Author: Rustless Bowl

The new energy vehicle market is poised for a year of contrasting fortunes in 2024.

The "chill" emanates from the suspension of operations by several major newcomers throughout the year.

From HiPhi halting production at the start of the year to rumors of Geely Auto's EV brand Jiyue disbanding towards the end, not to mention WM Motor's failed self-rescue, numerous new players fell just before dawn in 2024.

The "heat," on the other hand, stems from the industry's overall growth.

This year, the new energy market achieved two "ten million-level" milestones for the first time: sales exceeded ten million, and deliveries surpassed ten million.

According to data from the China Association of Automobile Manufacturers, in 2024, annual production of new energy vehicles surpassed 10 million for the first time, with annual sales approaching 13 million, marking increases of 11.1% and 37.6% year-on-year, respectively.

This coexistence of heat and cold underscores the intense differentiation within the new energy market, where rapid growth and survival of the fittest coexist.

Understanding this dynamic is crucial for anticipating industry trends in 2025.

Historically, the new energy industry seems to usher in new trend nodes every 3-4 years.

2018 was the "inaugural year," with automakers competing to sell one more car.

2021 was the "mass production year," with automakers racing to roll off the "100,000th car" under the ideology of scale.

From this perspective, 2025 can perhaps be defined as the "Year of Profitability" for new energy:

Amid market uncertainty, whether automakers can turn losses into profits this year will significantly impact the outcome of the industry shuffle.

1. After Li Auto, who will be the next new force to achieve profitability?

Two events in the past year have influenced the capital market's attitude towards the new energy industry:

First, Xiaomi's electric vehicle sales demonstrated the high maturity of the domestic new energy supply chain. This supply chain dispels the notion that "one cannot make cars."

Second, Li Auto's profitability amplifies the scale effect Tesla and BYD have explored in the mid-to-high-end market. It shows that regardless of price positioning, selling more cars can quickly improve gross margins and turn losses into profits.

These events highlight the market's urgent need for automakers to become self-sustaining:

Brands planning to lose 10 billion yuan over the next three years might be better off disbanding and starting anew.

Who will be the next automaker to turn losses into profits?

The answer lies in financial reports and sales data.

As of January 2025, third-quarter reports of mainstream domestic new energy brands show that most automakers have yet to achieve positive net profits, but losses vary.

NIO Auto has the smallest loss, with a quarterly loss of 690 million yuan, followed by Zeekr and XPeng, with quarterly losses of 1.139 billion yuan and 1.81 billion yuan, respectively. NIO has a higher loss, approximately 5.06 billion yuan. Meanwhile, Nezha, which has officially announced its resumption of work, has not released specific financial report data, but with annual sales hovering near the 100,000-unit mark, profitability seems unlikely in the short term.

Gross margin data better reflects automakers' overall operating conditions.

A generally recognized benchmark for gross margin is around 20%. If an automaker's gross margin reaches 20%, there is hope for initial profitability.

In this regard, NIO Auto has emerged as a dark horse. Compared to the first half's miserable figure of 1.1%, its overall gross margin rebounded to 8.1% in the third quarter, a significant increase. While still far from the profitability threshold, considering its sales of 271,900 units, ranking third among new forces, its gross margin is expected to improve further in the new year.

Zeekr and XPeng maintained consistent performance, with third-quarter gross margins of 16.0% and 15.3%, respectively, both improved compared to the first half's gross margins of 14.9% and 14%. With annual sales ranking fourth and seventh among new forces, respectively, their development trends continue to improve.

In contrast, NIO seems unsatisfactory in cost control. With annual sales of 205,300 units, ranking fifth, its third-quarter comprehensive gross margin hovered around 10%, leaving much room for improvement.

Xiaomi's electric vehicles, though ranking among the sales list with just one product, are still in early development stages and continuously investing in expansion. Therefore, discussing profit performance is premature.

Overall, while maintaining development pace, Zeekr and XPeng may lead the new force brands in achieving profitability in 2025.

With its strong momentum, Xiaomi is also expected to break industry profitability records. Other brands may need to continue working hard with urgency.

2. New Energy Automakers Launch the "Delivery War"

If profitability is the overt line determining the 2025 industry shuffle, the "covert line" influencing the industry landscape lies deep within the supply chain.

From sales of less than one million units in 2018 to now accounting for nearly half of domestic auto sales, domestic new energy vehicle sales have increased 13-fold in six years.

Behind these rapidly rising numbers is a widening delivery gap.

Macro data shows that in 2024, new energy vehicle deliveries lagged behind sales by 3 million units.

The market's perception of "only buying fuel vehicles" has changed. In the next stage, compared to "selling cars," "delivering cars" may become a critical factor for major brands.

After multiple rounds of internal competition, models in mainstream price segments have converged in product strength. Delivery speed has become a key factor affecting transactions. Simultaneously, regional limited-time replacement subsidies have amplified users' anxiety about car pickup.

This has been demonstrated by popular models like XPeng M03 and Xiaomi SU7 in recent months.

Mr. Lei, who slept on the workshop floor, demonstrated the reality of "happy with a big order but anxious about delivery."

Major automakers face varied reasons for delivery difficulties, ranging from capacity allocation issues and insufficient capacity to chip shortages, labor shortages, component shortages, and even Zeekr's "paint shortage," which can all become the final straw.

This is not new. The "capacity crisis" has always accompanied the new energy category. Even Elon Musk, the Iron Man of Silicon Valley, has painful memories of overseeing factories.

To ensure supply chain stability, automakers are employing various strategies:

· Self-research: Automakers like Tesla, NIO, and NIO Auto started early in self-researching and self-procuring components like motors and chips.

· Alliances: Brands like Thalys have joined the HarmonyOS Intelligent Driving Ecosystem, relying on a strong supply chain.

· Joint Ventures: Automakers like Xiaomi have established joint ventures with Contemporary Amperex Technology Co. Limited (CATL) on key battery components to ensure capacity supply.

Behind these supply chain cooperation models, the "ammunition" ultimately determining this "delivery war" is the cash on hand of major automakers.

Media reports state that Xiaomi's electric vehicles achieved a "multi-level jump" in capacity ramp-up within a year, relying on strong cash reserves and a 60-day settlement period.

Coincidentally, a Weibo post by Tesla's vice president Tao Lin also indicated that Tesla's key measure to ensure supply chain stability is continuously shortening the payment cycle for suppliers.

Bloomberg data shows that Tesla's average account settlement days have shortened to around 100 days, while other automakers listed in the ranking generally take more than 200 days.

Compared to public relations apologies, building a mutually trusting and win-win relationship with suppliers undoubtedly determines who automakers can "safely entrust their backs to" in this delivery war.

3. What Other Variables Will the New Energy Industry Face in 2025?

Apart from operational variables, new trends in products, the industry, and capital are also noteworthy in 2025.

First, at the product level, competition in the domestic new energy vehicle market will intensify in the new year.

Newly exposed models, including Xiaomi YU7, Tesla's new Model Y, Model Q, XPeng G7, AITO M8, Zeekr EX1E, Zunjie S800, AVATR 06, and others, as flagship mainstays, will not only drive sales performance and user attention in 2025 but also directly impact new forces' profitability in the new year.

Simultaneously, industry consolidation trends are becoming increasingly apparent.

Following HarmonyOS Intelligent Driving's ecological integration, on December 24 last year, CATL launched the Panshi Chassis, initiating a new model of reverse industry integration by power battery manufacturers.

So far, this model has received positive responses from brands like JAC and AITO.

Whether this "prefabricated cars" technology can build more cooperative ecosystems in the new year will also shape the new energy industry landscape.

Finally, at the capital level, a significant change is that unlike market capital shrinking during the winter period, in line with the "famous brands" of the new energy industry launched in various regions, local state-owned assets have become a key force supporting new energy brands.

Behind the new energy brand financing round at the end of last year were local state-owned assets everywhere.

IM Motors, which disclosed completing a B-round financing of 9.4 billion yuan, is backed by Shanghai local state investment companies like Lingang Group and Zhangjiang Hi-Tech Park. Similarly, Chongqing local state-owned assets played a leading role in AVATR's 11 billion yuan financing.

Coupled with the 3.3 billion yuan capital increase by Hefei state-owned assets in NIO at the end of September last year, local city state investment has become a bright spot supporting industry development in the dark night before new energy brands become profitable.

Whether it's a winner-takes-all scenario or a hundred flowers blooming in the 2025 new energy vehicle market, the war will not cease. For players, this year will be both the most challenging and the best one.