New energy vehicles are making inroads into Northeast China's automotive industry, with momentum steadily growing.

For a long time in the past, when people in China thought of the country's automotive industry, the image that came to mind was typically the "old industrial base of Northeast China," built from steel and concrete. Today, however, new-energy vehicles are gradually taking over the baton from traditional gasoline-powered cars, carving out a significant "niche" in the automotive market. Amid this transition between old and new, the once-brilliant old industrial base of Northeast China—fueled by its thriving auto industry—now seems somewhat "dimmed."
Since the beginning of this year, the market penetration rate of new-energy vehicles has repeatedly surpassed 50%. According to data from the China Passenger Car Association (CPCA), in July of this year, China's new-energy vehicle penetration rate reached a historic high of 50.8%. On September 9, the CPCA held its monthly passenger car market analysis press conference, revealing that in August, the penetration rate of new-energy passenger cars surged to 53.9%, setting a new monthly record. Looking at the domestic automotive market as a whole, the trend of new-energy vehicles and traditional fuel-powered cars "contesting head-to-head" is becoming increasingly evident. Meanwhile, as the new-energy vehicle industry continues to grow rapidly, many cities and regions across China are capitalizing on this "industrial tailwind," giving rise to several thriving clusters of new-energy vehicle and power battery industries, as well as establishing themselves as leading benchmark cities in the sector.
During this period, few have turned their attention to the Northeastern Three Provinces region, once renowned nationwide for its automotive industry. After all, the lingering concern that new-energy vehicles struggle to cross the "Shanhaiguan Pass" still weighs heavily on people's minds. Here, Gasgoo Automotive shifts its focus to the "Old Industrial Base of Northeast China," aiming to uncover whether the three northeastern provinces can once again seize the momentum by riding the "tailwind" of the burgeoning new-energy vehicle industry. In front of the former headquarters of the First Automobile Manufacturing Plant in Changchun stands a monument inscribed with the words "Commemorating the Foundation Laying of the First Automobile Manufacturing Plant." The date of its foundation—July 15, 1953—is also the very year that marked the beginning of the first Five-Year Plan of New China. From this milestone onward, China's automotive industry embarked on its remarkable journey.
Three years later, in 1956, the first batch of Jiefang-brand cargo trucks—entirely manufactured by Chinese hands—rolled off FAW's final assembly line. These vehicles, designated as the CA10 model, marked the end of China's inability to produce automobiles. "Jiefang," China's pioneering automotive brand, also ushered in the "Era of Liberation" for China's auto industry. On May 12, 1958, the Dongfeng-branded passenger car was successfully test-produced at FAW in Changchun, bearing the production code CA-71. This milestone ended New China's long-standing reliance on foreign-made cars and paved the way for domestically developed passenger vehicles. Building upon this prototype, FAW completed the trial production of China's first luxury sedan in August of the same year, christening it the "Hongqi"—meaning "Red Flag." This vehicle became the nation's first officially numbered, true-to-its-name high-end luxury car.

After the reform and opening up, the BMW Brilliance Automotive Group in Shenyang, Liaoning, and the Volvo Cars Daqing Automotive Plant in Heilongjiang were established and gradually developed into major domestic automobile manufacturers. Driven in particular by FAW Group, Northeast China has developed into an automobile production cluster with Jilin as the core and Liaoning and Heilongjiang as the wings. This automotive industry cluster boasts complementary advantages in vehicle production and parts supply.

It is reported that the Volvo Cars Daqing Plant is the Volvo Group's first SPA platform vehicle production plant in my country and the sole production plant for the Volvo S90 mid-to-large premium sedan. Looking back, the three northeastern provinces have witnessed many historic successes in my country's automotive industry. Looking ahead, they continue to aspire to contribute to the new energy vehicle industry.

In recent years, Gasgoo has noted that Liaoning, Jilin, and Heilongjiang have successively introduced policies to encourage the development of the new energy smart vehicle industry. At the end of last year, Liaoning Province issued the "Shenyang Intelligent Connected Vehicle Commercial Zone Construction Plan" (hereinafter referred to as the "Plan"). The goal is to create Northeast China's first intelligent connected vehicle commercial zone, a Beijing-Shenyang intelligent connected vehicle policy innovation coordination zone, and a nationally important hub for intelligent connected vehicle industry and technological innovation. According to the plan, to achieve these goals, the project will be completed in three phases.

Phase 1 (2023): Complete the construction of a test environment in Dadong District, implement application scenarios, build over 100 kilometers of smart roads, test and operate over 100 vehicles, establish over five commercial scenarios, and initially validate the technical approach for vehicle-road-cloud integration. Phase 2 (2024-2025): Using the entire 101 square kilometers of Dadong District as the implementation unit, establish a commercial operation model and fully complete the development of the region's five key systems: "smart roads, intelligent vehicles, real-time cloud, reliable network, and accurate maps." Generate a data set for vehicle-road collaborative autonomous driving, provide an average of 10,000 commercial autonomous driving trips annually, significantly optimize road traffic indicators, and gather over 100 upstream and downstream companies in the industry chain. Phase Three (2026-2027): Following the principles of "safety first, gradual expansion, and contiguous development," we will accelerate the city-wide replication and promotion of the pilot experience in Dadong District, gradually completing full coverage of a 300-square-kilometer urban-level smart road network and establishing a city-wide integrated vehicle-road-cloud ecosystem. This will establish a "Shenyang Experience" in terms of policy and technical systems, and build a nationally significant hub for intelligent connected vehicle industry and technological innovation.

Regarding electrification, at the end of April this year, the Liaoning Provincial Transportation Affairs Service Center issued the "Guiding Opinions of the Liaoning Provincial Department of Transportation on Accelerating the Promotion of Taxi Electrification" (hereinafter referred to as the "Opinions"). The "Opinions" point out that the taxi sector is a key area for national electrification efforts. Compared to gasoline and gas-powered vehicles, new energy taxis offer lower fuel costs and a more comfortable ride. Promoting the use of new energy taxis is of great significance for promoting green and low-carbon development in the transportation industry, supporting the achievement of dual-carbon goals in the transportation sector, facilitating the transformation and upgrading of the automotive industry, and improving the technical equipment level of the taxi industry. To this end, Liaoning Province will develop and improve a practical and feasible plan for promoting the electrification of taxis; increase the allocation of subsidies for taxi electrification promotion: the province will directly transfer 30% of the price increase subsidies from the Urban Transportation Development Incentive Fund to each city based on the current base, which will be used to support the promotion of taxi electrification; and accelerate the construction of supporting charging facilities for new energy taxis.

In May of this year, the General Office of the Jilin Provincial People's Government issued the "Notice on the Action Plan for the High-Quality Development of the New Energy and Intelligent Connected Vehicle Industry in Jilin Province." The goal is to optimize the development layout of the province's new energy and intelligent connected vehicle industries by 2026, with the industry's scale and competitiveness ranking among the top in the country. Specifically, by 2026, Jilin Province's production and sales of new energy vehicles will exceed 500,000 units, with domestically produced new energy vehicles accounting for over 40%. The local supply rate of key new energy components has significantly increased, reaching 70%. Public-sector vehicles will be upgraded to new energy vehicles at a faster pace, and charging and swapping services will be significantly more convenient. Jilin Province will take the lead in commercializing autonomous vehicles in cities and on highways. Jilin Province will lead the nation in intelligent transformation, digital transformation, and green development of the industry. Separately, the Heilongjiang Provincial People's Government issued an opinion on promoting the innovative development of the new energy vehicle industry. The document outlines assistance for Daqing Volvo Car Manufacturing Co., Ltd.'s new energy passenger vehicle application for product announcements, leveraging existing production lines to rapidly achieve mass production of high-end new energy passenger vehicles. It also encourages Harbin Hafei Automobile Manufacturing Co., Ltd. to quickly finalize its work plan, accelerate the renovation of existing production lines, and achieve mass production of new energy passenger vehicles, logistics vehicles, and postal vehicles.

In July of this year, the General Office of the Heilongjiang Provincial People's Government issued a notice on the issuance of the "20 Practical Projects for People's Livelihood in the New Era (2024)." This notice specifically calls for accelerating the retirement of outdated transportation vehicles, promoting the replacement of urban buses, supporting the demonstration and application of green energy vehicles such as hydrogen and methanol buses, and promoting the development of new energy-powered ships. Carbon dioxide emissions per unit of transport turnover for operating vehicles and ships will decrease by 1% and 0.7%, respectively, compared to 2023. The phenomenon of "oranges in the south growing like tangerines in the north" is gradually changing, and new energy vehicles are taking root in colder regions. Compared to other regions of China, the three northeastern provinces have inherent difficulties adapting to new energy vehicles due to climate factors. Traditionally, electric vehicles have underperformed in the auto market in the three northeastern provinces.

Ministry of Public Security data shows that in 2023, 7.43 million new energy vehicles were registered nationwide, with the three northeastern provinces accounting for less than 300,000, or 4%. However, the three northeastern provinces have never been a "barren land" where the new energy vehicle industry struggled to take root. This mere 4% share of new energy vehicle registrations reveals a significant potential for the industry's development. Currently, the new energy vehicle industry in the three northeastern provinces is in the early stages of a boom and is already showing growth momentum. In April of this year, Daily People published an article stating that after more than a decade of net population loss, Jilin and Liaoning experienced a turnaround in 2023, with net inflows of 43,400 and 86,000 people, respectively. The article attributed this primarily to the fact that two major automakers, FAW and BMW Brilliance, capitalized on the booming new energy vehicle industry in Northeast China, attracting numerous migrant workers to work there and encouraging those who had previously been reluctant to return home.

This is indeed the case. This year in particular, the new energy vehicle industry in the three northeastern provinces has made significant progress. According to data jointly released by the Shenyang Automobile Circulation Association Information Center and industry new media platforms, BYD maintained its top spot in the Northeast region's top 10 automakers in the first half of this year, with sales of 63,775 vehicles, 24,622 units higher than second-place FAW-Volkswagen, creating a significant gap.

Furthermore, in the Northeast region's top 10 sales ranking for the first half of this year, BYD had four models: the Qin PLUS, Song PLUS, Song PRO, and Destroyer 05. The BYD Song PLUS and Song PRO ranked fourth and fifth, respectively. This demonstrates that the market crowding-out effect of new energy vehicles is significant for both domestic and joint venture brands. In Liaoning Province, according to the 2023 Liaoning Province Economic Performance Press Conference held by the Liaoning Provincial Government Information Office, new energy vehicle production in Liaoning Province is expected to increase by 29.2% and retail sales by 120%. Specifically for each region in Liaoning Province, data from the Shenyang Automobile Circulation Association shows that by 2023, Shenyang's new energy vehicle ownership reached 108,000, more than doubling from the previous year, accounting for 25% of new car sales. In the first half of this year, Shenyang's passenger car sales increased by 7.55% year-on-year, with new energy vehicle sales increasing by 69.92%. Similarly, data released by the Benxi Municipal Bureau of Statistics shows that in the first half of this year, new energy vehicle retail sales in Benxi reached 87.045 million yuan, a 138% increase. New energy vehicle retail sales accounted for 14.2% of total automobile retail sales, an increase of 7.3 percentage points from the same period last year.

Regarding energy replenishment infrastructure development, it is reported that as of January this year, State Grid Liaoning had 457 charging stations and 2,663 charging piles, with a charging service network covering 23 highway service areas and 14 key areas in prefecture-level cities. By 2023, the company's annual charging capacity in its power supply area will reach 66.52 million kWh, with 2 million charging service trips per year. In addition, in April of this year, media outlets learned from the Liaoning Provincial Department of Finance that Xinbin Manchu Autonomous County, Fushun City, Huanren Manchu Autonomous County, Benxi City, and Jianping County, Chaoyang City, Liaoning Province, were selected as the first batch of pilot counties nationwide to address shortcomings in charging and swapping infrastructure, and will receive 135 million yuan in central government subsidies. More notably, a large number of new energy vehicle industry projects have already taken root in the fertile soil of the three northeastern provinces.

In January of this year, pre-series production of the Audi FAW new energy vehicle project officially began in Changchun, with a planned annual production capacity of over 150,000 vehicles. Production of the Audi Q6 e-tron and three pure electric models in the Audi A6 e-tron series will commence by the end of this year. Also in Changchun, in February of this year, the first phase of the FAW Fudi New Energy Power Battery Project, jointly developed by FAW and BYD, officially commenced production at Northeast China's first new energy vehicle power battery production base. The project, with a total investment of 13.5 billion yuan, is planned to have a 45GWh production capacity in three phases. Mass production officially began in March of this year. Once fully operational, the annual output value is expected to reach 20 billion yuan, meeting the demand for 600,000 electric vehicles annually.

Following a 10 billion yuan investment in its Shenyang high-voltage power battery plant in 2023, the BMW Group announced this year that it will invest an additional 20 billion yuan in its Shenyang production base for large-scale upgrades and technological innovations at the Dadong plant, laying the foundation for localized production of the "New Generation" model. The "New Generation" will be launched globally next year. In the Chinese market, the "New Generation" model will enter production in Shenyang in 2026. Furthermore, as a key supporting project for the localization of the "New Generation" model, BMW's sixth-generation power battery project commenced construction last year. With a total investment of 10 billion yuan and a planned area of ​​240,000 square meters, the project is five times the existing power battery production area. The goal is to begin production of BMW's latest new energy vehicle power batteries and related drive systems in Shenyang by 2026. In addition to the BMW Group, manufacturers including EVE Energy and Zhonghong Power have also established power battery projects in Shenyang. Unlike Liaoning and Jilin, Heilongjiang is exploring alternative new energy technology paths. In August of this year, the first batch of methanol-hydrogen new energy vehicles in Northeast China officially rolled off the production line at Geely's Yuancheng Hydrogen Ecosystem Daqing plant. Yuancheng New Energy Commercial Vehicle Group has signed a series of cooperation agreements with local companies and will work with Heilongjiang PetroChina to improve the methanol refueling system, accelerating the promotion and application of methanol-hydrogen electric commercial vehicles in the cold northern region.

Regarding the development of the autonomous driving industry, Shenyang has designated Dadong District as the core area for the development of intelligent connected vehicles. Incorporating the Beijing Yizhuang model, it has established a state-owned intelligent connected vehicle platform company. Through policy guidance, capital investment, and talent recruitment, it is continuously promoting innovation and development in the intelligent connected vehicle industry, including infrastructure construction and the development of an industrial ecosystem. Furthermore, Shenyang is about to open Northeast China's first Level 4 autonomous driving road, and has been selected as a pilot for the "vehicle-road-cloud" application of intelligent connected vehicles. Can the three northeastern provinces usher in a "new energy era"? These developments demonstrate to a significant extent that the Northeast, seemingly at odds with new energy, actually possesses fertile ground for the new energy vehicle industry, though significant progress will take time.

In fact, numerous factors can overcome inherent "climate disadvantages" and help the three northeastern provinces carve out niches for the new energy vehicle industry. First, as the founders of China's automotive industry, in addition to the well-known advantages of a complete automotive industry chain from the fuel era mentioned above, the three northeastern provinces boast relatively well-developed green energy power generation industries such as wind, solar, and hydrogen. This allows them to provide green electricity for the automotive industry from the source, meeting the carbon neutrality requirements of the entire new energy vehicle industry chain.

According to power generation data released by various provinces for the first half of 2024, from January to June of this year, the three northeastern provinces generated 88.5 TWh of new energy power, accounting for over 39% of the total power generation in the Northeast power grid. Specifically, in the first half of 2024, Liaoning Province generated 7.68 TWh of new energy power, Jilin Province generated 3.94 TWh, and Heilongjiang Province generated 2.73 TWh. Liaoning Province, leveraging its abundant wind and solar resources, is actively developing its clean energy industry, aiming to achieve a 55% share of clean energy installed capacity and over 48% of power generation by 2025.

Liaoning Province is the only province in the three northeastern provinces developing offshore wind power. According to the "Liaoning Province 14th Five-Year Plan for Marine Economic Development," the province aims to achieve a cumulative grid-connected offshore wind power capacity of 4.05 GW by 2025. The Deputy General Manager of the Daqing Power Supply Company of State Grid Heilongjiang Electric Power Co., Ltd. stated, "In the first half of 2024, the total renewable energy generation in the Daqing power supply area reached 5.964 billion kWh, a year-on-year increase of 6.03%, equivalent to saving 1.944 million tons of standard coal and reducing carbon dioxide emissions by 4.711 million tons."

Regarding hydrogen energy, as many as 13 hydrogen energy projects were underway, signed, or put into operation in the three northeastern provinces by the first half of 2024. These included four in Jilin Province, six in Liaoning Province, and three in Heilongjiang Province. Secondly, in terms of educational resources, the Northeast boasts a large number of universities and automotive design and R&D institutions. Institutions such as Jilin University, Dalian University of Technology, Northeastern University, Northeast Petroleum University, Harbin Institute of Technology, Harbin Engineering University, Shenyang University of Technology, and Changchun Automotive Industry College are all well-positioned to train technical talent and production personnel for Northeastern automotive companies.

Automotive-related companies already established in the Northeast have also made significant contributions to the region's automotive talent development. For example, the Hongqi Design Institute, FAW Group's New Energy Research and Development Institute, BMW Brilliance's R&D Center, and Volvo's Daqing Plant R&D Center all boast strong talent development capabilities. Finally, the three northeastern provinces enjoy a unique geographical advantage for exporting their automotive products overseas. Liaoning boasts numerous coastal cities, including Dandong, Dalian, Yingkou, Jinzhou, Panjin, and Huludao. Heilongjiang and Jilin are close to overseas auto markets in Russia, Japan, and South Korea, which are dominated by fuel-powered vehicles.

According to Shenyang Customs, in the first 11 months of 2023, Liaoning Province's total foreign trade import and export value reached 705.76 billion yuan. Exports of the "new three" products, represented by electric passenger vehicles, solar cells, and lithium batteries, maintained rapid growth. Of these, exports of electric passenger vehicles reached 12.66 billion yuan, a year-on-year increase of 55.3%. Of course, even though the three northeastern provinces have demonstrated their advantages in the new energy vehicle industry, they still face the reality that extreme cold weather poses a challenge to the battery life of power batteries. The director of Envision Power's Advanced R&D department once stated in an interview, "In terms of the chemical reaction rate within the battery, every 10°C difference results in a 2- to 4-fold difference. In other words, a pure electric vehicle with a nominal range of 401km will actually have an 85% reduction in range at -10°C, but at -20°C, the range could drop to 50%."

Chinese power battery manufacturers are already working to address this challenge. More recently, in August of this year, Xingdong Lithium Battery released four low-temperature batteries capable of charging and discharging at -20°C, -25°C, -30°C, and -35°C, achieving a maximum charge and discharge efficiency exceeding 97%, addressing the low-temperature limitations of lithium iron phosphate batteries. Xingdong Lithium Battery reportedly uses a patented in-situ gel electrolyte and adds initiators and coagulants compatible with lithium iron phosphate batteries, enabling the batteries to operate within a temperature range of -35°C to 60°C. Clearly, in the short term, the domestic auto market will be divided between new energy vehicles and fuel-powered vehicles. The undeniable fact is that in the global automotive market, the shift to new energy vehicles is an undeniable reality. Whether it's hot or cold, whether in Northeast China or overseas markets, climate and geography will not forever hinder the new energy vehicle industry's expansion into a broader market. In the three northeastern provinces, the seeds of new energy vehicles are already being nurtured in this fertile soil. These seeds will surely take root and sprout, growing into unstoppable towering trees. For now, we'll just have to wait and see.

Reprinted from Sina Auto

Email:
info@adtfm.com

Phone:
021-20532053

Address:
2nd Floor, No. 150 Jindian Road, Pudong New Area, Shanghai