New energy vehicles to maintain a high boom, how about the automotive heat pump air conditioning market?

The State Council decided to extend the vehicle purchase tax exemption policy for new energy vehicles until the end of 2023, which further stimulated the consumption of new energy vehicles, which is of great benefit to the whole industry chain. As the automotive heat pump air conditioner in the upper reaches of the automobile industry chain, it naturally rises in this gust of east wind.

It is understood that automotive heat pump air conditioning is a subdivision of automotive thermal management, that is, one of the development directions of air conditioning system, mainly plays a role in the heating of the occupant cabin in winter, and is considered to be the mainstream of automotive air conditioning system in the future. So, what is the development potential of automotive heat pump air conditioners, and what are the opportunities and challenges facing this market?

01. The room for efficiency improvement is large, and the permeability of heat pump air conditioners is increased.

At present, the air conditioning systems of new energy vehicles are mainly divided into PTC air conditioning and heat pump air conditioning. The former is to add thermistors to the original air conditioning system and use the thermal effect of electricity to heat the air directly. because of its simple principle and relatively low cost, it has become the mainstream of the current application of new energy vehicles. The latter reverses the refrigeration link and transports the heat outside the car to the car by changing the flow direction of the coolant in the pipe to achieve the heating effect.

Although it has not yet become a market *, from the heating principle, heat pump air conditioners have advantages that PTC air conditioners can never match-low energy consumption. As mentioned earlier, PTC air conditioners heat air directly through electrical energy flow through resistors, and the energy efficiency ratio cannot exceed 1 without considering loss, which means that the mileage of new energy vehicles driven by electric energy will be reduced in winter. On the other hand, the heat pump air conditioner drives the refrigerant backflow through a small amount of electric energy to bring external heat into the car, and the energy-efficiency ratio can far exceed 1 in non-extremely low temperature weather, which can effectively prolong the winter mileage.

From the point of view of the improvement space of heating efficiency, PTC air conditioning can improve the efficiency of PTC heater and reduce heat conduction loss, but the upper limit of energy efficiency ratio can not exceed 1, so there is little room for development in the future; while heat pump air conditioning can improve the power of electric compressor as a refrigerant power source and improve the thermal conductivity efficiency of refrigerant, it can reduce the loss and improve the heating efficiency, and there is more room for service life in the future.

For new energy vehicles, battery life is always the most critical core element, the configuration of components and systems need to be based on the premise of battery life. According to the statistics of "2021 China New Energy vehicle user Survey", driving range is the concern factor for users to buy new energy vehicles, and "insufficient mileage" is also the first among the main reasons for not buying new energy vehicles. This means that in order to improve the attractiveness of products and expand consumption, heat pump air-conditioning systems that can effectively reduce losses and improve mileage will become the choice of more automobile companies in the future automobile thermal management.

By the end of 2021, Renault's ZOE, Nissan's leaf, Tesla, Inc. 's Model3 and Model Y have all been equipped with heat pump air-conditioning systems, while new car-building forces such as NIO Inc. (NIO.US) and XPeng Inc. (09868.HK) have also installed heat pumps one after another. In terms of annual sales, the permeability of heat pump models has risen from 11.1 per cent in 2018 to 23.5 per cent in 2021, according to CITIC.

02. Foreign capital is dominant, and the domestic substitution rate needs to be improved.

With the increase of the permeability of heat pump models and the expansion of the demand for new energy vehicles, the market space of vehicle heat pump air conditioning is also expanding. According to CITIC's forecast, the global heat pump air conditioning market for new energy vehicles will reach 16.493 billion yuan in 2022 and 44.209 billion yuan by 2025, with a compound growth rate of 168.05%. It is one of the segments of the growth space in the new energy vehicle industry chain.

At present, the automotive heat pump air conditioning market is dominated by foreign-funded enterprises, especially in the integration of heat pump air conditioning systems. Although automotive heat pump air conditioning is a new market brought by new energy vehicles, and the starting line for Chinese and foreign enterprises to enter this market is at the same level, thanks to the advantages of system integration and customer resources accumulated in the thermal management of traditional fuel vehicles, Denso, Valeo, Hanang and other international giants still occupy a high position in the market, and the degree of localization needs to be improved.

However, in terms of spare parts, the degree of localization of new parts such as electronic expansion valves and four-way valves is significantly higher. Take Sanhua Intelligent Control (002050.SZ) as an example, with the technical experience accumulated in the field of traditional fuel vehicle expansion valve, Sanhua Intelligent Control's research and development on electronic expansion valve is progressing very smoothly. The global market share of its products has exceeded 50%, and Tesla, Inc. 's share is as high as 70%. It is the undisputed leader in the electronic expansion valve industry.

However, it should also be noted that although the domestic supply of some parts is dominant, the electric compressor with the highest value and technical barriers is still monopolized by foreign brands. At present, the market pattern of electric compressors for new energy vehicles is roughly the same as that of traditional fuel vehicle mechanical compressors. Denso, Sandian and Hanang have a combined market share of more than 80%, firmly controlling the entire vehicle electric air compressor market. While the domestic electric compressor supplier with mass production capacity is only 002239.SZ, in this heat pump air conditioning industry segment of the market scale * field, domestic substitution still has a long way to go.

Generally speaking, the automotive heat pump air conditioning market is still dominated by foreign brands, and the integration is monopolized, while domestic brands have a small advantage in parts, but the key components with the highest value are still occupied by foreign brands. With the introduction of domestic support policies and the improvement of local advantages, it is expected that the domestic substitution rate of components will be improved, and after parts suppliers accumulate rich product matrix integration experience, the domestic substitution rate of heat pump system integration is also expected to improve.

03. Home appliance enterprises enter the market, and competition intensifies.

If you only look at the domestic market, you will be able to find an obvious fact, that is, the current domestic automotive heat pump air conditioning parts suppliers are mostly home appliance enterprises. For example, Sanhua Intelligent Control mentioned earlier is one of its main products are refrigeration and air conditioning control components. Shield Environment (002011.SZ), another supplier of valve components, was also a manufacturer of household and commercial air-conditioning parts and equipment. Home appliance enterprises layout of automotive heat pump air conditioning market has become a trend.

In fact, the concept of heat pump air conditioning is not unique to new energy vehicles. It has been used in household air conditioners long before, that is, the so-called "air source heat pump air conditioning". Compared with automotive heat pump air conditioners, household air source heat pump air conditioners are very mature, and because of the same principle, the technical requirements of automotive and household heat pump air conditioners on compressors and valves are roughly the same. therefore, household appliance enterprises have obvious advantages both in technology and in cost control.

However, due to the cross-industry layout, home appliance enterprises also have a greater competitive disadvantage in entering automotive heat pump air conditioners. Through years of accumulation, traditional auto parts suppliers have already reached a deep cooperative relationship with major auto companies and have obvious first-mover advantages. although household appliance enterprises are better than traditional suppliers in some products, they are restricted by insufficient customer accumulation. it is difficult to cut into the automobile supply chain. However, home appliance companies are also actively making up for customer disadvantages and entering the market by means of mergers and acquisitions. For example, 00921.HK acquired Japan Sandian in 2021 and became a global automotive air-conditioning compressor company.

In a word, as an important part of the new energy vehicle industry chain, the future development of air conditioning system will be closer to heat pump air conditioning, and the market space of vehicle heat pump air conditioning is very broad. At present, the domestic substitution rate in this market is still relatively low, and there is a lot of room for improvement, but reducing cost and improving efficiency is always the key to improve domestic permeability. Therefore, the household appliance enterprises with technological advantages are expected to become the leader of the automotive heat pump market in the future, but the disadvantage of customer resources is also inevitable for household appliance enterprises, and whether they can seize the opportunity remains to be tested.