What Remains for Car Manufacturers When Privileges Are Gone?

In the previous article, we discussed that the consumption tax on lithium batteries will formally begin to be levied starting from September 2026. It starts at 2%, rising to 4% after one year. Calculated out, the cost of a car increases by a few hundred yuan, at most about a thousand yuan, having a negligible impact on the final selling price.

I left a question at the end of the article: "What Remains for Car Manufacturers When Privileges Are Gone?" Over the past decade, new energy vehicles developed like the sun in the sky with the support of various policy benefits, such as tax exemption on purchase and unrestricted green license plates, making fuel car owners extremely envious. In such an environment, it was relatively easy for a new energy car manufacturer to survive.

Therefore, various industries and sectors all wanted to get a share, thus creating a strange scene. In the early years, there were cumulative hundreds of companies declaring they would start making cars, phone makers making cars, real estate developers making cars, appliance manufacturers making cars, as if making cars suddenly had no threshold.

Making cars is not easy. Only after Xiaomi Auto's Lei Jun started making cars did he exclaim "Making cars is too hard", and that was when there was still policy support. Now, the truly surviving new force car manufacturers can be counted on the fingers of two hands, let alone the fact that the policy support is being withdrawn step by step now, making the survival of new energy car manufacturers even more difficult.

So what is left? Rather than saying what is left, perhaps it's about how to survive?

• No shortcuts, products are the real strength

Those with confidence and ability to survive are those car manufacturers that still poured money into R&D and quality during the policy bonus period, focusing solely on product strength.

Take BYD as an example. Many see it selling millions of units a year, the global new energy sales champion. But looking back more than ten years, when others were lying on the "credit book" of fuel cars to make money, BYD was self-developing batteries, chips, and DM hybrid systems. These things seemed hard, tiring, and unappreciable at the time, but when battery costs became the deciding factor of competition, Blade Batteries became the ace in hand.

Therefore, when privileges are gone, what car manufacturers are left with is product strength. The three words "Product Strength" look light, but they are actually a combination of technology, cost, efficiency, quality control, etc. Each item requires time and real money to accumulate.

Some brands, established for three to five years, have iterated seven or eight models. But look closely, the tri-electric system is bought, the smart driving solution is from suppliers, the chassis is tuned by others, the only self-developed capability lies in the UI design of the vehicle system. Tell them what to compete with BYD, when BYD becomes a price butcher, who isn't gritting their teeth to follow? Everything is from others, so the cost cannot be reduced.

Previously, policy support could offer some relief, but what about after fuel and electricity truly have equal rights? Those car manufacturers without core technology, relying on low prices to stay alive, will fall one after another. Competition among top brands will shift from "who discounts more" to "who has stronger technology". The new energy vehicle industry is shifting from "policy-driven" to "technology-driven". You see, lithium batteries are taxed starting September 1st this year, but solid-state batteries and sodium-ion batteries don't require this. CPCA's Cui Dongshu said clearly, lithium battery policy adjustments mean the new energy vehicle tax "protection period" is exiting in phases and rhythmically.

Tesla's Q2 financial report shows that the reason they almost incurred losses was that they invested all the money earned from selling cars into future technologies, AI infrastructure, Robotaxi, Humanoid Robot Optimus, all hard-core high-tech work. Back then, no one was optimistic about FSD, but now aren't some car manufacturers taking it as a benchmark?

Technical barriers are the real moat.

• Expanding Globally Reveals True Strength

Besides product strength, there is another dimension where a real gap has emerged in recent years — going overseas. No matter how big the domestic new energy market is, it's a bowl of over 20 million vehicles a year, and it has already become so competitive that profit margins are thin as cicada wings. If you want to break out of the internal competition and really make money, you still have to go overseas.

But going overseas is two completely different logics compared to selling cars domestically. Domestically, if the product is passable, prices are in place, and channels are spread, the basic foundation is set. Going overseas? Just the market access standards in various markets can strip a team's skin. The EU's WVTA certification, the US's FMVSS standards, tax policies of various Southeast Asian countries, every link is a hard bone to chew. Not to mention how to build after-sales networks, how to solve spare parts supply cycles, how to eliminate the natural distrust local consumers have for Chinese brands.

To be honest, these things are much harder than discounting 20,000 yuan domestically. And for enterprises that can chew through these things one by one, the gap with those who only compete on price domestically will only grow larger.

BYD exported over 400,000 units last year, being the pure electric sales champion in Thailand, Brazil, and Israel. Do you think it was sold cheap? The BYD factory in Thailand went from start to production in less than a year and a half, the factory in Uzbekistan is also running, overseas dealer networks spread to over 70 countries. This landing speed, behind it is the joint action of supply chain management capabilities, localization operation capabilities, and various comprehensive strengths.

MG sold well in Europe, last month's sales in Europe were 38,640 units, ranking high among Chinese brands, not relying on the price card. Besides the inherent European local brand awareness, a large part is also local operation. Great Wall in Russia, Chery in Brazil, also can only stand firm after rooting down.

Going overseas is like a magnifying glass. However strong your comprehensive capabilities are domestically, when put overseas, they are either amplified or reduced to their original state. What car manufacturers ultimately compete on is actually comprehensive strength.

Why is BYD dare to shout "Electricity is cheaper than Oil"? Not because of subsidies, but because it makes its own batteries, makes its own chips, vertically integrated down to the teeth. This cost capability, whether policies are opened or not, it's not afraid. Why does Tesla dare to repeatedly adjust prices in the global market? Because its manufacturing efficiency and supply chain management can support profit margins. These are the real trump cards.

• Qingdong Commentary

Weaning is certainly unpleasant, but truly solid enterprises actually don't need that milk. Policy privileges are a crutch, leaning on it walking is naturally less effort, but there will always be the day to throw it away. And those enterprises that spent their energy polishing products, accumulating technology, and building brands during the protection period will instead thank that day for coming early enough. Because once privileges are gone, those insubstantial things will scatter. What remains are all real things.