China’s new car-making forces have been suffering from “licenses” for a long time

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Back to the press conference two months ago, Li Yinan was full of confidence in Ziyoujia.

After four years, Ziyoujia, a subsidiary of Niu Chuang, finally released its first new car NV. After the debut of the new model, Ziyoujia immediately announced a series of sales and delivery plans: the day after the press conference, retail centers in 23 cities across the country will officially open, and the first batch of product deliveries will start in December, and will be in 40 cities by the end of the year 120 stores will be built in the city.

If all goes well, this might be a good start. But at the end of November 2022, there was news that the production line of Youjia’s factory in Changzhou, Jiangsu Province had stopped operating.

On December 7, 2022, Ziyoujia issued a letter of apology, acknowledging that the product could not be delivered in a short period of time, and initiated a refund, confirming the news that the factory had stopped production. In just two months, the vigorous car-making project died down, which shocked the car circle.

The stagnation of delivery is pointed to the production qualification of Ziyoujia and the foundry Dacheng Automobile.

In the industry, the production qualification is also often referred to as “the birth certificate”. Starting to build cars without this birth certificate is tantamount to walking in a gray area.

However, since the rise of the new energy vehicle market, no new car maker in China has obtained an independent application for production qualification.

In the past, new cars were mainly produced through OEMs and acquisitions. However, in recent years, supervision has become stricter, and delivery problems caused by production qualifications of new cars have become more prominent. Not only Ziyoujia, but Xiaomi also had a lot of rumors last year due to production qualification issues.

What is noncommittal is that production qualifications are like a wall that completely isolates new players outside the delivery room from old players in the delivery room.

Li Yinan and Lei Jun are waiting for a “birth certificate”

In November 2018, Li Yinan founded Niu Innovation Energy. Because it does not have new energy vehicle production qualifications, at the end of 2021, Niu Chuang will reach a cooperation with Dacheng Automobile, which has production qualifications as early as 2018, and use the latter’s production qualifications to build cars in the name of an OEM.

Choosing an OEM model is a common operation in the industry. For example, NIO found JAC as an OEM, and Xiaopeng found Haima as an OEM in the early days. However, not long after Niu Chuang and Mahayana finalized the cooperation, the policy on production qualifications suddenly changed.

At the beginning of 2022, the Ministry of Industry and Information Technology issued the “Notice on Carrying out the Pilot Work of Consigned Production of New Energy Vehicles”, requiring both entrusted enterprises and entrusted enterprises to obtain access to new energy vehicle manufacturers. In other words, not only OEM car companies need to have production qualifications, but also OEM car companies need to provide production qualifications, which is called the “dual qualification” requirement in the industry.

The one-paper policy caught both parties who should have put all their energy into the mass production of new cars by surprise, and the foundry fell through.

In order to avoid risks, Li Yinan had no choice but to go the wrong way and “hand over” the Ziyoujia brand he created himself. The “NIUTRON” and “Ziyoujia” trademarks were registered by Mahayana Automobile and belonged to Mahayana.

Li Yinan also emphasized that the relationship between Niu Chuang and Mahayana is no longer an OEM model, but an in-depth cooperation. Niu Chuang provides technical support for Mahayana Automobile, and Ziyoujia Auto is a new brand jointly created by Niu Chuang and Mahayana Automobile. .

On the eve of the listing of Ziyoujia NV, Niu Chuang urgently changed its name to “Martian Stone Technology Company”, saying that the move was to avoid confusion among users about the relationship between the “NIUTRON” and “Ziyoujia” brands and the company.

Zhang Rui (pseudonym), the founder of a car-making technology supplier, told Leifeng.com that it is logically feasible for Niu Chuang to hand over the brand and intellectual property rights of Ziyoujia to Dacheng Automobile.

But the house leak happened to rain overnight, and Mahayana’s production qualifications failed at this time.

In fact, Mahayana was already in debt before cooperating with Niu Chuang. Since 2019, there have been reports of Mahayana’s poor management and tight capital chain. In 2020, Mahayana fell into a situation of suspension of work and production, and in 2021, it encountered creditors requesting it to apply for bankruptcy and reorganization three times.

According to the regulations revised by the Ministry of Industry and Information Technology in 2020, for new energy vehicle companies that have stopped production for more than 24 months, the re-production needs to be verified by the Ministry of Industry and Information Technology. Enterprises that cannot maintain access conditions or have gone bankrupt may have their qualifications revoked.

Wang Liang (pseudonym), an executive at a leading car company, said that under such circumstances, the National Development and Reform Commission could cancel the production qualification of Mahayana, but did not cancel it directly. If Li Yinan submits a supplementary application to the Ministry of Industry and Information Technology in the name of Dacheng Automobile, “the higher authorities may turn a blind eye to approve the application, and they may be able to continue working if they are fined.”

Many people in the industry believe that Li Yinan “neither thought about nor prepared in advance” on the matter of production qualifications, and was “too high-profile”, rushing to develop products for pre-sales without re-applying. It is an illegal operation.

Despite the blow to the head, Li Yinan did not give up. Liu Mu (pseudonym), a partner of a technology investment fund, revealed that Niu Chuang is looking for cooperation with a car factory with production qualifications again.

However, Liu Mu is not optimistic about this. He thinks that “it is difficult to find a car factory with production qualifications again. It is better to wait for two months until everything is OK in Mahayana. It will take at least a few months to find another car factory.” Time, and the conditions are not good, other people’s perception of you is different, now Niu Chuang is more passive.”

The landscape of the new energy market is changing rapidly. By the time Li Yinan starts again, he may have missed the best time.

In this battle, Li Yinan was defeated by aggressiveness. However, being constrained by production qualifications is actually a common problem encountered by new car-making forces that have emerged since 2014. Nowadays, with the strengthening of supervision, the policy threshold for latecomers to cross is also higher.

Xiaomi, which is highly concerned about making cars, has not escaped the disaster of production qualifications. In August last year, it was reported that Xiaomi was considering using the OEM model to build cars due to delays in applying for independent production qualifications.

Zhang Rui confirmed the news to Leifeng.com. He said that it is very difficult for Xiaomi to obtain the production qualification. The Yizhuang factory in Beijing was stopped. Lei Jun and others visited the relevant departments three times, but failed to obtain the qualification.

The two checkpoints are strictly guarded against, and it is difficult for car companies to see tricks

Why is it so difficult for new energy car companies to obtain production qualifications?

Generally speaking, for new energy vehicle companies to obtain production qualifications, they usually have to go through two checkpoints. The first is the investment permit from the National Development and Reform Commission, which is called “big qualification” in the industry; the second is the production access and product access of the Ministry of Industry and Information Technology. , known as “small qualifications”.

Among them, the first checkpoint supervised by the National Development and Reform Commission is the prerequisite for the subsequent assessment by the Ministry of Industry and Information Technology, which is very important. A senior industry insider said that before the release of the “dual qualification”, after the car companies passed the review of the National Development and Reform Commission, the Ministry of Industry and Information Technology generally passed 100%.

Looking back at the regulatory process, the National Development and Reform Commission and the Ministry of Industry and Information Technology have control over the production qualification of new energy vehicles can be traced back to 2015.

In June 2015, the National Development and Reform Commission and the Ministry of Industry and Information Technology issued the “Regulations on the Administration of Newly-built Pure Electric Passenger Vehicle Enterprises”, which implements an approval system for investment projects of newly-built pure electric enterprises, and the investment management department of the provincial government or the enterprise group with separate plans shall report to the National Development and Reform Commission for review. If it is a new Sino-foreign joint venture car project, the National Development and Reform Commission shall report to the State Council for approval.

After the investment project has passed the landing, the Ministry of Industry and Information Technology will also assess the new enterprises and products.

This means that only after passing the approvals at various levels can new energy car companies be able to obtain a production qualification. The country’s strict control over the production qualifications of new energy vehicles can be seen.

From 2016 to 2018, although the National Development and Reform Commission gradually delegated the authority of automobile investment projects to provincial governments, new energy automobile production projects still had to be approved step by step according to the “approval system”.

This situation did not loosen until January 10, 2019, after the official implementation of the “Regulations on the Administration of the Automobile Industry”. The new “Regulations on the Administration of the Automobile Industry” explicitly cancels the approval items of automobile investment projects, and at the same time changes from “approval and approval” to “record management”.

The new regulations in 2019 seem to have relaxed the entry threshold, but in fact the difficulty of obtaining approval has not decreased but increased. The new regulations also take local capacity utilization into consideration, requiring that only when the capacity utilization meets certain conditions can new investment projects be opened.

Zhang Rui revealed that Xiaomi’s delay in obtaining independent production qualifications for car manufacturing is related to the overcapacity of automobiles in Beijing. “A lot of factories in Beijing are empty, and no new factories will be approved.”

From the perspective of policy trends, the supervision of new energy vehicles has almost never been relaxed. So far, no new car manufacturer has obtained the production qualification issued by the National Development and Reform Commission and the Ministry of Industry and Information Technology. The new forces tried their best to give birth to two modes of obtaining production qualifications:

The first is to transfer the production qualification to its own name by acquiring a car factory. In this model, car companies such as Ideal, Weimar, and Nezha are represented.

The second is to entrust factories with existing production qualifications to produce on their behalf, that is, the OEM model. Weilai and Jianghuai, Xiaopeng and Haima are the representatives.

The first mode of acquiring a car factory is very “heavy”. Taking Ideal as an example, it spent 650 million yuan to acquire Chongqing Lifan Motors in 2018, just to obtain the production qualification of Lifan Motors and support the production of the Changzhou factory. In 2019, Chongqing Ideal replaced Chongqing Lifan and appeared in the Ministry of Industry and Information Technology’s announcement of car company access, and Ideal officially obtained the production qualification.

The acquisition of production qualification does not mean once and for all. As mentioned above, Li Yinan’s Mahayana production qualification was frozen, and ideal off-site production also has the risk of violation.

Since the acquisition of Chongqing Lifan, Ideal has successively built factories in Changzhou and Beijing. It was not until February last year that it bought land in Chongqing, where the parent company with production qualifications is located, to build a third factory.

Wang Liang said that ideally, only the Changzhou factory is in production, which is against the regulations, because the Chongqing factory has no output as the parent factory. Once the production qualification of the Chongqing factory is revoked, the Changzhou production base as a subsidiary factory will also suffer.

In other words, in order not to violate the regulations, Ideal must allocate part of its production capacity to the Chongqing factory.

The second OEM model has lower capital requirements for entrusted car companies, and is therefore more friendly to new players who have just entered the market. Relying on OEM, new forces can deliver vehicles at a lower cost. After sales and production capacity increase, more capital can be obtained, and then the path of acquisition can be obtained to obtain their own production qualifications.

Especially in June 2019, the legitimacy of the foundry model has been officially certified by the Ministry of Industry and Information Technology.

However, the new “dual qualification” regulations released in early 2022 have once again raised the threshold for the foundry model, making it difficult for new players to enter the market with the help of foundry.

Right now, new players who are trapped by production qualifications are in a dilemma, with almost nowhere to go.

New and old forces, hard to eat a bowl of rice

Under the requirement of “dual qualifications”, if the entrusted car company cannot obtain the production qualification, it can only hand over the brand of the new car to Mahayana to act as a supplier like Li Yinan, or take the road of wholly-owned acquisition.

Lacking capital support, it is clear that not all new cars have the strength to carry out wholly-owned acquisitions.

At the same time, there is also news in the industry that in order to limit the disorderly expansion of new car manufacturers, since May 2022, the policy side has tightened the space for capital acquisition, holding, and transfer of production qualifications.

This made the new entrants helpless, and Wang Liang was quite dissatisfied with this, “I want to start a new company, but I can’t buy it, and I can’t transfer it. What should I do?”

Zhang Rui put forward another idea. He said that under the current situation, new car manufacturers can jointly invest with old factories to set up new companies to produce new cars. However, according to the policy, this new company must be controlled by the old factory in order to use the production qualification of the old factory, and the new car can only become a minority shareholder.

Undoubtedly, this model is quite beneficial to the old factory. After accepting the capital injection of the new car, the idle production capacity of the old factory will be revitalized, and at the same time, the profit from sales can be obtained.

“The reform aims to revive the old factory through new resources, but most of the new cars are unwilling to let the old factory take control.” Zhang Rui said.

Wang Liang believes that the control logic of the relevant departments is actually to restrict new players, “new entrants are not allowed, because there are too many entrants.” In the tone of the Internet, that is “not born unless necessary.”

The problem of overcapacity in domestic automobiles is quite serious.

According to the data of the Passenger Car Market Information Association (referred to as the “Passenger Association”), there will be 86 domestic passenger car companies with sales in 2021, with a total production capacity of 37.038 million vehicles, and the corresponding overall capacity utilization rate is 57.93%. Among the total production capacity of passenger vehicles, the remaining enterprises have 3.85 million production capacity completely idle.

In terms of new energy passenger vehicles, the production capacity dedicated to new energy passenger vehicles will reach 5.695 million units in 2021, and the capacity utilization rate will be 58.4%.

“While the auto industry is solving the problem of overcapacity in traditional vehicles, it must also prevent overcapacity in new energy vehicles.”

The Federation of Passenger Passengers said that in the case of excess passenger car production capacity, there are still 10.46 million production capacity under construction for companies that already have production qualifications, which will be completed and put into production one after another, and most of the production capacity under construction is new energy vehicles. Part of the existing production capacity can also produce new energy vehicles on the same line.

New regulations come out frequently, and compliance requirements have been updated. So far, it has not had a significant impact on players who entered the game early.

For example, the foundry cooperation between Weilai and Jianghuai, Wang Liang revealed that because this cooperation has been approved before, it can continue to be used in theory, and it is not within the scope of the new “dual qualification” regulations.

NIO also has no plans to apply for or acquire production qualifications. He added that the cooperation between NIO and JAC has been very smooth. The former has absolute control over the production line. “NIO is in charge of buying land, building factories, equipment and production management, and JAC is completely in charge.”

However, Jianghuai’s absolute cooperation with Weilai is likely to be an isolated case in the industry.

Previously, there were many problems in the early stage of the foundry cooperation between Xiaopeng and Haima, and Xiaopeng could not fully control the production line located in Haima. Initially, Xiaopeng raised the management fee paid to Haima in order to improve the management quality of Haima. But it soon became apparent that with more money, the quality of management may not necessarily improve, “because it can keep getting worse and require more money.”

Later, Xiaopeng decided to acquire production qualifications to control production quality. After obtaining the production qualification of Foday Automobile in 2020, Xiaopeng accelerated the construction of factories and expanded production capacity. At the end of 2021, after the contract with Haima expires, Xiaopeng will not renew the contract.

Soon after the official announcement of building cars, policy adjustments occurred, and the problems Xiaomi had to solve were much more difficult. First, the independent production qualification was “difficult to produce”, and the acquisition restrictions were yet to be resolved. Now the OEM plan is also temporarily “stranded”.

However, Xiaomi Auto, which is backed by Xiaomi Group, cannot be compared with Li Yinan’s Niu Chuang. Zhang Rui revealed that Beijing does not want to lose Xiaomi, the “dark horse” in the future market, and it is very likely that a whitelist will be issued to allow powerful new cars such as Xiaomi to be manufactured with “single qualification”.

In this regard, Wang Liang does not agree. He said that it is difficult to get Xiaomi into the white list. There are rumors that Beijing can only choose between Xiaomi and Ideal, and it is impossible for Beijing to invest in two factories.

Ideal’s factory in Beijing will start construction in October 2021, with an investment of more than 6 billion yuan in the entire project. It is planned to be put into operation by the end of 2023. The first phase will achieve an annual production capacity of 100,000 pure electric vehicles.

“Ideal, Xiaomi, who will win, has not yet been determined.”

Under the dual background of stricter regulation and overcapacity of automobiles, it seems difficult for the market to wait for a new new energy automobile production qualification to be issued.

Leifeng.com Leifeng.com

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