On April 7, the Ministry of Industry and Information Technology drafted a draft for comments on electric bicycle industry regulations. The industry regulation policy is expected to be adjusted in the near future.

The draft for solicitation of comments emphasizes strengthening the standardized management of the two-wheeler industry to ensure the healthy development of the industry, including guidance on intelligent manufacturing, digital management, and battery information traceability management.

On April 2, the head of Yadi participated in the NDRC trade-in symposium.

On May 8, the Ministry of Industry and Information Technology, the State Administration of Market Supervision and Administration and the State Fire and Rescue Administration jointly issued the “Electric Bicycle Industry Management Specification Conditions” and the “Electric Bicycle Industry Regulatory Notice”, and the new regulations for the two-wheeler industry began to be gradually implemented.

CITIC Securities believes that the policy issued this time is only a program. Enforcement rules will be introduced one after another within this year. At the same time, it also marks that the industry will also enter a period of strong supervision. The new regulations mainly carry out strong supervision on the production side and user side, particularly at the level of battery safety, production capacity, and product specifications.

CITIC Securities believes that two-wheelers fall within the potential category of trade-in policies and are expected to benefit from this wave of trade-in policies.

At the same time, battery technology updates are expected to promote the further development of the two-wheeler industry pattern, increasing demand for high safety or driving the penetration of sodium battery two-wheelers.

At a time when policies are about to change, leading companies will benefit more from the new industry pattern brought about by policy changes with technical reserves and better responsiveness, and continue to be optimistic about the performance of two-wheeler leaders.

The agency believes that entry threshold mechanisms such as entry lists will also be implemented one after another. Many electric bicycle manufacturers below the scale will not be able to continue production due to limited qualifications, giving up a large amount of market share, while leading companies have stronger compliance capabilities, which will benefit from the gradual improvement of the market pattern.

At a time of policy changes, leading companies have fully benefited from safety, regulatory advantages, sufficient technical reserves and better responsiveness, and continue to be optimistic about the performance of two-wheeler leaders.

Electric bicycle-related companies:

Yadi Holdings (01585): Revenue increased by about 11.9% to RMB 34.763 billion in 2023; compared with the same period last year, the company's net profit increased by about 22.2% to RMB 2.64 billion. In 2023, the company achieved sales of 16.522 million two-wheelers, up 17.9% year on year, and reached 30.2% market share (based on wholesale sales volume); of these, electric scooters sold about 4.960 million units, down 1.5% year on year; electric bicycle sales volume was about 11.561 million units, up 28.8% year on year. In terms of price, the company's average bicycle price for the first half of 2023 was about 2,075/2,132 yuan respectively. The significant month-on-month improvement was mainly due to improved product structure. The sales volume of Guan series, overseas and Feiyue products reached 33.2% in the second half of the year, an increase of 4.5 pct over the first half of the year. In February 2024, Yadi released the Guanneng 6th generation series of products, all equipped with the newly upgraded Yadi TTFAR 6.0 long battery life system, Yadi Ark intelligent security control system and Yadi Intelligent Mobility System to solve the pain points where industry power and mileage cannot be combined. Product strength has been greatly improved, which is expected to drive the company to continue to improve its product structure and profitability this year.