Chery Group to Explore Electric Vehicle Business Model

The “Twelfth Five-Year Plan” for the development of electric vehicle science and technology that was drafted by the Ministry of Science and Technology has proposed to deepen demonstration and promotion, explore commercial promotion models, increase financial subsidy for the development, optimization, and application of demonstration products, and expand the public service sector. The pilot model for the demonstration and promotion of electric vehicles in the field of private vehicles explores new commercial models for demonstration and promotion of electric vehicles such as separation of automobiles and vehicles, battery leasing, and vehicle leasing, and strengthens the combination of technological innovation and business model innovation.

It is worth mentioning that the Ministry of Science and Technology for the first time set aside 17 million yuan of special funds to support business model innovation and battery replacement technology research.

In fact, domestic car companies have been looking for sustainable business models to promote electric vehicles. In the business model experiment and exploration, independent brands have taken the lead.

Chery Group

Chery Automobile recently announced the signing of five companies, namely Saibo Le (China) Investment Corporation, Putian Offshore Oil New Energy Power Co., Ltd., Sino-Singapore Tianjin Eco-City Investment Development Co., Ltd., Huatai Property Insurance Co., Ltd. and Gaozhan Electric Vehicle Co., Ltd. The strategic cooperation agreement will cooperate on the demonstration and operation of pure electric vehicles, the overseas sales of new energy vehicles, the construction of infrastructure facilities, and the rapid development and production of battery electric vehicles. One of the important cooperation points is to cooperate with vehicle rental, joint sales, and new types of electric vehicle insurance to build a mature electric vehicle operation model.

According to the cooperation agreement signed by the parties, Chery will cooperate with Putian Offshore Oil New Energy Power Co., Ltd. in the construction and operation of electric vehicle infrastructure including charging stations and charging piles to speed up the operation of electric vehicle battery replacement. Based on its own product strategy, Chery will systematically cooperate with Putian Offshore Oil to carry out the research, development and production of standardized quick-change battery electric vehicles, and be responsible for the marketing of electric vehicle products on the grid.

Yuan Tao, deputy general manager of Chery Automobile Co., Ltd., said in an interview with the "Scientific Times": "The strategic cooperation with major companies is of great significance to the further development of new energy vehicles."

In the global new energy automotive industry competition, electric vehicles are both a technical level of competition, but also a contest of business models and technical standards. The convenient charge-and-swap infrastructure and innovative commercial operating model are the preconditions for promoting the marketization and scale of pure electric vehicles. Chery’s cooperation with companies such as Sebrole and Putianhai Petroleum will strive to jointly build a mature electric car model, eliminating consumers’ concerns about the continued ability of electric vehicles and the inconvenience of power-up, thus leading to the final entry of electric vehicles. Millions of households pave the way.

"Active and Practical" Attempt

Xie Tzong, a researcher on the electric vehicle business model in China, gave an evaluation of Chery’s move with “activeness and pragmatism”. He believes that Chery took the lead in forming the industrial alliances including R&D, vehicles, infrastructure, investment institutions, and insurance companies during the “Twelfth Five-Year Plan”. “This kind of attempt is very meaningful.”

Compared to the "central enterprise alliance" of electric vehicles established in August this year, the coalition formed by Chery is clearly clearer and operational. However, regarding the specific details and timetable for Chery’s commercial operation of electric vehicles, the reporter called the senior figures of Chery’s new energy vehicle company and did not receive a clear reply.

It is worth noting that this alliance has not yet included the key link in the electric vehicle industry chain—battery companies. According to Xie Zicong, battery companies are an important part of the alliance, “in a sustainable business platform There should be no shortage of vehicles, infrastructure and batteries, or any one of the troikas."

“We should let the battery companies participate in the industry alliance from the very beginning.” Xie Zicon told the Scientific Times that “battery standardization is the key to the commercialization of electric vehicles.” The reason is simple. In the operation of electric vehicles, whether it is The use of charging or quick-change power battery, in the use of the user there are maintenance and replacement issues, must be based on battery standardization and premise. “In the course of using electric vehicles for more than 10 years, how would the quality of the brand's batteries be a problem? If this battery company goes out of business, it will no longer be produced.”

Mode argument

“In the next phase, the focus of the electric vehicle industry should be on the construction of business models and supporting technology systems,” Xie Zicon pointed out.

It is understood that during the current promotion of electric vehicles, there are mainly three different business models of vehicle purchase (including batteries), vehicle leasing, and battery leasing, and each has its own advantages and disadvantages.

Vehicle purchase (including battery) mode Due to the immature nature of today's "Battery Fast Charge" technology, more and more people are affixing a "This Road Impossible" label. The focus of the debate on the business model is mainly on the two paths of “whole vehicle leasing” and “battery leasing”.

Electric vehicle rental is developed from the rental business model of fuel vehicles. This model is recognized by many vehicle companies. Vehicle companies generally think that electric vehicle leasing can avoid many problems that have not been solved in the current policy and technology fields. It is a shortcut for electric vehicles to enter the civilian market. There are already many domestic auto companies trying commercial vehicle rental models.

At the beginning of this year, 100 Zotye 2008EV pure electric vehicles were listed in Hangzhou through leasing, and pure electric vehicles entered the personal consumption field for the first time in small quantities. Consumers only need to pay 2,500 yuan per month for rent. If feedback is provided to the manufacturer, consumers can receive a monthly reduction of 1,000 yuan. Zotye's first "to rent, sell, and sell" approach to the market is to make pure electric vehicles bypass cost problems and truly allow consumers to feel its advantages and benefits. However, large-scale vehicle leasing to the market requires a large amount of money invested by vehicle companies. This will be a challenge.

The business model of battery leasing is a way to sell the battery and the whole vehicle separately.

In Xie Zicon's words, it is "using a red line to separate users from industry alliances." One side of the red line is the user. The electric car is cheaper, is as convenient as refueling and refueling, and the electricity cost per 100 kilometers is lower than 100 kilometers. The user does not need to consider the battery cost, battery maintenance, battery life and mileage. . After purchasing a vehicle, you will enjoy the benefits of “how much you will pay for the journey.” The other side of the red line is the various companies in the industry alliance, providing high-quality products and after-sales services in accordance with their respective commercial laws. In other words, the entire vehicle problem is solved by the vehicle company, and the problem of the power battery is solved by the battery company and the operating company. Each assumes its responsibility.

“The core idea of ​​this program is to help electric cars form the market competitiveness of products under the existing technical conditions.” Xie Zicong said, “This model is a better way to build a sustainable development platform for China’s electric cars.”

Xie Zicong believes that if the initial stage of electric vehicle promotion, the central government and local government subsidies can subsidize enterprises in all important links of the industry chain according to the level of risk and the size of technical inputs, so that these fund subsidy policies can truly play a role in the overall development of the incubation industry chain. The effect will be better than the subsidies for only one company.

Yang Yusheng, an academician of the Chinese Academy of Engineering, told the Scientific Times: “The business model of 'naked car sales, battery leasing, and exchange compatibility' is the development of the 50-pure electric bus replacement mode of operation for the Beijing Olympic Games, which may have a positive impact on China’s development. The commercialization of electric vehicles will play a catalytic role.” At the same time, he also pointed out that the key is to calculate the accounts that allow consumers and all sectors of the industry chain to “win together”.

Chery’s and Zotye’s related heads also said in an interview with the “Scientific Times” that, in the absence of clear policy guidance, mature technology, and inadequate supporting facilities, the first use of leasing methods to carry out trial promotion remains. It is the current primary choice, not necessarily confined to the debate on vehicle leasing or battery leasing.