Guotai Junan: comprehensive promotion of new standards for electric two-wheelers, accelerating optimization of the industry landscape.

Guotai Junan released a research report stating that the terminal sales acceleration of electric two-wheeled vehicles is leading to differentiation, with top brands benefiting the most. Starting from November 1, 2024, the new 3C certification standards for electric two-wheeled vehicles will be fully implemented. Some small and medium brands have a slow pace in passing the certification, resulting in shrinking supply in stores. Top brands are seeing an increase in terminal sales and sales elasticity, making their sales prospects promising. The main points from Guotai Junan are as follows: 3C Certification: Improving supply structure, leading companies have sufficient SKU reserves. The new certification standards mainly include the "Safety Technical Specifications for Lithium-ion Batteries for Electric Bicycles," the first amendment to the "Safety Technical Requirements for Chargers for Electric Bicycles," and the first amendment to the "Electrical Safety Requirements for Electric Bicycles," all of which will be implemented starting from November 1. Products must undergo the relevant CCC certification and display the CCC certification logo before they can be sold, imported, or used in other business activities. Currently, small and medium brands are slow in obtaining certification, resulting in store shortages, prompting dealers to switch to top brands with sufficient SKU certification reserves (Emma and Yadi have completed certification for over 100 models), leading to an acceleration in terminal sales and industry supply-side reform. New National Standards: Expected to be formally released by the end of 2024, driving up ASP and increasing market share concentration. The draft of the new national standards explicitly requires a reduction in plastic parts, an increase in metal parts, an increase in stacked cables and communication modules, and the addition of smart functions, which will increase production costs and demand higher capabilities for intelligent solutions from vehicle companies. It is expected that brands will increase prices to pass on the cost increase, leading to growth in industry ASP. Furthermore, the new national standards require companies to have the production, testing, and quality control capabilities for key components such as complete vehicles and frames to match the production capacity of electric bicycles. As the certification of relevant capabilities requires whole vehicle manufacturers to provide, the policy will promote the industry's production mode from OEM to OBM mode, gradually phasing out workshop-style companies without quality control capabilities and small brands dependent on OEM production, increasing industry concentration. Trade-in Program: Focused on supporting lead-acid products, policy needs to be fully implemented. Due to the switch in product standards and the determination of subsidy application criteria, the policy is still gradually being rolled out nationwide. Overall, the subsidy amount is mostly 10%-20% of the selling price or a one-time subsidy in price segments, generally ranging from 400-600 RMB (in some regions, if consumers scrap and exchange lithium battery products for lead-acid battery products, additional subsidies will be provided), combined with residual value from recycling, totaling 700-900 RMB. Taking Shanghai as an example, the calculated subsidy intensity for mainstream brands is 20%-30%. Currently, most regions have trade-in programs until the end of 2024, but with the new national standards yet to be implemented, it is expected that trade-in programs will continue to complement the requirements of the new national standards, with some brands waiting for the release of new national standard products before launching marketing efforts. Risk Warning: Downstream consumption power lower than expected, trade-in program progress slower than expected, etc.