The battle in the new energy vehicle market reignites in the second half of the year, with the country’s entrance into the market and the launch of subsidies for rural areas

New energy vehicle market competition intensifies in H2 with country's entry and rural subsidies

There is a saying circulating on the internet that “houses, cars, and children are the major consumption items of middle-class families”. Upon careful consideration, this is indeed true. After establishing a family, who hasn’t carried the burden of mortgage, car loans, and various expenses for their children? In the first half of this year, signals of consumption recovery have also emerged in various industries, but fundamentally, consumer spending needs to be stimulated. At this time, subsidies and price cuts have become the most effective ways. Taking cars as an example, the new energy vehicle subsidy war in March of this year was heated, and the price cuts of Tesla and Citroen allowed consumers who wanted to buy cars to enjoy real discounts.

Nowadays, with the arrival of the second half of the year, consumers have new expectations for the automobile market, such as whether there will be preferential policies for purchase tax on fuel vehicles and whether there will be relevant subsidies for new energy vehicles. These issues that concern everyone’s purse are of concern to every consumer. On June 8, the Ministry of Commerce issued the “Notice of the General Office of the Ministry of Commerce on Organizing Automobile Consumption Promotion Activities”, officially indicating the development direction of new energy vehicles in the second half of the year. For people who are waiting to buy a car, it is worth observing the specific subsidy policies and related preferential measures that will be available. Today, we will analyze several directions worth noting in this automobile consumption promotion activity.

The Ministry of Commerce’s notice pointed out that a “hundred cities linkage” key activity list should be established, and 3-5 candidate cities for the hundred cities linkage and their key automobile consumption promotion activities should be recommended. The Ministry of Commerce will select about 100 cities with distinctive features and complementary advantages to form a key activity list for the hundred cities linkage. In addition, it will focus on new car sales, used car transactions, scrapping and renewal, replacing “old” with “new” (new energy vehicles), and the automotive aftermarket, and promote automobile consumption throughout the entire chain. At the same time, it will play the role of local financial funds, and encourage financial institutions to introduce automotive credit and financial support policies.

From the notification issued this time, the focus is still mainly on the new energy vehicle market. Currently, major automakers are betting on the new energy vehicle market, launching related products, and promoting technological development from the bottom-up to form a technological moat, which has effectively protected their brands and provided consumers with clear direction of choices. For example, BYD’s DMI technology, WenJie’s Hongmeng car machine, Avita’s intelligent driving, etc. have become symbols of their respective brands. Of course, with the decrease in price of new energy vehicles, fuel vehicles may also offer related discounts to increase their sales, but the efforts may not be as strong as those for new energy vehicles. Nevertheless, this is still a good time to purchase fuel vehicles.

Although the cities participating in the event have not been announced yet, the author believes that the event will probably revolve around new energy vehicle cities, such as Chongqing, a relatively typical city where companies such as SAIC and Avita have factories and where the Chongqing Auto Show is currently taking place. Major new energy vehicle companies have gathered in Chongqing, and new cars and technologies are particularly eye-catching, playing a crucial role in the construction of Chongqing’s strategic emerging industry cluster. Another city is Shenzhen, known as a city of innovation, where various brands of new energy vehicles can be seen everywhere, making it a model for the rest of the country.

The Ministry of Commerce will organize the launch ceremony of the “Thousand Counties and Ten Thousand Towns” new energy vehicle consumption season soon, and guide various regions to carry out various forms of new energy vehicle promotion activities, such as “tent cars” promoting new energy vehicles in rural areas, in over a thousand counties and ten thousand towns across the country. It is not difficult to see that promoting new energy vehicles in rural areas will become a mainstream trend in the second half of the year, bringing more discounts and choices for consumers in townships, counties, and districts.

The Ministry of Commerce has pointed out that in order to target this market, enterprises should be encouraged to promote new energy transportation vehicles such as micro cargo, micro card, light truck, etc. with high cost performance and strong practicality that are suitable for rural areas. These types of vehicles are more suitable for daily use by rural consumers, with affordable prices and practical uses, which can be said to accurately improve their sense of happiness. When I was young, I had never heard of new energy vehicles. The means of transportation in the village was either bicycles or horse-drawn carriages. With the deepening of the promotion of new energy vehicles in rural areas, it is believed that it will further drive the consumption of new energy vehicles while improving the sense of happiness.

While promoting the use of new energy vehicles in rural areas, the Ministry of Commerce also emphasized the need to promote the sinking of after-sales service networks and improve the construction of rural charging technology facilities. Enterprises are encouraged to further sink sales and maintenance service channels, strengthen the construction of new energy vehicle mobile maintenance stations, rural maintenance points, and rural maintenance and technology personnel training, and continuously improve the after-sales and maintenance service network for new energy vehicles in rural areas. For consumers, car consumption is a large-scale expenditure. Although buying a car can improve convenience and happiness, after-sales service must also be considered. Only when after-sales service in rural areas keeps up, can it solve the worries of rural consumers when purchasing new energy vehicles.

Another typical problem is the charging issue. In many places, people choose to use fly lines to charge. They pull a very long line from inside the house, although the safety is not high, it solves the urgent need for charging, which is actually a problem caused by the inadequate charging facilities. The Ministry of Commerce has pointed out that it is necessary to actively coordinate and promote the improvement of the rural charging infrastructure system, rely on county and township commercial outlets, enterprises, and institutions and other places to jointly promote the construction of rural centralized public charging station sites, and actively coordinate with relevant departments to do a good job in ensuring the construction of rural charging stations, land use, power grid support, etc.

Actually, when it comes to building charging stations in rural areas, we should consider the issue of charging prices to the greatest extent. How to price and operate them is a knowledge. Otherwise, people may not be willing to use the charging stations. We can pay attention to the subsequent policy guidance in this regard.

With the announcement of the notice to promote car consumption, the new energy vehicle market in the second half of the year is extremely lively. If people were buying all kinds of new cars in the first half of the year, then in the second half of the year, promotions will be even more aggressive in addition to the purchase of new cars, which is quite attractive to consumers who intend to buy cars. Of course, in such a situation, should you buy a new energy vehicle or a traditional fuel vehicle? I believe this is also a dilemma for many old car owners. What choice will they make?

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