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High-end perspective: How Energy Chain Smart Electric leads the world’s largest new energy market

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Editor’s note: Investment and financing in fields related to new energy vehicles and smart energy have been hot spots in China’s science and technology innovation market in recent years. In June 2022, the Chinese company Energy Chain Smart Electric was listed on Nasdaq in the United States, becoming the first Chinese charging service company listed overseas. In early January 2023, Energy Chain Holdings, the parent company of Energy Chain Smart Electric, announced that it had completed a series of financing of RMB 900 million. FT Chinese Network “High-End Viewpoint” interviewed Wu Xuelu, President and CFO of Energy Chain Smart Electronics, who has transformed from an investor into a business manager. The following is the transcript of the interview.

FT Chinese Network: From an investor to a “leader” of an enterprise, please talk about what made you make up your mind to enter the game and join Energy Chain Smart Electric?

Wu Xuelu: First of all, I have been familiar with energy chain for a long time. In 2021, I participated in Bain’s US$200 million investment in Energy Chain, led Bain’s post-investment support and empowerment for Energy Chain, and as the CFO of Ruisi, I took the lead in promoting the listing of Energy Chain Smart Electric in 2022.

Secondly, in the process of cooperation, with the deepening of understanding, I have more and more recognition of the company E-Link. Especially from Chairman Dai Zhen and CEO Wang Yang, I feel a broad industry vision and pattern, as well as innovative and practical business thinking. They made me firmly believe that the company’s future development is promising.

In addition, the rapid development of China’s new energy industry is a major background for my decision to join Energy Chain Smart Electric. As of the end of December 2022, the number of new energy vehicles in China has reached 13.1 million, and the penetration rate of new energy vehicles in a single month has reached more than 30%, with 60% of the world’s new energy vehicles and 70% of the charging capacity.

China’s new energy vehicles will continue to maintain high growth in the future. At present, the number of cars per thousand people in China is 220, which is about 600-800 in European and American countries. It is estimated that by 2030, the number of new energy vehicles in China will increase from the current 13.1 million to 120 million.

On the basis of this industry, Energy Chain Smart Electric has become a leader in charging services in China, the world’s largest new energy vehicle market. It has established a third-party charging service network, serving millions of C-end users and 80% of OEMs, and connecting with Tencent. , Alipay, AutoNavi and other mainstream channels have connected 90% of charging operators, 45,000 stations and 434,000 charging guns, and the total charging volume accounts for about 19% of the national charging volume. There is reason to believe that in the high-growth new energy track, Energy Chain Smart Electric will definitely achieve better development by virtue of its first-mover advantage.

FT Chinese Network: From the perspective of the transformation of investor status, how do you foresee the future trend of the entire industry?

Wu Xuelu: Regarding the future trend of the industry, I think we can look at it from two aspects.

One is from the perspective of the underlying “car”. The scale of production and sales of new energy vehicles in China has reached the first place in the world. By the end of 2022, the number of new energy vehicles will reach 13.1 million, and the penetration rate of new energy vehicles in a single month has exceeded 30%. China owns 60% of the world’s new energy vehicles.

China’s new energy vehicles maintain a rapid growth trend. In 2022, the production and sales of new energy vehicles will be 7.058 million and 6.887 million respectively, a year-on-year increase of 96.9% and 93.4% respectively, with a market share of 25.6%. It is estimated that in 2023, the sales volume of new energy vehicles in my country is expected to exceed 9 million.

In the long run, the number of new energy vehicles in China is expected to reach 120 million in 2030.

The second is from the perspective of the “charging” required by the car. Charging facilities are the necessary infrastructure for the development of new energy vehicles.

According to the investment of 100,000 yuan in one pile, it means that by 2030, trillions of yuan will flood into this market. Such a huge investment must not be done by a few companies, but must be done by a large number of charging operators.

On the other hand, charging and swapping infrastructure is highly dependent on factors such as land and capital. With the advancement of the third-tier and fourth-tier and township markets in the future, more and more asset parties with land resources will enter the market, and the market will become more and more fragmented .

For example, urban investment, environmental investment, hotel groups, homestay companies, etc. in various places will become a large number of new participants in the charging market.

In the past two years, China’s charging market has shown a trend of decentralization. Charging operator CR5 (the market share of the top five companies) has dropped from 87% in 2018 to 67% in 2022. In the future, SME (small and medium-sized operators) are expected to account for ratio will exceed 60%.

The fast-growing but increasingly fragmented charging market urgently needs professional service providers to provide unified industry specifications and services.

To sum up, we believe that the future of this industry will have certainty and high growth. At the same time, this industry also has a relatively fragmented localized market, which requires standardized and standardized services.

FT Chinese Network: Now China’s new energy market is full of new development opportunities. At the beginning of the new year in 2023, Energy Chain Smart Electric announced that it has completed a new round of financing. As the president and CFO, can you tell yourself about the rapid development of the smart new energy industry, the fast-growing charging and swapping market, and Energy Chain Smart Electric? Talk about your thoughts on market positioning?

Wu Xuelu: I want to talk about the positioning of Energy Chain Smart Electric.

First of all, Energy Chain Smart Power is an asset-light industry connector and one of the largest third-party new energy asset operation and service platforms. Specifically, we can provide operators with integrated services such as site selection, EPC, finance, operation and maintenance, energy storage, and vending machines, as well as service charging pile manufacturers, OEMs, car owners, logistics fleets, etc.

The second is the strength of energy chain smart electricity. As the first company in charging services in China, Energy Chain Smart Electric now serves 80% of OEMs and connects 90% of charging operators. As of September 30, 2022, Energy Chain Smart Electric has served 1,282 charging pile operators, and connected more than 45,000 charging stations and more than 434,000 charging guns. In the first three quarters of 2022, the total charging capacity of energy chain smart electricity reached 1892GWh, and the total transaction value (GTV) reached 1.861 billion yuan, which were 2.29 times and 2.35 times that of the same period last year.

FT Chinese Network: Under the trend of accelerating digitalization in the traditional oil and electricity industry, what does the expansion and deepening of offline network applications mean for the future development of enterprises? What are the unmet needs in the market that NAAS will develop or satisfy next?

Wu Xuelu: At present, both electric vehicles and charging infrastructure have achieved rapid growth, but the growth of charging infrastructure is still lower than that of electric vehicles. Looking back at 2022, the sales volume of new energy vehicles from January to November will be 6.067 million units, the increase in charging infrastructure will be 2.332 million units in the same period, and the increase ratio of vehicles to piles will be 2.6:1.

On the one hand, Energy Chain Smart Electric continues to expand the first-mover advantage of the C-end user entrance. On the other hand, we also start from the B-end, providing one-stop services for asset holders in the charging market, and doing a good job for new market participants. Good all-inclusive service, so as to further expand the high-quality supply of the market.

We believe that China’s charging pile market will become more and more fragmented in the future. City investment, SDIC, Huantou, and commercial real estate asset holders, such as hotel groups and homestay companies, will actively participate in the charging market. However, in such a decentralized market environment, they lack experience in the construction and operation of charging stations, and lack of access to traffic for car owners. In this regard, Energy Chain Smart Power can provide them with a one-stop service for the whole process from site selection planning to purchase of piles and electricity to construction and operation, allowing them to start with zero threshold.

At present, the company has reached in-depth cooperation with large-scale central enterprises in China, Luzhou Energy Investment, State Grid Changzhi Company, etc., aiming to promote the construction and operation of charging stations. At the same time, we also cooperated with Wuhan Huantou to help them operate and manage the public charging piles in Wuhan, which has greatly improved the utilization rate of charging piles and the charging experience of car owners.

According to the company’s strategy, Energy Chain Smart Power is an energy retailer + energy asset operator. In the next step, we will mainly focus on two aspects.

In the direction of energy retailing, Energy Chain Smart Power will further efficiently connect the supply and demand ends of charging services through digital means, expand the service network, and increase the proportion of green energy such as wind power and photovoltaics, as well as non-electric services such as catering and after-car.

In the direction of energy asset operation, provide one-stop all-inclusive services such as site selection, planning, EPC, operation, operation and maintenance for the asset owner of the charging station, reduce costs and increase efficiency for the asset owner with standard and professional services, and expand high-quality products in the market station supply.

To sum up, the value that NAAS provides to the market and industry is to promote the construction specification and service process standardization of new energy facilities, improve the operating efficiency of new energy facilities and the richness of value-added services. At the same time, under the background of dual carbon, we have been actively exploring emerging businesses of energy storage and virtual power plants to increase the supply of green energy. At the same time, we have participated in peak-shaving and valley-filling of large power grids to help improve energy efficiency and reduce carbon emissions.

FT Chinese Network: As China’s largest and the first Chinese charging service company listed on the market, does Energy Chain Smart Electric have a layout or plan for overseas markets?

Wu Xuelu: I believe this is also a question that many people are concerned about. As a NASDAQ-listed company, Energy Chain Smart Electronics must go overseas. The vision of the energy chain is “to enable everyone to use green energy”, and we hope to contribute to global carbon neutrality.

China is one of the most developed markets in the world’s new energy track. Energy Chain Smart Electric already has a first-mover advantage in China, and it is inevitable to go overseas.

At present, we have surveys in the Middle East, Southeast Asia, Europe and other markets. If there is more good news about business progress in the near future, we will definitely share it with the market in time.

(This article only represents the author’s point of view. Responsible editor email: Tao.feng@ftchinese.com)

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