Core Ideas:
First, compared with China, why does the demand for charging piles in Europe and the United States have more room for growth and faster growth?
1. The ownership of the United States and Europe has accelerated upward, and it is objectively necessary to build more piles. The penetration rate of new energy vehicles in the United States is low, sales are accelerating, and ownership is increasing rapidly. Although the overall growth rate in Europe is slightly lower, the proportion of pure electricity in new car sales continues to increase, and the month-on-month increase in tram sales continues to drive the demand for charging piles.
2. The current public vehicle piles in Europe and the United States are relatively high, and there is a large space for supporting improvement. The public vehicle pile ratios in the United States from 2019 to 2021 were 16.6/14.6/15.9 respectively, the vehicle pile ratios in Europe in 2020 and 2021 were 14.7/14.4, and China's public vehicle pile ratios in 2019-2021 were 7.4/6.1/6.8, respectively. The United States and Europe are much higher than China, and there is a large space for supporting incremental piles in public piles.
3. The proportion of DC piles in the current public piles in Europe and the United States is relatively low, and DC charging piles have a large upward space. From January to August 2022, the proportion of DC piles in China, the United States and Europe was about 42%/25%/10% respectively. The proportion of DC fast charging piles in public piles in Europe and the United States is relatively low, and most of them are still low-power slow charging piles, which is difficult to meet the needs of more vehicles for fast charging, and the space for DC piles in the new supporting facilities is large.
Second, marginal changes - supply-side overseas policies increase support > domestic head pile enterprises accelerate overseas certification
1. Policy support (US policy/Europe), the subsidy policies of European and American governments for charging piles will be upgraded in 2022. Since 2022, Germany has clarified the charging pile installation subsidy policy, and the public pile and private pile are subsidized, and the construction of charging piles is supported to a greater extent. The US market has successively launched a 5 billion subsidy policy for the construction of public charging piles on highways and an IRA bill that increases the upper limit of tax credits and increases the validity period of subsidy policies, which directly promotes the supporting and installation of charging piles in the United States.
2. Domestic products can match overseas demand, and leading enterprises actively carry out European and American standard certification.
(1) There are good enough products (power, product quality) to meet overseas needs, and the cost is low, and the products have cost-effective advantages. The domestic charging pile market started earlier, there are many participants, and the market competition is fierce. Domestic pile enterprises in the fierce competition to improve product strength and control costs ability is far better than overseas manufacturing enterprises, so China's charging pile products in the basis of meeting overseas demand, has a significant cost advantage, the foundation of going to sea is solid.
(2) Chinese enterprises are actively doing European standard/American standard certification. After laying down the "internal strength", domestic enterprises actively apply for the certification of European standards and American standards, and certification puts forward higher requirements for product quality and objective understanding of European and American market demand.
3. How big is the total market space? ——The European and American markets have a compound growth rate of 60-80% in the past three years, and the market size is expected to reach about 15 billion in 2025
From 2023 to 2025, the growth rate of the charging pile market in Europe and the United States is much higher than that in China. We measure:
(1) In terms of the scale of the domestic market, we expect that the overall market size of domestic charging piles will be about 22.7 billion yuan in 2022, and the domestic market size is expected to reach 45 billion yuan in 2025 (public piles + private piles); From the perspective of growth rate, we expect the compound growth rate of market size in 2023-2024 to be about 20-40% range;
(2) In terms of the scale of the US market, we expect the size of the US public pile market to be about 3.3 billion RMB in 2022 and 19.1 billion RMB in 2025, and in terms of scale growth, we expect the compound growth rate of the US market to reach 80% from 2023 to 2025;
(3) In terms of absolute value of the European market, we expect the European public pile market to be about 2.6 billion yuan in 2022 and 11.2 billion yuan in 2025, and from the perspective of scale growth, we expect to maintain a compound growth rate of more than 60% from 2023 to 2025.
Fourth, the core of the business model of the industrial chain / profit distribution: AC pile competition brand + channel & DC pile competition for China's manufacturing dividend, more profits of the industrial chain are concentrated on the manufacturing side
Product structure level: the core component of the charging pile is the charging module, which accounts for about 40% of the cost composition of the DC pile. Comparison with overseas pile product strength (preparation for going overseas):
(1) AC and DC: AC pile specifications are close at home and abroad, and overseas high-power products of fast charging piles have a slight advantage over domestic products;
(2) Software and hardware: software differences in national specifications, hardware level is relatively close.
Product Value Level: Comparative Analysis of Chinese and Foreign Markets and Business Systems:
(1) The essence of the profit of the exchange pile is the competition of brands and channels. We compare the AC pile and the household storage inverter system, and believe that: 1) the two have similarities in business models, the core of the competition between enterprises is brand and channel, specifically the core ability is to timely launch excellent new products that meet customer needs and effectively expand sales channels while establishing a solid cooperative relationship with world-renowned brands or retailers; 2) There is a gap between the two from the profit level, and the intermediate link profit of household storage series products at the current stage is better than that of the charging pile industry chain.
(2) The essence of DC pile profitability is to rely on the dividends made in China, and the comprehensive cost performance of products. We found that under the premise of the same or similar quality, the price of DC piles made in China is much lower than that of overseas manufacturers, and the gross profit margin of Chinese manufacturers is also better than that of overseas competitors, that is, on the basis of excellent product performance, the product cost control ability is far stronger than that of overseas competitors, and DC piles deeply reflect the dividends of Chinese manufacturing.
1. Compared with China, why does the demand for charging piles in Europe and the United States have more room for growth and faster growth in the future?
Reason 1: The rapid increase in the number of electric vehicles + the increase in the proportion of pure electricity in Europe
The overall growth rate of new energy vehicles in Europe is low, but the growth rate of pure electric vehicles is large, and the proportion is expected to increase, and pure electric vehicles have a rigid demand for charging piles. Before Q2 2021, European hybrid vehicle sales accounted for more than 50%, and since Q3 2021, the growth rate of European pure electric vehicle sales has been higher than that of plug-in hybrid models. The proportion of pure electric vehicles in Europe has increased from less than 50% in H1 2021 to nearly 60% in Q1-Q3 2022. The logic of increasing the proportion of pure electric vehicles is:
1) Car companies' R&D is biased towards pure electric models, and more pure electric new models are launched;
2) Mass production at Tesla's Berlin plant;
3) Subsidies for plug-in hybrid models will be withdrawn earlier.
The penetration rate of new energy vehicles in the United States is currently low, and the growth rate is expected to lead the world in 2023: We expect the penetration rate of new energy vehicles in the United States to be around 6% in 2022, and we expect it to reach 12% in 2023. The U.S. market is expected to grow by more than 60% in electric vehicle ownership in 2023.
Reason 2: The ratio of European and American vehicle piles is too high, the piles are insufficient, and there are supporting rigid attributes
The bus pile ratios in the United States from 2019 to 2021 were 16.6/14.6/15.9, respectively, and in Europe, the vehicle pile ratios in 2020 and 2021 were 14.7/14.4, respectively. China's three-year bus pile ratio from 2019 to 2021 was 7.4/6.1/6.8 respectively. After comparison, it can be found that the ratio of European and American vehicle piles is too high and the piles are insufficient. The reasons behind it are as follows:
1) The net profit of European and American charging pile companies is negative all year round, discourageing the enthusiasm of investment and operation: The net profit of European and American charging pile companies is negative all year round, taking Evgo as an example, the gross profit in 2021 is -43.546 million yuan, the net profit is -368.2732 million yuan, and the H1 in 2022 is still a loss, and the perennial loss of operating enterprises discourages the enthusiasm of newly expanded charging stations.
2) The initial investment cost of charging piles is too high: Before Chinese manufacturers enter the European and American markets, the cost of equipment purchased in Europe and the United States is high.
3) The strength of government support needs to be improved: before 2022, European and American governments will have relatively limited subsidy policies for charging pile investment.
Reason 3: The proportion of DC piles in European and American public piles (AC/DC) is relatively low, and the proportion of DC charging piles has a large upward space
The number of DC charging piles in Europe is too small and the proportion is low, and there is a lot of room for growth:
1) The proportion of AC piles in public piles in Europe from January to August 2022 was 88.7%, 91.6% and 90.4% respectively; The proportion of AC piles in public piles in China from January to August 2022 was 62%, 59% and 58%, respectively. After comparison, it can be seen that the proportion of DC in European public piles is much lower than that in China, and European DC charging piles have upward space.
2) Build a larger proportion of fast charging piles to meet market demand. Rapid energy replenishment has always been an important development direction of electric vehicle technology progress, in addition to their own parking spaces and other scenarios that can be parked for a long time, electric vehicles in short-term parking public scenes have the need for rapid energy replenishment, and a higher proportion of fast charging piles meet the objective needs of consumers.
2. Starting from this year, why has it entered a period of rapid development?
Marginal change 1: Policy - Europe's pre-2021 policy is mainly quantitative guidance, and detailed financial subsidy policies have been introduced since 2022
Early European policies were based on guidelines on the number of charging piles.
(1) Taking Germany as an example, as early as 2019, the "Electric Infrastructure Master Plan" pointed out that 1 million public charging piles should be built by 2030;
(2) The European Commission issued a policy in 2020 stating that 1 million public charging piles should be built by 2025;
(3) The United Kingdom said that the installation of charging piles should be considered in new buildings. Since 2022, the subsidy policy for charging piles has been improved, and charging pile-related enterprises can obtain more tangible benefits. Taking Germany as an example, the German government has developed a sound subsidy policy for public piles/private piles, and the public piles are combined with different power levels to give different subsidy amounts, higher than 100KW high-power piles have the opportunity to enjoy subsidies of up to 30,000 euros, ordinary exchange public piles up to 2,500 euros, private piles subsidy standards of 900 euros.
Marginal change 2: domestic charging pile overseas certification - head pile enterprises seize the opportunity to actively certify and accelerate overseas layout
Overseas space and profit attraction, domestic pile enterprises actively certified to accelerate overseas layout. At present, Yingjie Electric, Daotong Technology, Galaxy Electronics, Crestec and other enterprises have carried out charging pile overseas business, and many enterprises have obtained European standard/American standard certification. Obtaining overseas certification – this is the first and crucial step for domestic charging piles to go overseas.
Certification requirements: Under different charging standards in different countries, the charging interface is not compatible, and overseas standards have higher requirements for the standardization and safety of charging piles. At present, the four main international charging pile standards are: China GB / T, CCS1 American standard, CCS2 European standard, Japanese standard CHAdeMO.
Certification time: product overseas certification depends on the company's technical accumulation and experience, if both are at a high level, 1-2 months can complete the certification, but if the requirements are not met, it takes 6 months to 1 year.
Certification costs: With the rise of the popularity of the European and American markets, certification costs are also rising, a set of CE certification fees in previous years were 20~300,000 yuan, and in the past two years, it has risen to 50~600,000 yuan.
3. Market space in China, the United States and Europe
Chinese market space - the estimated market size in 2022 is 20 billion +, and the compound growth rate in the next 2-3 years is between 20-40%.
China's new energy vehicle ownership and charging pile ownership are on the rise, the pile ratio continues to decline, and the number of car owners installing private piles is gradually increasing (the pile ratio of private piles is rapidly declining). Conclusion:
(1) In terms of scale, we expect that the overall market size of domestic charging piles will be about 22.7 billion yuan in 2022, and the domestic market size is expected to reach 45 billion yuan in 2025 (public piles + private piles);
(2) From the perspective of growth rate, we expect the compound growth rate of market size in 2023-2024 to be about 20-40%.
The US market space - the current size is more than 3 billion, and it is expected to continue to double in the next 2 years
The penetration rate of American automobiles in the mainstream market is low and the pile is relatively high, so there is more room for improvement. As of 2021, the number of new energy vehicles in the United States is 2.05 million, and the ratio of piles to public piles is 15.9:1. Conclusion:
(1) In terms of scale, we expect the size of the US public pile market to be about $460 million in 2022 and expected to grow to about $2.67 billion in 2025;
(2) In terms of scale growth, we expect the compound growth rate of the US market to reach more than 74% from 2021 to 2025.
European market space - the current size is nearly 3 billion, and the compound growth rate is expected to reach 60%+ in the next 2-3 years
The penetration rate of new energy vehicles in the European market is high, and the ratio of public vehicle piles in 2021 is about 14.4:1. Among public piles, the proportion of DC piles is relatively low, only 8.4% in 2021, and the proportion of DC piles may have greater room for improvement. Conclusion:
(1) In terms of absolute value, we expect the European market to be about $370 million in 2022 and $1.57 billion in 2025;
(2) From the perspective of scale growth, we expect to maintain a compound growth rate of more than 60% from 2023 to 2025.
4. What do you see when you go to sea? AC pile looks at brand and channel, DC pile looks at cost advantage
Products: The cost of charging modules accounts for the highest proportion of DC pile parts, reaching about 40%.
DC pile, AC pile:
(1) DC piles have high requirements for the power grid and need to build a dedicated network, so they are mostly equipped in centralized charging stations;
(2) AC piles have low requirements for power grid transformation, generally do not need special transformation of the power grid, and are simple to use.
It is mainly used for personal and household electric vehicles. The core components of the DC pile - charging module:
(1) The cost ratio is significant: In the cost composition of the entire charging pile, the charging module is the main cost source of the charging pile, accounting for about 40% of the cost of the whole pile.
(2) Affect the core performance of the product: the charging module is equivalent to the "heart" of the charging pile;
(3) High technical threshold: The key technology of the charging module lies in IGBT, which is difficult to process.
The core competitiveness of the exchange pile going overseas: brand effect + channel construction
There is a similar business model between the exchange pile and the household storage industry chain, which also has a rapid growth of overseas orders, that is, the combination of brand effect and channel construction.
(1) Brand recognition is an important competitive advantage, and creating products that are popular with consumers is particularly key. One of the core competitiveness of Deye Co., Ltd., a representative enterprise in the household storage inverter industry, is the ability to launch excellent new products that meet customer needs in a timely manner. Specifically, starting from customer needs, strengthen the benchmarking of products with high sales, and after the distributor feedback that the excellent inverter company Victron products in the Netherlands sell well, quickly analyze the reasons and develop corresponding high-quality new products (16kW single-phase photovoltaic storage hybrid inverter) to solve customer pain points, and establish in-depth cooperative relations with key customers during this period to build customer stickiness and improve brand recognition.
The core competitiveness of DC piles going overseas: cost performance is the secret weapon of domestic enterprises, and the essence is to benefit from the dividends of Chinese manufacturing
The essence of making money from DC piles is to rely on the dividends made in China, and the comprehensive cost performance of products. We found that under the premise of the same or similar quality, the price of DC piles manufactured in China is much lower than that of overseas manufacturers. The average price of domestic enterprises is about 1 yuan/W. The price of piles of global first-tier brands such as ABB is about twice that of domestic enterprises (about 2 yuan/W), and ABB's 60KW piles are priced as high as 113,000 yuan. Moreover, the gross profit margin of Chinese manufacturers is also better than that of overseas competitors. The profitability of domestic enterprises is better than that of overseas competitors. That is, on the basis of product performance reaching overseas market access standards, product cost control ability is stronger than overseas competitors, and DC piles profoundly reflect the dividends of Chinese manufacturing.
Profit distribution rhythm: In the short term, compared with operating enterprises, the profits of charging pile manufacturers have entered the release stage
The overseas charging pile business has developed rapidly, and the European and American markets have flourished. According to the sales data of the Amazon platform from 2020 to 2022, the sales of new energy vehicle charging piles in major countries in the European and American markets in 2021 nearly doubled compared with 2020, and the sales of the United States, Germany, France and the United Kingdom in the four months of 2022 have exceeded the annual sales volume in 2020. The logic behind it is that the global new energy vehicle market is still in a stage of rapid growth. According to this, the overseas charging pile industry is expected to usher in a full recovery, and we expect that 2025-2030 may usher in a sustained peak growth stage. Compared with the channel side, the manufacturing end takes the lead in entering the profit release cycle. At the current stage, the gross profit margin of the manufacturing end is high, and the gross profit margin of intermediate channel providers and operating enterprises is relatively low. Manufacturing companies are the first to enter the profit release cycle. The cost of manufacturing is low, the gross profit is high, and the manufacturing advantages in China are significant. Focus on manufacturing profits, relying on the advantages of manufacturing in China, it has a significant advantage in gross margin.
