On March 21st, the Beijing Economic and Information Technology Commission publicized “Details of Beijing's first financial subsidies for new energy vehicles to be paid in 2017â€. In 2017, Beijing plans to allocate the first batch of subsidies for new energy vehicles, involving a total of 4066 vehicles. It is planned to allocate funds of 5,179,903,500 yuan. Companies that receive subsidies include: Ankai Automobile, Beiqi Foton Motor, Nanjing Jinlong Bus, Chery Automobile, Geely Automobile, Jiangnan Automobile, Dongfeng Automobile, BYD (002594.SZ), Jianghuai Automobile and SAIC Motor.
After sales of new energy vehicles plummeted in January, sales in February rebounded to 18,000 units, an increase of 145% from the previous quarter and an increase of 30.3% over the same period of last year. However, in January-February, the total production and sales of new energy vehicles continued to decline year-on-year due to the decline in cliff-type in January. According to data from the China Automobile Association, 24,781 vehicles were sold in the January-February period, down 30.5% year-on-year.
The sudden drop in sales of new energy vehicles in January was mainly a result of the superposition of the "subsidy retreat" and "recommendation list reaffirmation" policies. After the gradual clear-cutting in February, the rapid adjustment of car prices made the market appear to pick up. On January 23, the first batch of the “Recommended Vehicle Catalogue for Promotion and Application of New Energy Vehicles†of the Ministry of Industry and Information Technology was officially released in 2017. On March 1st, the second batch of recommended catalogues were landed, and the first two batches of recommended catalogues totaled 386 models. On March 14th, the Ministry of Industry and Information Technology publicly reported new products for the 294th batch of “Road Motor Vehicle Manufacturing Enterprises and Products Announcementâ€, among which 697 models of 86 enterprises that applied for new energy vehicles were identified. The last batch of 218 models of 35 enterprises that applied for new energy automotive products reported a significant increase in the number of production applications.
We believe that "subsidy reduction" does not mean that the country's strategy to promote healthy development of the new energy vehicle industry has changed, but it is intended to promote the gradual transition from a policy-driven to a market-driven change in the new energy automobile industry. On March 5th, Miao Wei, Minister of the Ministry of Industry and Information Technology, stated that he was considering alternative measures after the withdrawal of subsidies. In addition, as the industry chain matures and matures, vehicle manufacturers and key upstream component companies can resolve the pressure brought about by the decline in subsidies through economies of scale and technological progress. As for the future production and sales targets of new energy vehicles, there is no need to be pessimistic. Production and sales are expected to return to the high-speed growth track, and the industrial boom is expected to continue to rise. China Automobile Association also optimistically expects sales of 700,000-800,000 vehicles in 2017. The new energy automotive industry chain involves many sub-sectors such as vehicles, batteries, motors, electronic control, and charging. It is recommended to pay attention to the entire vehicle and three-cell battery leading enterprises, such as BYD, Yutong Bus (600066.SH), and Yiwei Lithium Energy. (300014.SZ), Guoxuan Hi-Tech (002074.SZ) and others.