Tesla still needs to cut prices, Mercedes-Benz abandons oil to electricity: it's time for domestic trams to wake up

In the current electric vehicle market, two trends seem to be unfavorable to domestic new energy. One is that orders have skyrocketed since Tesla cut prices, and the cost reduction brought about by large-scale mass production of 4680 batteries will probably continue to be reduced. Musk mentioned in an earnings conference call a few days ago that many people want to buy a Tesla tram, but they may not be able to afford it, so our price adjustments in the market will also meet the needs of ordinary consumers.

Musk said that although the overall car market may shrink, consumer demand for Tesla will remain good, and deliveries are expected to reach 1.8 million vehicles throughout the year.

Furthermore, Mercedes-Benz is about to completely abandon the conversion of oil to electricity. According to foreign media sources, Mercedes-Benz's internal sources revealed that the company plans to abandon its “EQ brand,” which focuses on the development and production of electric vehicles, and accelerate “all-electric mobility” when the next generation of new compact cars is launched at the end of 2024 at the earliest. This may mean that the BBA is seeing its own crisis in the age of electrification and is trying to reverse the trend.

Judging from these two trends, domestic trams may face pressure from both sides.

Behind Tesla's price reduction and Mercedes-Benz's complete abandonment of oil to electricity

The effect of Tesla's price reduction was actually immediate.

According to people familiar with the matter, the number of orders placed at Tesla stores in some cities increased by 500% compared to December 2022. We know that the impact of this on domestic trams is already showing; it's not following, it's not following, it's not following.

In particular, judging from Tesla's financial report, in 2022, Tesla's total revenue reached 81.5 billion US dollars, up 51% year on year to 81.5 billion US dollars; net profit reached 12.6 billion US dollars, up 128% year on year.

Judging from financial reports, Tesla's profits and revenue are growing rapidly. However, there is still room for Tesla to cut prices. If the price drops to around 200,000, domestic trams will face extreme pressure. After all, from the perspective of balancing costs and profits, there is not much room for domestic trams to decline.

However, in the past, to some extent, domestic new energy has also gradually become its BBA. In terms of new energy models, currently domestic renewable energy is the main force of more than 200,000 to 300,000 models. The price of the NIO ES8 is already impacting the 4.5 million price level, and BYD is looking forward to hitting millions of luxury cars.

In the 300,000-400,000 tram camp, BBA is no longer a local brand. BMW, Mercedes-Benz, and Audi have long entered the market for electric vehicles, and have also launched their own pure electric models, such as Mercedes-Benz's EQ series, BMW's i-series, and Audi's e-tron series, but sales have always been sluggish. They have all seen the limitations of oil to electricity, and are making changes.

For example, as early as October of last year, the BMW Group planned to stop producing MINI electric models at its Oxford plant in the UK and transfer this production line to China, while BMW's next generation all-electric model, the MINI, will be reproduced in Zhangjiagang, Jiangsu, China.

Also last year, 500,000 Mercedes-Benz tram owners expressed their dissatisfaction due to Tesla's sales ridicule, but unexpectedly, they were ridiculed by people all over the Internet and became popular. We can clearly feel that in the automobile industry, the tide of the times is changing subtly.

According to the insurance volume data from January to December 2022, the insurance volume of the six pure electric models currently sold by Mercedes-Benz (including EQA, EQB, EQC, EQE, EQS, and EQS AMG) is 3,420, 4057, 3211, 1633, 1,584, and 45, respectively, for a total of only 13,950 vehicles. Compared with the sales volume of other fuel vehicles under the Mercedes-Benz brand, the total sales volume of the EQ series electric cars is even one-tenth that of the Mercedes-Benz E-Class.

Whether it's Audi or Mercedes-Benz, the current performance in the field of new energy vehicles is not very good. Judging from October sales data, the sales volume of domestic BMW i3 and iX3 bikes is higher than that of Mercedes-Benz, but it is only 2,498 and 3103.

One important reason for the backwardness of BBA electrification is the limitations brought about by the conversion of oil to electricity. As a giant in the fuel vehicle era, BBA's original production process and platform model have been solidified. Although BBA is purifying electrification, it still hasn't completely changed its original production model. Electric vehicles are also produced on the original fuel vehicle platform, which is a typical oil-to-electricity model.

However, due to the different structure of electric vehicles and fuel vehicles, the core components are different. Whether it is the rationality of the mechanical layout, the efficiency, battery life level, and safety of the automobiles produced, there is a certain gap between cars produced on pure electric platforms such as Tesla, BYD, and NIO.

This has led to a gap between them, Tesla, and the new domestic players in terms of tram experience and performance.

Why is oil to electricity not competitive?

Oil to electricity is to replace the original engine and transmission with the three parts of an electric vehicle on the basis of traditional fuel vehicles, so in the process of this “transformation”, problems arise. The motor is replaced by an engine, while the traditional fuel tank is replaced by a power battery pack. There are certain hidden risks in structure and safety. Problems such as high maintenance quality, small battery space, short range, high power consumption, and poor spatial performance are very prominent.

From Mercedes-Benz's own perspective, building MEA means choosing a traditional fuel vehicle manufacturing platform for electrified transformation and intelligent upgrading. Judging from the two “oil to electricity” products, EQA and EQB, the scratches are very obvious.

For example, the EQB, whose size is between EQC and EQA, had to eliminate the seven-seat configuration of the fuel version of the GLB in order to leave enough internal space to store the battery pack. However, the largest battery pack under the MEA platform is 100 kWh, and the battery life is about 680 kilometers. It cannot meet the market's demand for long battery life, and the charging efficiency is not very good.

In fact, it's not just Mercedes-Benz; the market performance of oil-converted electric models of other brands is also quite average.

Generally speaking, pure electric oil to electricity is basically not as good as pure electricity on electric platforms at the same price. Because tram platforms do not have engines or transmissions, the positions of batteries and motors can be better planned during design. The same energy density can lower more battery packs and provide better battery life.

The pure electric platform also takes into account the battery energy management system, wire harness layout, and redundant design for assisted driving. The overall intelligence and software capabilities should be even better. Redesigning a dedicated tram platform is certainly much better than a product made from oil to electricity.

Tesla cuts prices, Mercedes-Benz wakes up, pressure is on the domestic tram side

As mainstream car companies launch new pure electric models based on exclusive pure electric platforms one after another, the market for “oil to electricity” models launched by traditional car companies a few years ago is shrinking, and the current market competition situation no longer allows Mercedes-Benz to eat their old ways.

Judging from the actions of Mercedes-Benz and BMW, they are waking up.

Judging from now on, the BBA is changing. For companies of this size, it may be time related to doing a good job with pure electricity. After using a pure electric platform, it is likely that the driving experience will catch up. At this year's CES exhibition, Mercedes-Benz unveiled new intelligent lane change and navigation assistance driving functions. Mercedes-Benz also officially announced that it has applied for certification of L3 level conditional autonomous driving systems in the US states of California and Nevada, and will begin commercial use after approval.

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Looking at it now, although domestic new energy vehicle companies have a certain advantage in terms of tram layout time, from the perspective of technology accumulation, the moat barriers for most players are not very deep.

As a result, Mercedes-Benz and BMW are all waking up and making every effort to promote intelligence and electrification. At this time, the pressure is actually greater on domestic new energy. On the one hand, Tesla continues to cut prices, and the future pricing space has reached the 200,000 level, hitting fuel vehicle companies such as Volkswagen, Toyota, and Honda, which have also suppressed the cost performance space of domestic trams. In fact, the pricing trend of domestic new energy in the past is moving towards the middle and high-end, and the pricing space for BBA is getting closer and closer.

In the past, models such as the Mercedes-Benz EQS were limited by the conversion of oil to electricity. In the two core fields of smart cockpits and autonomous driving, there was still a certain gap compared to domestic new energy. However, judging from CES just now, products such as smart cockpit components, driver assistance systems, and concept cars from automobile giants such as Mercedes-Benz and Volkswagen have been unveiled one after another. After Mercedes-Benz completely abandons oil to electricity and changes to pure electric platforms, it may only be a matter of time before it catches up in the field of intelligence.

For example, as EVA and MMA later replaced the MEA platform, EQS was rapidly mass-produced. The EQS has become one of the few pure electric cars with a battery capacity exceeding 100 kWh. Furthermore, the EQS uses an 8-core CPU and 24GB of operating memory to support the fluency of the vehicle system and develop intelligence. The improvement in experience is also visible to the naked eye.

As a result, the pressure on domestic new energy sources has been squeezed on both sides. On the one hand, Tesla acts as a price butcher, putting pressure on fuel vehicles and domestic new energy, blocking the path of cost effectiveness. Domestic renewable energy cannot be sold at reduced prices and profits like Tesla; there is no way to keep up with Tesla's pace.

However, once the BBA experience catches up, it also blocks the room for price increases. After all, BBA's high-end brand influence is already deeply rooted in the hearts of the people. It has accumulated technology and brand premium effects. When consumers buy BBA, social show-off mentality and brand considerations account for a large part of the reason why consumers buy BBA.

Therefore, as long as their product strength keeps up with the mainstream level in the field of electric vehicles, then the brand premium it has accumulated in the fuel vehicle era can still be maintained in the new energy camp, and the possibility of selling cars at a premium still exists to maintain profit and sales volume.

It's time for domestic trams to wake up

Mercedes-Benz's complete abandonment of oil to electricity is actually a sign similar to Tesla's price reduction. It can be said that in the past, they all misjudged the competitiveness of domestic trams. In the past, Tesla was able to reap high profits and high sales volume at the same time, but as the competitiveness of domestic trams became stronger, Tesla began to sacrifice profits to increase sales, and Mercedes-Benz completely abandoned oil to electricity. This also means that they should pay attention to their opponents from a strategic level. Judging from today, Mercedes-Benz and BMW are all ready to drop the fuel package. Go to battle.

Therefore, judging from the market situation in 2023, the pressure faced by domestic electric vehicles is far greater than before. Tesla has already used the bottom card for price cuts, and the BBA has not issued a bottom card, so domestic trams may face an embarrassing situation where both sides are being squeezed.

At this time, domestic trams need to clear up. Under the current situation, Tesla is continuing to cut prices, and it is not appropriate to blindly push the high-end. The core is to stabilize sales volume. While ensuring price competitiveness, domestic trams need to have new bright spots in terms of service and product technology to capture consumers. Now is still a critical moment to improve product reputation and technological innovation.

How to break out of this crushing dilemma is to have your own rhythm and style of play, and come up with competitive new products to continuously increase brand premiums, rather than being driven by rivals. After all, the real hand-to-hand combat has already begun ahead of schedule.

Shared by Xinxi Wang