvious that the service is difficult to directly contribute profits. Assuming that the average holding life of its customers’ first-hand cars is 4 years and the utilization rate of power exchange service remains unchanged, according to our rough estimation, the car enterprise needs to bear more than 20000 yuan of power exchange fee for each sold vehicle.

More than 20000 yuan for bicycles is undoubtedly a large expenditure. However, considering the high single vehicle price of the car enterprise – the entry price of the main models on sale is close to 360000 yuan, which is higher than the actual transaction price of pure electric models of similar sizes of an international luxury brand, and the price difference is more than 20000 yuan. The uniqueness of the power exchange service and the grasp of the user’s pain points undoubtedly help the car enterprise establish and maintain the user experience and a high bicycle premium. From this perspective, the power exchange business is reasonable for the vehicle enterprise.

In addition, since the free power exchange policy is only applicable to the first owner, after the vehicle enters the second-hand car market, car enterprises are expected to obtain direct income from the power exchange business. According to our calculation, if the proportion of paying users and the utilization rate of the power exchange station meet certain conditions, the power exchange business is expected to contribute profits; Moreover, with the increase of kWh service fee, the profit area of power exchange business will gradually expand.

It must be emphasized that the pre investment of power exchange mode is large, and its specific applicability and rationality may be far different for brands in different price segments. As the saying goes, “Huainan is orange and Huaibei is orange”, automobile enterprises need to make a specific analysis on specific problems such as cost allocation, operation efficiency and pricing mode.

Indirect benefits of power exchange services

The power exchange business is expected to help car companies realize many indirect benefits, including baas (battery as a service), battery rental on demand, improving the value preservation rate of used cars, boosting battery recycling, etc.

Baas: benefiting from the physical premise that the battery can be replaced, manufacturers who change the tram type can carry out the sales mode of vehicle power separation (which refers to the separation of vehicle body and battery ownership), that is, baas. Because this model avoids the cost of battery pack in the new car sales stage, the economic pressure of car buyers can be reduced. As for a new car making force that launched the business, according to its official app, baas has a penetration rate of more than 60% in its new car sales, and its role can be seen.

Battery rental on demand: according to “McKinsey’s insight into Chinese automobile consumers”, the proportion of consumers with a pure tram driving range of more than 600 kilometers is expected to reach 45% in 2021, which is significantly higher than the survey results in 2019 (26%). We understand consumers’ preference for long-distance self driving and the resulting mileage anxiety; However, in the face of soaring battery raw material prices, blindly increasing the battery pack may not be a good strategy. On the premise of vehicle electricity separation, the possibility of renting high-capacity battery packs on demand arises at the historic moment. Consumers can choose the most appropriate (rather than the largest) battery pack according to their actual travel needs, so as to avoid paying a lot of sunk costs to meet the occasional long-distance travel needs.

Used car residual value protection: the low rate of used car residual value has always been a major concern for electric vehicle consumers. Since the power exchange mode avoids the risk of battery depreciation, it can theoretically form a hedging rate advantage over traditional pure electric vehicles. This is also confirmed in the latest list of hedging rates of pure electric vehicles by model. Taking the latest data of automobile preservation rate released by China Automobile Circulation Association as an example, the three models of electric SUV of a new power of car manufacturing are listed as the top three in the domestic pure electric SUV preservation rate.

Boost battery recovery: since the turnover of battery replacement is always under the control of vehicle enterprises, vehicle enterprises of power replacement can realize the efficient recovery of power battery at a relatively small cost, which is an advantage that vehicle enterprises adopting traditional charging mode are difficult to copy.

Growth of power exchange service scale

In the last half of the year, the new force of car building has significantly expanded the network scale of its replacement power stations. The number of replacement power stations has expanded from more than 150 at the end of September 2020 to more than 510 at the end of September 2021. Up to now (mid January 2022), it has been close to 800, with a rapid growth rate. Combined with the power exchange data released by the car company during the two “National Day” holidays in 2020 and 2021, we examined the change of power exchange utilization rate under the condition of sharp increase in the number of power exchange stations:

With the expansion of the scale of the power exchange network, car owners’ enthusiasm for the use of power exchange services is also increasing. The average daily power exchange times per 100 car owners have increased from 8.3 times during the “National Day” in 2020 to 13.2 times during the “National Day” in 2021, an increase of nearly 60%.

The daily power exchange times of a single station will increase from 31.3 times during the “National Day” period in 2020 to 36.2 times during the “National Day” period in 2021. It must be pointed out that the replacement power station network of the car enterprise in 2020 is dominated by first-generation stations, and the battery reserve of a single station is only 5 pieces; After the large-scale launch of the second generation station in the past six months, the current power exchange network has transitioned to the second generation station, and the battery reserve of a single station has been increased to 13. The substantial increase in battery reserves and the small increase in the average daily service quantity of a single station mean a great improvement in the user experience; Considering the frequent reports of long lines of electric vehicle charging during the “National Day” in 2021, the power change service will undoubtedly give its owners flexibility in energy supplement.

For the new power of car making, if you want to make better development of power exchange business in the future, you may make efforts from the following aspects:

1. More scientific and reasonable site selection of power exchange station

The utilization rate and user experience of the power station are closely related to the rationality of the station site. The enterprise needs to fully consider the constraints such as the ownership and traffic flow of the replacement tram within the radiation range of the replacement power station, users’ energy supplement habits, power infrastructure and parking lot conditions, take into account the balance of interests between the replacement power operator and the replacement tram owner, and make a reasonable plan for the location of the replacement power station.

2. Efficient battery resource allocation under multiple battery specifications

At present, the car company provides two specifications of battery packs: Standard endurance level (70 / 75kwh) and long endurance level (100kwh); In the future, there will be super long battery life (150kwh) battery packs. In the case of coexistence of multiple specifications, enterprises should achieve more efficient battery resource allocation through a variety of means, such as accurate demand forecasting, efficient offline operation and maintenance team, and innovative user operation means (such as reverse power change, etc.), so as to ensure that users can change power stations at the right time and use the right battery packs.

3. More “flexible” battery upgrade

The car company launched a flexible battery upgrade service in the middle of 2021, allowing users to temporarily replace high-capacity battery packs according to the actual situation of travel. While giving users greater autonomy in battery selection, the service also has some shortcomings. For example, it can only upgrade the battery pack according to the monthly rent, which obviously does not meet the needs of car owners for the most typical weekend long-distance travel. In view of this, enterprises can consider adjusting the shortest cycle of battery flexible upgrading from month to week, or even shorter. Of course, this will put forward higher requirements for battery resource allocation ability, but such adjustment is necessary from the perspective of “user enterprise”.

There is no absolute success or failure mode for the power exchange business. Any car enterprise that is adopting or planning to set foot in the power exchange mode needs to be able to withstand three “soul torture”:

Do business decisions really start from user needs and pain points, not just based on existing technology?

Can the overall strategy support the economic sustainability, convenience and comprehensive experience of power exchange mode?

Does the enterprise have control over the user’s mind and data, and can it maximize the direct and indirect value of the power exchange mode?

Authors: Guan Mingyu, Peng Bo, Zhou Guansong, Chen Qing McKinsey: the future road of electric transportation: McKinsey: the 2030 high level self driving car will reach 50% of the total sales. McKinsey & Bloomberg: research shows that electric vehicles will become mainstream in 14 years: 3Q20 gross profit margin 14.5% Q4 monthly delivery 5600+ two generation platform NT2 is absolutely ahead of China. Li Bin is confident that McKinsey: innovation driven China New journey of medicine McKinsey: Chinese medicine in the digital age McKinsey: 12 disruptive technologies expected to appear in the world in 2025 McKinsey: 2016 China digital consumer survey report (attached) McKinsey: the next decade of China’s private banks McKinsey: Asian consumers lead the future of mobile travel Guojin Securities: Tesla industry series in-depth report: electric and intelligent fly together, Tesla wave strikes (with report) China’s new car e-commerce: from the emperor’s new clothes to breaking cocoons into butterflies (with download) McKinsey: how to realize the big data of automobile in the future and make new consumption: face to face with the new generation of Chinese automobile buyers McKinsey: Interpretation of the analysis report of tourism industry in 2017

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