Policy shift towards [charging facility construction subsidy+charging facility operation subsidy]

Due to the intensive introduction of multiple policies in April and May this year, it was stated that efforts should be made to accelerate the construction of charging infrastructure.

On April 19th, the National Development and Reform Commission separately mentioned the need to vigorously stabilize automobile consumption and clarify work priorities, accelerating the construction of charging stations and urban parking facilities;

On April 28th, the Central Political Bureau meeting pointed out the need to consolidate and expand the development advantages of new energy vehicles, and accelerate the construction of charging stations and other facilities;

On May 5th, the executive meeting of the State Council reviewed and approved the implementation opinions on accelerating the construction of charging infrastructure, better supporting the deployment of new energy vehicles to rural areas, and rural revitalization.

The meeting emphasized the need to focus on the prominent bottlenecks that constrain the entry of new energy vehicles into rural areas, moderately advance the construction of charging infrastructure, innovate construction, operation, and maintenance models, and ensure that there are people to build, people to manage, and sustainability.

It can be observed that the government's fiscal subsidy policy is tilted towards the supply side, showing a gradual shift from subsidies for new energy vehicles to subsidies for charging facility construction, and then to subsidies for charging facility construction and operation.

The imbalance between vehicles and piles is driving the development of piles

As of 2022, the penetration rate of new energy vehicles in China has reached 30%, but the scale of charging stations is unbalanced with the development of new energy vehicles.

With the increase in the number of new energy vehicles, the demand for charging piles has also increased significantly. Although the vehicle to pile ratio has decreased from 4.5:1 in 2016 to 2.5:1, this volume is still insufficient and there is a lot of room for improvement.

In 2022, China's charging infrastructure increased by 2.593 million units. According to statistics from Minsheng Securities, as of the end of 2022, there were 5.21 million charging stations in China.

Policy goal for 2025: The vehicle to pile ratio is 2:1, and the ideal long-term state is 1:1.

According to China's plan to achieve a 2:1 vehicle to pile ratio by 2025, it is expected that the number of charging piles will reach 22.57 million, an increase of 13.05 million compared to 2022.

Complete upstream, midstream, and downstream industrial chain

The charging pile industry chain is complete, involving charging equipment manufacturers, power supply, site supply, and third-party charging platforms from construction to operation.

The charging module has the highest value among upstream components, and its gross profit margin is also relatively high.

On the one hand, in terms of cost composition, charging equipment accounts for over 90% of the construction cost of charging piles, of which charging modules account for about 50%;

On the other hand, technically speaking, the charging module is the core link of the charging pile and also the link with the highest technical barriers. The market concentration is also high, and some key technologies inside the module include IGBT, magnetic components, and so on.

However, in the upstream, except for the charging module, other components have relatively low barriers and severe homogenization, similar to a perfectly competitive pattern.

The current competitive landscape in the midstream equipment production field is relatively scattered, with numerous competitors and a large industry space. Currently, there is no absolute advantage for leading companies to win.

At present, there is no oligopoly model similar to photovoltaic manufacturing, and the competitive landscape of charging station equipment manufacturing is still relatively scattered, with a relatively large competitive space.

Among them, equipment manufacturers such as Guodian Nanrui, Xuji Group, Terui De, and Autoxun, as well as electric vehicle manufacturers such as BYD and Tesla, are the main drivers of charging technology progress.

In terms of equipment suppliers, manufacturers related to shell and other components include Jinfa Technology, Wanhua Chemical, Guoen Technology, Yinxi Technology, Pritt, etc;

Manufacturers related to charging modules include Delixi, Power Source, Guodian Nanrui, Xuji Electric, etc;

The downstream operation links have a stable and concentrated pattern, mainly including three categories, with traditional operators leading the way; The second type is some supporting facilities for car companies; Finally, there are third-party platforms that profit by sharing service fees.

The main operators include Special Power, Star Charging, State Grid, Yunkuai Charging, and China Putian; Solution providers include Schneider, Dianxiang, etc.

The high power and standardization trend of charging modules is significant

In 2022, electric vehicle sales exceeded expectations and experienced explosive growth. Although the vehicle to pile ratio has decreased with the acceleration of charging infrastructure construction, difficulty and slow charging remain the main pain points for new energy vehicles at present.

The insufficient number of charging stations and the increase in charging capacity of individual vehicles have extended the replenishment and waiting time. However, currently, the average fast charging time of popular models in different price ranges on the market is mostly more than half an hour, far higher than the average refueling time of gasoline vehicles.

The cost and difficulty of promoting battery swapping solutions are high, so high-power fast charging has become an important development direction for new energy vehicles in the future.

The charging module is the most valuable component that directly determines the performance of the charging station.

The charging module is the core component of the charging station, with the highest value accounting for 40%.

And the charging module directly determines the stability and reliability of the charging pile, and its performance directly affects core performance such as charging speed and loss.

High power, high power density, and standardization are the future development trends of charging modules.

An increase in power density can effectively reduce product volume, use more charging modules in limited space charging stations, and further improve the output power of charging stations.

At present, there is a lack of unified standards for charging modules, and products cannot be compatible and replaced, which increases the cost of updating and upgrading charging stations.

Standardization of core components and interfaces, and generalization of spare parts are the future development directions.

Charging gun cables are expected to benefit from the structural increment brought by high-power charging

High power charging will bring greater heat dissipation pressure. According to the Electric Vehicle Conductive Charging Connection Standard, products with a capacity of 300A and above require mandatory liquid cooling.

The cost of charging gun wires accounts for 20% in DC piles, and a higher proportion in AC piles and liquid cooled DC piles, while high-power charging piles require liquid cooling for heat dissipation.

At present, the suppliers of liquid cooling charging gun lines mainly include foreign-funded Phoenix, and domestic enterprises such as Yonggui Electric, AVIC Optoelectronics, Volvo Nuclear Materials, and Rifeng Group have made breakthroughs, which are expected to fully benefit from the structural increment brought by high-power charging.

Thanks to the well-established domestic supply chain and relatively low costs, domestic enterprises will have cost advantages with the increase of product volume.

At the same time, domestic manufacturers have sufficient technology and patent reserves, and the barriers to technology and patents are relatively small.

The future opportunities for liquid cooled charging gun lines to go global are worth continuous attention.

At the same time, high-pressure fast charging piles have higher requirements for heat dissipation, and the proportion of liquid cooling technology routes will increase.

In addition, charging station component manufacturers and charging station manufacturing and assembly manufacturers will be the first to benefit.

Integrated power supply station for optical storage, charging and inspection

The integrated charging station for photovoltaic power generation, energy storage equipment, charging piles, and battery detection is an intelligent charging station that integrates photovoltaic power generation, energy storage equipment, and battery detection.

Not only can photovoltaic power generation be fully utilized as a clean power source, but the addition of energy storage can also fully utilize the peak valley price difference, reduce electricity expenses, and bring more operational benefits.

The application scenarios of integrated light storage, charging, and inspection are diverse, and can be applied to charging and swapping stations for new energy vehicles, outdoor parking lots, and other places.

In recent years, with the advancement of battery technology, the number of cycles has gradually increased and the cost of batteries has continuously decreased. Coupled with the promotion of the time of use electricity price policy, the peak and valley price differences of electricity prices in various industrial, commercial, and large-scale industries have been increased.

The economy of the [optical storage and charging] system will be further improved, and it is expected to be accelerated and promoted in the future.

End:

Analogous to traditional fuel vehicles and gas stations, the construction progress of charging piles should be coordinated with the development of new energy vehicles, otherwise it will cause an imbalance in the vehicle to pile ratio.

Charging stations belong to infrastructure construction. With the rapid development of China's new energy vehicle industry in the next 10 years, the demand for charging stations will also enter a period of intensive construction with the increase in the number of new energy vehicles.

However, the current market competition continues to intensify, and the entry threshold for the charging pile market is relatively low, resulting in fierce competition. If the competition in the charging pile market continues to intensify, it may lead to a continued decline in the profitability of the industrial chain.

Partial information references: Jian Zhi Research: "Let the Wind Blow Back and Copy Energy Storage Charging Stations", DT New Materials: "Market Analysis of Charging Station Industry Chain", Huajin Securities: "Making up for Shortcomings in the New Energy Vehicle Aftermarket and Accelerating Charging Station Construction", CITIC Securities: "Research on the New Energy Vehicle Charging Operation Industry", Huajing Industry Research Institute: "Analysis of China's Charging Station Industry Chain and Investment Outlook Report", CITIC Construction: "In depth report on the charging pile industry: another village under willow trees, charging piles in the golden age", Financial industry: "Can energy chain smart electricity be considered as a potential value depression?", Zhengwen Investment: "In depth research on market and industry chain development in 2023", Selected by Leqing Think Tank: "Panoramic analysis of the charging pile industry chain"