Mercedes-Benz and BMW, two luxury carmakers with a century of competition behind them, recently announced that they had signed a cooperation agreement to establish a joint venture in China with a 50:50 share ratio to operate a super charging network in the Chinese market.
Why did these two traditional luxury car companies decide to cooperate at this time? Why did they choose the electric vehicle charging sector? Why did they choose the Chinese market?
In fact, since the end of 2019, new energy automotive companies led by Tesla have set off a wave of new energy in the world. With the support of capital, Tesla's market value has soared, breaking through the threshold of a trillion dollar market value.
Tesla has become the world's largest automotive company by market value, which has a particularly significant impact on traditional car companies. As a result, the global capital industry quickly reached a consensus that new energy vehicles are the future direction. Driven by this consensus, the valuation of the global new energy industry chain has been enhanced several times.
With the strong wealth effect, more and more cross-industry or new enterprises have sprung up like mushrooms. In addition, some car companies that produce small quantities have quickly surpassed established car companies in terms of market value after listing.Traditional car companies feel the crisis，and are converting to the production of electric vehicles. Among them, the most successful conversion is BYD.
However, as a traditional industry, the automotive industry is not a new industry even if it is transformed into new energy. Due to the rapid increase in market penetration, the industry is quickly changing from a blue ocean to a red ocean. Therefore, traditional car companies are more anxious.
Moreover, most new energy vehicles sold by Chinese car companies are priced at around 300,000 yuan, which has seriously disrupted the high-end market dominated by Mercedes-Benz and BMW. Therefore, it is not surprising that these two companies have decided to cooperate. The high-end market itself has limitations, and many traditional car companies have taken years to build their competitive advantages. There is still a long way to go in the future, and traditional car companies do not need to be too anxious. New energy vehicle companies have not completely won this battle yet.
Eventually, valuation will return to a reasonable level, and we must still view the new energy vehicle sector with a rational mindset.
Mercedes-Benz and BMW's decision to team up to enter the charging pile market is undoubtedly a move made in solidarity, with the aim of achieving a synergistic effect. Although they have always been competitors, they are now standing on the same side in the face of the major transformation in the automotive industry. From a brand perspective, Mercedes-Benz and BMW are the largest luxury car representatives in China, but they have been challenged by Tesla and other new entrants in recent years. To maintain their position, they need to join forces. On the other hand, their decision to collaborate also reflects the current state of the automotive industry, which is highly competitive. With the global economy slowing down, many car companies are seeking cost-effective solutions and viewing China's rapidly growing new energy vehicle market as a key battleground. As new energy vehicles become more prevalent, fast-charging technology is becoming an increasingly important part of the user experience in the era of intelligent travel. Additionally, this cooperation can also be seen as a sign of humility. In the early days of the transformation of the automotive industry, Mercedes-Benz and BMW held a dominant position in the high-end market and had developed an arrogant mindset. This can be seen from the speed of their response in the early days of the transformation of the automotive industry; charging stations are similar to the infrastructure of the automotive industry, and it takes time to implement them. Players such as Tesla and NIO have started to aggressively expand their charging networks several years ago, while Mercedes-Benz and BMW waited until now to respond by focusing on consumers' needs.
Mercedes-Benz and BMW's sudden entry into the charging pile market will have an impact on the current market structure. In the future, could more automakers enter the charging market? Will the charging market eventually be dominated by one or two major players or will it continue to be fragmented?
With the continuous promotion of the "carbon peak and carbon neutrality" policy, the long-term trend of the new energy industry is becoming increasingly clear, and the market still believes that the new energy industry is a good investment track.
In 2022, new energy vehicles continued to experience explosive growth, with a full-year sales volume exceeding 6.887 million vehicles and a market share of 25.6%.
According to statistics, in 2022, the number of automobiles nationwide reached 311 million, and the number of new energy vehicles nationwide reached 13.1 million. Combined with these two data, the proportion of new energy vehicles is only 4%, which still has a large gap compared with the market share of 25.6% mentioned above. With the continuous improvement of the market share of new energy vehicles, the ownership rate of new energy vehicles will also continue to increase. Behind the growth in new energy car sales is the huge market demand for charging as a supplement energy source. China has become the largest charging pile market in the world.
Currently, China's charging pile market exhibits a diversified competitive landscape. National teams such as the State Grid and the China Southern Power Grid, service providers such as Telling and Star Charging, as well as various participants that provide charging services directly to users, have made the charging market generally fragmented.
As globally renowned automakers, Mercedes-Benz and BMW naturally cannot miss this huge market opportunity. Their joint entry into the charging pile market can improve their industrial chain layout and enhance their competitiveness in the field of new energy vehicles. At the same time, the joint entry of Mercedes-Benz and BMW will intensify competition in the charging pile market, which may have some impact on existing companies. Their entry into the charging pile market will bring advanced technology and management experience, promote technological innovation and upgrade throughout the industry, and help accelerate the integration of the charging pile industry.
In the future, the charging market will definitely require both "uniformity" and "diversity." "Uniformity" lies in charging standards, which will be unified to the greatest extent possible, thus facilitating third parties and capital markets outside the main engine factories to enter the charging market in a big way and making it bigger and stronger. In this way, it will support further expansion of new energy vehicles. On the other hand, there will inevitably be "diversity" in brand competition, as differentiation is needed to form brand influence in the field of charging.