The number of ultra-large die-casting machines producing Tesla integrated auto parts in China

Figure 1 China’s annual output of die castings and annual output of automobiles

Figure 1 shows the relationship between the annual output of die-casting parts and the annual output of automobiles, which is highly positively correlated, indicating that the demand for automotive aluminum alloy die-casting parts will greatly affect the overall development prospects of the die-casting industry.

2. The horizontal cold chamber die casting machine is the main production equipment in the die casting industry

Die-casting production is generally carried out in a die-casting unit, which includes a die-casting machine and a series of peripheral equipment. The die-casting machine is the main equipment of the die-casting unit, and the injection and molding of the die-casting parts are completed on the die-casting machine. Horizontal cold chamber die-casting machine (referred to as die-casting machine) is the main product in the die-casting machine market, and it is also the research object of this subject.

According to some statistical data released by China Casting Technology on June 15, 2021, the number and proportion of cold and hot chamber die casting machines in my country are shown in Table 1. Due to the small tonnage of the hot chamber die casting machine, the production volume of die castings is much lower than that of the cold chamber die casting machine. If calculated according to the production volume, the cold chamber die-casting machine is significantly higher than the proportion of the number of die-casting machines.

3. The life cycle of the automobile determines the life cycle of the die casting machine

3.1 Judging the car life cycle

The product life cycle theory was first proposed by Harvard University professor Raymond Vernon in his article “International Investment and International Trade in the Product Cycle” in 1966.[9]. The product life cycle is the market life of a product, that is, the entire process of a new product from entering the market to being eliminated by the market. The market life of a product is different from the life of a product. The life of a product refers to how long a product can be used. A typical product life cycle can generally be divided into four stages, namely the introduction period, the growth period, the maturity period and the decline period.

The theory only considers the two variables of sales and time, divides products into different strategic periods, and adopts appropriate response strategies in different periods, which increases the operability of corporate strategy. However, this theory has the following major shortcomings:

(1) It is not easy to confirm the starting and ending points of each stage of the product life cycle.

(2) Not all product life cycle curves are standard S-shaped, and there are many special product life cycle curves.

(3) It is impossible to determine whether the product life cycle curve is suitable for a single product project level or a product collection level.

(4) The curve only considers the relationship between sales and time, and does not involve other variables that affect sales such as cost and price.

As a product, die-casting machine has its own product life cycle. Because die-casting machine manufacturers are directly facing the industrial market, it is difficult to judge. The automobile industry directly faces the consumer market, and the automobile life cycle is relatively easy to judge. Based on the high positive correlation between the annual output of die-casting parts and the annual output of automobiles, the life cycle of the die-casting machine is judged according to the life cycle of the automobile, and the following assumptions are made:

(1) Automobiles are durable consumer goods, suitable for product life cycle theory, and suitable for S-shaped life cycle curve[10].

(2) The impact of the automotive market on the die-casting machine industry lags behind the impact on the automotive industry, and the lag time is one year.

(3) The product life cycle curve is not applicable to the full range of die-casting machines, and further detailed grouping analysis is required according to market demand.

Adopt product penetration rate analysis method[9]To determine the life cycle of cars on the Chinese market, the calculation formula is:

Social holdings = cumulative production over the years + cumulative imports over the years-cumulative exports over the years-cumulative group purchases over the years;

Average population penetration rate = social holdings / total population × 100%.

According to empirical data, when the average population penetration rate is less than 5%, it is the input period, when it is 5%-50%, it is the growth period, when it is 50%-90% it is the mature period, and when it exceeds 90% it is the decline period.

The average population penetration rate method is used in the automobile market. The main indicator is the number of car ownership. The value is the number of car ownership per thousand people in the country. The car ownership in my country is generally based on government official data, which is basically close to the real ownership. .

To calculate the car penetration rate, we must first define the upper limit of my country’s own car ownership. According to the World Bank’s data on car ownership in 20 major countries in the world in 2019, my country has 173 cars per 1,000 people, ranking 17th. The number one American car ownership per thousand people is 837, which is 4.8 times that of China. Experts from the China Automobile Center Energy Data Center once pointed out that China’s car ownership cannot reach the level of a moderately developed country, and the highest peak number of 1,000 people is 280.

In fact, there are divergent opinions about the upper limit of my country’s car ownership. Based on empirical data, this article uses 50% as a demarcation point between the growth period and the maturity period, which is equivalent to 500 cars per 1,000 people. The upper limit of the inventory is compromised, and the average value of 280 and 500 is used as the upper limit, that is, 390. The upper limit of car ownership is 1.4 billion × 390/1000 = 546 million vehicles.

According to statistics from the Ministry of Public Security, as of June 2021, China’s car ownership is 292 million. Then, dividing the current car ownership by the upper limit of the car ownership will get the penetration rate in June 2021, that is, 2.92/5.46=53%. Theoretically, when the penetration rate is 50% to 90%, it is the mature period. Since 50%<53%<90%, it can be considered that the automobile penetration rate has just passed the growth period and entered the mature period, that is, the early stage of the mature period. It can also be considered as a die-casting machine. It is also at this stage.

The automobile penetration rate has just entered the mature stage after the growth period. This judgment is a judgment on the level of automobile aggregation. According to different driving energy, automobiles are basically divided into two categories, as shown in Table 2. According to the classification of cars and their respective characteristics, make further judgments, as shown in Figure 2.

Figure 2 Life cycle of fuel vehicles and new energy vehicles Source: China Automobile Manufacturers Association, Huaxin Securities R&D Department

Hybrid vehicles are a transitional product aimed at saving fuel and reducing emissions, and are currently in a period of decline. After more than 100 years of development, traditional fuel vehicles have the most mature technology and are currently in a mature stage. Pure electric vehicles and other categories are in a period of rapid growth and are the main driving force for future development. The fuel cell vehicle technology is mainly dominated by Japan. The domestic technology is not yet mature and lacks corresponding supporting facilities. Fuel cell vehicles are currently in the introduction period.

3.2. The life cycle of traditional fuel vehicles and new energy vehicles

As far as automobiles are concerned, fuel vehicles will be replaced by new energy vehicles. This is a trend, and the product life cycle theory cannot be determined. There are some differences in the demand for die-casting machines for the die-casting parts of fuel-burning vehicles and new energy vehicles, and the life cycle cannot determine the specific life cycle of various series of models.

Regarding the delisting of petrol vehicles, between 2016 and 2018, countries (regions/cities) around the world have announced the timetable for the ban on petrol vehicles in various forms. The overall goal is to ban the sales of petrol/diesel vehicles from 2025 to 2040. . In terms of automakers, Ford, Jaguar Land Rover, General Motors, Nissan, BAIC Group, Volvo, and Bentley also announced plans to stop fuel production. It is foreseeable that the introduction of stricter emission reduction regulations will accelerate the delisting of fuel vehicles. In my country, on October 20, 2020, the General Office of the State Council issued a notice on the new energy vehicle industry development plan (2021-2035). By 2025, the sales of new energy vehicles and new vehicles will reach about 20% of the total sales of new vehicles. .

According to the sales of cars and new energy vehicles over the years, the sales trend can be seen, as shown in Figure 3. The restriction is that the sales of new energy vehicles will account for 20% in 2025, and the sales ceiling in 2040 will be 35 million. As can be seen from Figure 3, driven by policies and other thrusts, the sales of fuel vehicles are declining. On the one hand, new energy needs to fill the share left by the decline in fuel vehicles, and on the other hand, it must maintain overall growth. The output of energy vehicles accounts for 50% of the annual output of automobiles. The curve shows the schematic curve of the annual sales of die-casting machines after 2029. The graph on the right of Figure 3 shows that the output of new energy vehicles accounts for 50% of the annual automobile production in 2028. The curve (solid line) represents 2028. Schematic curve of annual sales of die-casting machines after the year. The dotted line on the right is the same as the solid line on the left. It is used in comparison with the solid line to indicate that the greater the rate of decline in the sales of fuel vehicles, the greater the rate of increase in sales of new energy vehicles. , The more conducive to the growth of die-casting machine sales. Figure 3 combines the relevant literature data based on the development history of China’s die-casting machine to sort out the life cycle diagram of the die-casting machine.

Figure 3 Annual sales volume of fuel vehicles and new energy vehicles

Figure 4 shows that the inflection point between the growth period and the mature period of the die casting machine may appear between 2021-2025, and the inflection point between the mature period and the decline period may appear around 2030. If the output of new energy vehicles reaches 50% between 2028 and 2029, according to the previous assumption on the life cycle of die-casting machines (2), the reaction time of die-casting machine manufacturing industry lags behind the auto market by one year, then after 2030, will the turning point be The arrival mainly depends on the state of the game between fuel vehicles and new energy vehicles. If fuel vehicles still dominate, then the die-casting machine will enter the late stage of maturity (see the dotted line in the figure above); if new energy vehicles are in the dominant position, the effect of lightweight and structural integration is significant, and there are no substitutes, then it will Extend the time of the maturity period and delay the time node of the recession period (as shown in the dotted line in the figure above).

Figure 4 Die-casting machine life cycle in the Chinese market

4. Analysis of the demand for die-casting parts of fuel vehicles and new energy vehicles

4.1 The main similarities and differences in the demand for die castings between fuel-fueled vehicles and new energy vehicles

Compared with fuel vehicles, the main difference between electric vehicles is the drive system and transmission system, and the number of die castings will be reduced. There are about 16 die-casting parts for the engine of a fuel vehicle, and about 8 die-casting parts for the transmission system. There are about 4 die-casting parts for the electric drive system of electric vehicles, and about 2 die-casting parts for the transmission system.

Lightweight is one of the key technologies for energy-saving fuel vehicles, and it is also the main measure for new energy vehicles to increase the cruising range. Fuel vehicles will have more steel parts replaced by die-casting parts in the future, such as front subframe beams, rear longitudinal members, A-pillars, D-pillars, seats, rear axles, and rear longitudinal beams. The powertrain system of new energy vehicles and electric vehicles includes slots for connecting power and electronic equipment, gearboxes, cover plates, shells, rotors, angular connectors, stators, magnetically active components, and inner shells with cooling systems. Electric new energy vehicles, in addition to the demand for die-casting parts that include fuel vehicles to replace steel parts, there are further demand for die-casting parts, such as battery peripherals, electronic controls, deactivators, and even seat frames, steering wheels, and instrument panels.

4.2 Integration requirements of structural parts

Many new materials and new processes will appear with the deepening of lightweight and the surge in demand for electric vehicles, and then more changes in the product portfolio of die castings. In particular, the demand for chassis and structural parts is growing rapidly, and aluminum-magnesium alloy castings to replace steel are gradually increasing, such as four doors and two covers, chassis beams, rear compartments, roofs, all-aluminum chassis, and all-aluminum bodies. Some chassis and structural parts are large in size and require die-casting machines with greater clamping force.

4.3 New die castings

Under the trend of electrification, intelligence, networking, and sharing, many die castings required for new functions will inevitably be produced, such as electric drive systems, fuel cell systems, 48V, HUD, LCD instruments, smart seats, etc.

The rising trend of the amount of aluminum used in automobiles is the driving force for the development of the die-casting industry. The changes in the demand for die castings will have an impact on the demand for the clamping force of the die casting machine in the future, which is mainly reflected in the t position requirements of the die casting machine.

According to industry experience, the clamping force of the die-casting machine for the production of die-casting parts of the fuel vehicle drive system is mainly between 2,000 to 3 500 tons. The clamping force of the die-casting machine required for the die-casting parts of the electric drive system is generally below 2500t. The size of the battery pack is compared. Large, generally required clamping force is above 3 500 t. The trend of integration and integration requires the clamping force of the die-casting machine to lean toward the two ends, one end is required to be smaller than the die-casting parts of fuel vehicles, and the other end is required to be greater than that of traditional fuel-fuel vehicles. The demand on the small end is easy to meet, and the large end requires a clamping force of 6,000t, 8,000t, or even more than 10,000t. It mainly produces vehicle chassis, tailgate structural parts, body structural parts, and so on.

On the basis of Figure 4, the die-casting machines are grouped according to the clamping force, combined with the market conditions of the die-casting machines and the manufacturer’s marketing strategy to further infer the life cycle of the die-casting machines of each group.

Die casting machines are divided into 7 groups according to tonnage, see Table 3. Referring to Figure 5, the first two groups have similar brand share structures and can be divided into one group.

Figure 5 The market share of each brand of cold chamber die casting machine in the Chinese market in each t position (the abscissa is the clamping force)

Figure 5 shows that there are more brands in the group with lower clamping force and more competition. The brands in the group with greater clamping force have relatively fewer brands. Overall, the production of die casting machines has been relatively mature, but a market monopoly has not yet formed. The total amount of group data with F ≥ 5 000 is too small to represent monopoly.

1) F<1000 From Table 3, it can be estimated that the proportion of die casting machines below 1,000 t is 92%. There are many brands in this group, the homogenization of products is serious, and the market competition is very fierce. At present, the market is saturated and profits are beginning to decline gradually. . The sales strategy is often to reduce prices, increase sales promotion levels, improve service quality, and find new overseas markets. It can be judged that this group of die-casting machines is in a mature stage.

2) 1 000≤F<2 000 At present, old customers repeat purchases. In order to obtain new customers or stabilize old customers, the price will be reduced at an appropriate time. Sales volume has surged, profits have reached a peak, the scale of enterprise production has been gradually expanded, costs have been gradually reduced, and new competitors will join them. In order to maintain their market growth rate and extend the time to maximize profits, many companies usually improve quality, such as adding new features, new options, or developing new models and new uses. The focus of each company's advertising is to establish an image, establish a brand, maintain old customers, and attract new customers. Therefore, this group of die casting machines is in the growth stage.

3) 2 000≤F<3 000 At present, the situation in this group is relatively complicated. From the perspective of the demand for automotive die-casting parts, it is at the end of the mature period. As the penetration rate of new energy vehicles increases, it will gradually enter a recession period. Decrease accelerated, and sales fell sharply. Profit margins are very low, and a large number of competitors withdraw from the market. Companies can either passively give up until this group completely withdraws from the market. Either take the initiative to give up, and gradually transfer the company's internal resources to other products. From this, it is judged that this group is at the end of the mature period and is accelerating into a recession period. However, if there are die castings from other industries to fill this gap in the future, it is equivalent to extending the maturity period of this group.

4) The characteristics of this group of 3 000≤F<5 000 are similar to those of 1 000≤F<2 000. It can be judged that this group is in the growth stage. The main driving force for subsequent growth comes from the further integration and combination of automobile die castings. Lightweight.

5) F ≥ 5 000 At present, this group is a new product on the market, sales are slow, only 14 units, sales are small, its manufacturing cost is high, the profit is very low or even negative, and the number of competitors is small. The current market share cannot reflect the real market situation, so it is judged that this group is in the transitional stage of the product’s budding period and the introduction period. At present, the demand for die-casting parts is not clear enough, and the market is on the sidelines. Because the investment risk is too high, many die-casting factories are not eager to order die-casting machines, so die-casting machine manufacturers are critical to the market timing of launching ultra-large-scale die-casting machines. Since Tesla first used ultra-large structural parts in its electric vehicles, various die-casting machine manufacturers have responded differently. Some companies have adopted a rapid penetration strategy, that is, using a low price and high promotion method, aiming to gain first-mover advantage and hit the market as soon as possible. Enter the blank market to establish barriers to competition, and then gain profits by increasing sales and output. On the contrary, some companies adopt the strategy of slow skimming, that is, adopting high prices and low sales promotion methods, aiming to use the lowest possible cost in exchange for more profits.

From this, the life cycle of die casting machines for different clamping force groups can be inferred, as shown in Figure 6.

Figure 6 Die-casting machine life cycle of different clamping force groups

5. Conclusions and recommendations

Since 2000, under the background of global supply chain, my country’s automobile industry has developed rapidly. The global die-casting production has shifted to Asia, especially mainland China. At the same time, it has driven the transfer of die-casting machine manufacturing industry to mainland China. The new crown epidemic has accelerated this process. On the whole, the driving force of the Chinese market’s demand for horizontal cold chamber die casting machines in the next 10 years will still exist: my country’s automobile market is not saturated; automobile lightweight; high penetration rate of electric vehicles; integration and integration of aluminum alloy body and chassis; Demand for die castings in other industries; uncertain factors: changes in the ban on the sale of fuel vehicles, China’s economic development prospects, the growth rate of electric vehicle penetration, and the development of hydrogen energy vehicles.

Automobile sales and die-casting sales are highly positively correlated. It is reliable to predict the life cycle of die-casting machine by using automobile life cycle. Accurately judging the life cycle of horizontal cold-chamber die-casting machine has the following reference function: It is beneficial to die-casting machine manufacturers. The characteristics of the different life cycle stages of the die-casting machine adopt appropriate marketing strategies. It will help die-casting machine manufacturers to adopt corresponding strategies to enhance their competitiveness and increase economic benefits. Provide reference for related enterprises’ die-casting investment, and avoid involute investment and waste of social resources. With the help of the laws of economic development, it is conducive to the die-casting industry to enter the track of a virtuous cycle of development. It is helpful to explore the product portfolio of die-casting machines. Differentiation and segmentation are equivalent to the difficulty of maximizing the scale, and it is difficult to achieve differentiation and segmentation.

The inflection point between the growth period and the maturity period of the die casting machine’s life cycle may appear during the “14th Five-Year Plan” period. According to preliminary judgments based on factors such as the ban on the sale of fuel vehicles, the inflection point between the maturity period and the recession period may appear around 2030, mainly depending on The state of the game between fuel vehicles and new energy vehicles. If fuel vehicles dominate, the die-casting machine will enter a period of decline; if new energy vehicles are in the dominant position, the effect of lightweight and structural integration will be significant, and there will be no substitutes. Then it will extend the time of maturity and delay the time node of entering the recession period. As China’s auto market is guided by policies, the next five years are critical. The current “14th Five-Year” Auto Industry Development Plan will be officially released in October this year, and everything will become clearer by then.