The way traditional car companies sell assets.

From the end of last year to the beginning of this year, Tesla had several rounds of price reduction, followed by many domestic car companies. Recently, Dongfeng's brands took the lead in "big sale" and set off a "hurricane" of price reduction with a number of joint venture brands, with 6.5438+02 million yuan for C6, less than 6.5438+02 million yuan for Loulan and Cadillac, and the highest discount reached 6.5438+03 million yuan ...

Dongfeng system was greatly promoted in March; Image source: public information of various enterprises

For supply chain enterprises, it is never a good thing for car companies to cut prices, because the pressure will be transmitted level by level. This has been proved countless times in the past few years, and the situation faced by suppliers after Tesla's repeated price cuts at the beginning of this year is also very telling.

In February this year, Reuters reported that some industry officials said that some suppliers in the automobile industry were already struggling, and further price reduction by Tesla might bring greater negative impact. A lawyer representing a car supplier also mentioned, "They will eventually try to squeeze out one of us (reduce the price space)."

Therefore, not surprisingly, this wave of large-scale price cuts by car companies is bound to spread to upstream supply chain enterprises.

Being suppressed again is a high probability event, and the pressure on suppliers increases.

For supply chain enterprises, the most direct impact is nothing more than being further suppressed by car companies.

In fact, this is nothing new. Almost every year, car companies require suppliers to carry out the so-called "annual decline", which is generally around 3%-5%, which has almost become an industry practice.

Of course, with the increasing demand of car companies to reduce costs, in recent years, many suppliers are facing higher and higher annual reduction requirements.

Relevant persons of Hiroshima Aluminum (Nantong) Co., Ltd. told Gaspar that the cost reduction requirements put forward by car companies this year have not changed compared with the previous year, "about 8%". It is reported that the company is mainly engaged in high-pressure die casting and processing of aluminum alloy casings of engines and gearboxes, gearbox valve bodies and motor casings.

A supplier specializing in ABS, ESC, airbag and body stabilizer valve control system also said that the annual decline rate of car companies this year is about 3%- 10%.

According to a supplier who mainly provides in-vehicle communication module, T-box, OBD and other products, due to fierce market competition, the competition among domestic suppliers in the car factory has intensified year by year. In 2022, some automakers demanded higher price cuts from upstream suppliers than in previous years. "According to industry practice, the annual decline of upstream suppliers is usually around 5%, and the actual demand in 2022 will exceed this range." In addition, this year's cost reduction target of car companies has been confirmed by many times, "the ratio is between 5%- 10%."

In addition, a supplier specializing in solenoid valves, liquid storage tanks, gas-liquid separators and other products revealed that "in the past three years, the company has not reduced prices for customers, and the demand for the most this year has dropped by more than 20%."

The recent research initiated by Gaspar also revealed a large-scale increase in the annual decline ratio of car companies. This survey * * * received nearly 2000 valid survey results feedback, among which nearly 74% users said that compared with previous years, the cost reduction requirements put forward by car companies have increased this year, and only about 10% users said "no improvement".

The problem is that this happened before the current wave of price cuts. Now car companies are "fighting" and cutting prices crazily, which may bring more drastic price cuts to suppliers.

In the above survey, in view of "more and more car companies are cutting prices, do you think car companies will further ask for cost reduction?" This problem, 90% of participating users said, will further improve the requirements of reducing costs. This means that even if the annual reduction ratio of suppliers does not improve at the beginning of this year, it is likely to face higher cost reduction requirements.

Gaspar learned in relevant interviews that under the current tide of price reduction, some car companies have already "started" with suppliers. A supplier mentioned above said that car companies began to cut prices, which had an impact on the company, and some customers had asked the company to cut prices significantly.

Of course, some suppliers said that the company has not been affected yet. But even these suppliers believe that the impact will gradually manifest, "it will come sooner or later."

A supplier who mainly provides automobile gearboxes, new energy vehicle powertrains and other products said that the current price reduction tide has little impact on the company for the time being, but it is expected to be reflected by the end of the year. In addition, some suppliers revealed that this situation will affect the company's order volume, "orders will be reduced by 40%."

Under such circumstances, supply chain enterprises are obviously confused.

Some insiders said: "Suppliers with high bargaining power are fine, but suppliers with weak bargaining power may not be able to fight back, or they may suffer silently, even if this may make them face losses, they may directly lose orders."

This can also be clearly seen from the performance of some parts suppliers last year. Also a power battery manufacturer, Contemporary Ampere Technology Co., Ltd. achieved a net profit of 30.729 billion yuan in 2022. Although the year-on-year growth rate was not as fast as the revenue growth rate (152%), it almost doubled. Looking at Funeng Technology, although the revenue increased by 23 1.67% year-on-year to116.09 million yuan,

Such an obvious gap is related to bargaining power. Funeng Technology also admitted in the financial report that the price of main raw materials represented by lithium carbonate rose sharply in 2022 compared with the previous year, which led to the increase of the company's product cost. Although the company established a price linkage mechanism with major customers, the adjustment of the price linkage mechanism with some customers failed to meet expectations.

But then again, even suppliers with strong bargaining power can't relax in reducing costs. After all, it is a very urgent and long-term challenge to reduce the cost of supply chain even if the recent "unexpected situation" of car companies' price reduction is put aside. Tesla once shouted "the next generation car platform" to reduce the cost by another 50%. I am afraid that car companies and suppliers will be nervous and spend more effort on reducing costs.

Image source: Tesla

Localization, scale, automation ... which is more effective?

Then the question is, how can supply chain enterprises further reduce costs?

In the investigation mentioned above, Gaspar found that there are usually the following ways to reduce the cost of supply chain enterprises: reducing the procurement cost of raw materials, selecting upstream raw materials with better costs, laying out the upstream supply chain, improving the localization rate, increasing the production scale, product/system integration, modularization, reducing staff and increasing efficiency to control labor costs, and digital upgrading.

Among them, the voting rate is higher: reducing the procurement cost of raw materials (19%), selecting upstream raw materials with better cost (14%), improving the localization rate (17%), reducing staff and increasing efficiency, and controlling labor costs (17%).

As we all know, Contemporary Ampere Technology Co., Ltd. has been strengthening the layout of upstream supply chain, and has won many mineral resources through "buy buy Buy" in recent two years. At present, some relevant layouts have come into effect, which is not difficult to see from its recently launched "lithium mine rebate" plan.

The core terms of the plan are: in the next three years, the price of lithium carbonate for some power batteries will be settled at 200,000 yuan/ton, and at the same time, the car companies signing the cooperation need to promise about 80% of the battery purchases to Contemporary Ampere Technology Co., Ltd. It is reported that the plan is progressing steadily. At present, the signing of agreements with relevant car companies has entered the practical stage and is expected to be reached at the end of March at the earliest.

For contemporary Ampere Technology Co., Ltd., the arrangement of upstream supply chain seems to be very effective, but it may not be so for other suppliers. In this survey, only 8% of users voted for this option.

The reason may be that the layout of the upstream supply chain not only needs a lot of investment, but also needs related technical reserves, which is very risky. In addition, compared with battery manufacturers, traditional suppliers spend more time on the upstream supply chain and the remaining space may be limited.

Relatively speaking, it may be more effective to reduce the procurement cost of raw materials and choose upstream raw materials with better costs. Although the practice of car companies transferring costs to the upstream has caused complaints from suppliers, it seems that no one can avoid putting pressure on upstream suppliers.

Pushing up the localization rate is also one of the effective cost reduction strategies. In the past few years, many car companies and suppliers such as Tesla have further optimized their costs through localization, and they are still moving forward.

The suppliers of the above-mentioned solenoid valves, liquid storage tanks, gas-liquid separators and other products said that the company's next way to optimize costs is mainly to localize and choose cheaper suppliers.

Suppliers who mainly provide in-vehicle communication modules, T-box, OBD and other products also mentioned that the company's methods to reduce costs mainly include reducing the cost of material procurement and reducing the cost of device selection and replacement (especially introducing more domestic substitute semiconductor materials).

Another supplier covers many products in the fields of engines, gearboxes, motors and batteries. Talking about the strategy of reducing costs. In addition to process optimization, localization of raw materials is also mentioned.

The method of "reducing staff and increasing efficiency and controlling labor costs" is more direct. In other related interviews, many companies mentioned that "replacing labor with automated equipment" and "reducing labor costs by improving centralized automated production" are similar ideas.

It is worth noting that the voting rate of the option of "increasing production scale" in this survey is not high. After all, it is related to many factors, and the difficulty is not small. However, as Huang Xili, an analyst in soochow securities, mentioned in the relevant report, one of the ways for the supply chain to reduce the OEM cost is to enhance the scale effect (cost dilution), including increasing the expected cash-out of OEM sales and reducing the dependence on a single big customer.

Wei Yan, vice-president of procurement of Valeo China, also mentioned that one of the ideas to reduce costs and increase efficiency is to increase the quantity at the 4th new automobile supply chain conference in 2023 hosted by Gaspar recently. "With the quantity, the efficiency will be improved, but it is easy to return to the multi-source stage in Shuang Yuan and distract energy. However, we can consider some special products and need some support to help suppliers and partners reduce costs. "

In fact, for companies with good profitability, such as Tesla and Contemporary Ampere Technology Co., Ltd., the scale effect has played a great role. As far as Tesla is concerned, after the mass production of Model3 and Y, although the average price of vehicles decreased, the scale effect diluted the labor cost of bicycles and the depreciation of fixed assets.

Technology to reduce costs is more reliable, and new ideas need to be continuously explored.

Compared with the above-mentioned conventional cost reduction operation, the more irreplaceable or long-term feasible way may be technology cost reduction.

As Chen Wei, vice president of procurement of Valeo China, said recently, to continuously strengthen innovation, "only by reducing costs through innovation can we achieve sustainable costs."

A supplier specializing in high-precision drawing and precision parts stamping also said in an interview with Geshi Automobile that developing new technologies and optimizing resources will help manufacturers reduce costs and improve efficiency, and also help strengthen the market competitiveness of enterprises.

This can also be seen from Tesla's related practices. In the recent "Investor Day" of Tesla in 2023, Tesla constantly emphasized cost reduction, and among the seven cost reduction methods it showed, technology cost reduction was the core.

For example, through battery technology iteration (upgrading to 4680 and CTC chassis), Tesla bicycles have saved about1-20,000 yuan, and the follow-up potential is about 1.5 million yuan; Through integrated die casting, the bicycle saves about 2000-5000 yuan, and the follow-up potential is about 5000-8000 yuan; Through lean design to reduce costs, bicycles have saved about 6000-8000 yuan, and the follow-up potential is about 2000-3000 yuan.

Integral die casting process of Y-shaped back floor; Moving picture source: Tesla battery daily live screenshot

Zhu, the founder and chairman of Zero Run Technology, also pointed out in an interview with the media recently that 70% of the current vehicle cost of Zero Run is basically independently developed by the whole region. With the increase of sales volume in 2023, it will bring a great premium. At the same time, Zero Run has made many innovations, hoping to gain more cost advantages through innovation.

For example, the same 8 155 chip, you may only do one function of the cockpit, and the zero-run integrates the functions of four cameras' look around and Agamis' tuning, which saves more than 1000 yuan compared with others.

He also mentioned another important cost strategy: platform architecture. Zero running has been enjoyed and platformized in all aspects of battery, electric drive and electronic control, including the whole vehicle. In the future, after the scale, the cost advantage will become more and more prominent.

The practice of Tesla and other car companies provides some ideas for relevant suppliers, and also requires relevant suppliers to go hand in hand. As a supplier mentioned above said, relevant enterprises need to promote some technological changes on the basis of the consent of car companies and optimize costs on the premise of ensuring quality.

In fact, suppliers are already exploring new ideas and promoting the reduction of technology costs. Moreover, it is worth noting that the proportion of software in the whole vehicle is increasing. According to yost Sullivan's industry research report, it is estimated that the proportion of smart car software cost in the total vehicle cost will increase from 65,438+05%-25% in 2022 to 35%-45% in 2026, and the space for software cost reduction will also be broadened.

In the survey mentioned above, only 4% of participating users think that there is still a lot of room for hardware cost reduction, over 30% think that there is still some room, and over 50% mean that there is basically no room. In contrast, 60% of the participants said that there is room for reducing the software cost, and nearly 30% of them said that there is a lot of room.

Moreover, no matter from the results of this survey or the actions of many suppliers in the past two years, it is not difficult to see that many suppliers are promoting cost reduction from the software level.

For example, some suppliers help moped companies reduce costs by accelerating OTA "getting on the bus". Some insiders pointed out that remote software upgrade can save car companies billions of dollars, and the new income brought by functional software upgrade will far exceed the cost of deploying OTA functions.

Some suppliers have introduced more cost-effective product solutions through software and hardware optimization, such as integrated navigation and parking. According to the calculation of relevant suppliers, compared with 1V 1R+APA scheme, the cost of shore-berth integration scheme can be reduced by 20%-30%.

In short, there is a lot of room for software cost reduction, and related ideas can be said to abound, which needs suppliers to continue to explore.

This article comes from the author of Che Yi Geshi Automobile, and the copyright belongs to the author. Please contact the author for any form of reprint. The content only represents the author's point of view and has nothing to do with the car reform.