The lead-acid battery price war is starting

Speaking of the term "price war", in fact, people are not unfamiliar, especially in China from the planned economy to the market economy in the transition of these 20 years, "price war" voice from time to time in the ear. Today, I want to talk about a market segment of China's manufacturing industry -- the market of lead-acid batteries for electric bicycles. In recent years, the phrase "lead-acid battery" has repeatedly appeared in the media, and again frequently because of the "price war". As a result, the lead-acid battery market for electric bicycles has rapidly become one of the most important battlefields in China's manufacturing industry. What will happen to the lead battery industry?

In a normal market economy, the "price" often reflects the "value" attached to the commodity. And when the price becomes a "weapon" of market competition, each subject in the market will more or less become the victim of this "war".

In baidu baike, "price war" is interpreted as "a kind of commercial competition between enterprises by competing to lower the market price of commodities", with the purpose to suppress competitors, occupy more market share and digest inventory. And the market basis that forms this kind of competition, it is the high homogenization of the product. This is actually the electric bicycle with lead-acid battery industry a big pain point.

The e-bike is undoubtedly one of the most basic inventions of the last century. It is because of its appearance, because of the vast territory, inadequate transportation facilities caused by the Chinese people travel problems, to a large extent to alleviate. The lead-acid battery with its stable performance, low price, strong energy, safe and reliable advantages, once accompanied by China's electric bicycle industry to achieve a leap forward development.

For large electric bicycle market and domestic electric bicycle products relatively simple structure and craft, nearly 20 years, the market reflect many hard to count electric bicycle brand, born electric bikes in the lead-acid battery enterprise, in addition to the normal big companies, all kinds of unknown small workshops blossoming reduced after regulation (industry). But behind the prosperity of the industry, it is the electric bicycle with lead acid battery product homogenization degree is serious, the product added value is very low, the market sales of lead acid battery products in addition to very few varieties, almost no difference. Many consumers do not know how to choose which battery, in the end the damage to consumers and the industry itself.

When a market is big enough, anyone can have a piece of the pie. However, in recent years, with the development of new energy vehicles, the emergence of the concept of Shared travel, as well as the gradual improvement of public transport network, people's travel options are increasingly diversified, e-bike is no longer the primary choice for Chinese people to travel; At the same time, with the improvement of consumption level, people's demand for battery life, weight and environmental protection is increasingly demanding. Lithium battery starts to shine "enter" due to its falling cost, and lead-acid battery is no longer the only choice for electric bicycle power.

The contraction of the application market makes lead-acid battery manufacturers "very uncomfortable" but "very helpless". The simple process and low technology level that once enabled enterprises to quickly put into production and occupy the market have become the "stumbling block" that hinders enterprises from dividing the market. The low added value of battery products and the lack of innovative technology in the industry are also destined to grab the market, and the price seems to be the only weapon that enterprises can choose.

Some materials show that since 2012, almost every 1-2 years, there will be a "price war" of lead-acid batteries for electric bicycles in the media. The main reasons for each round of "price war" are different, but they are the following:

1. Grab the market. The market of an industry is finite, the development dimensions of industry enterprise also is finite.

When more people participate in the "cake", everyone's share of the "cake" will inevitably be reduced. However, the product structure of lead-acid battery enterprises of e-bikes is exactly the same, with low added value of technology, lack of innovation and product differentiation. In order to seize the market, we can only rely on "price war".

Some analysts have pointed out that the recent "intensified" price war, which has the taste of market competition, but also to suppress competitors. In the field of lead batteries for electric bicycles, "cash is king", the capital can be quickly collected through the low price strategy to obtain a large market with a small loss. Still, it's a bargain.

2. Cost effective. The scale economy brings about the reduction of industry costs, and the decrease of costs will naturally lead to the decrease of prices. For enterprises with cost advantages, the "price war" is actually the embodiment of their prominent advantages.

3. Overcapacity. This seems to be the electric bicycle lead-acid battery industry "cliche." Once the fully developed market is added with new input, it will inevitably lead to overcapacity, while the capacity of the lead battery industry of electric bicycles has been almost saturated since the peak of the industry. Once the excess production capacity, inventory backlog, it will form a new round of "price war".

"The price war has been going on and the most fundamental reason is still overcapacity," posted a netizen who identified himself as the head of the production base of a leading battery company. "Before, when battery prices were going up and up and up, it was so easy to make money, so we expanded and we expanded, and then we found out there was excess capacity, and we kept fighting a price war to take over the market, and we kept going down and down.

The global electric bicycle battery market is almost all concentrated in China, and the environmental protection campaign will eliminate the capacity of illegal enterprises. In order to make up for this gap, large enterprises begin to expand the capacity, which can only be absorbed through the "price war". And "price war" also became the "expedite agent" of industry shuffle from this.

4. Production costs are rising. Commodity prices, in addition to being driven by application markets, are partly about politics. In recent years, the price of raw material lead has been in a volatile decline due to the impact of international unrest, domestic environmental protection and application market changes, and the cost of raw material for battery manufacturers has been reduced. However domestic more and more strict environmental protection policies, make enterprise in pollution control aspects of environmental protection investment increasing, at the same time, manpower and material resources, and other costs are rising year by year, and lead battery consumption tax collection, etc., accumulate these factors, cause the battery manufacturing enterprises overall costs rise, profits dropped accordingly. In order to gain more profit space, some enterprises often adopt the "price war", which is to obtain profits and withdraw funds in a short time by selling at a low price.

The "price war" between two industry giants, namely super power and tianneng, will directly affect the "where to go" of the whole industry of lead batteries for electric bicycles.

Except for large enterprises with cost advantage, small enterprises lacking competitive advantage will be eliminated in the price war. In the "price war" caused by other reasons, there are few winners.

In the "price war" in the lead-acid battery industry of electric bicycles, the dealers located in the channel are the first to suffer. In the lead-acid battery industry of electric bicycles, the mode of "payment first and settlement later" is usually implemented. The "price war" makes dealers pay higher and higher additional sales costs in order to collect payment, which is often "unbearable" for dealers in the end. Some netizens claimed that in the "price war" in 2015, some dealers once said: "seckill! To give back to new and old customers at a loss to send benefits! XXX series (battery) to the old for new price, do not 299, do not 199, as long as 149 yuan, grab is to earn, the number is limited, to end! This kind of advertisement content, also can imagine from this at that time "price war" miserable degree.

But in recent months, the lead-acid battery industry's "price war" once again, seems to be getting worse, which is not surprising.

After market research, the author found that the price of lead battery for 48V12Ah electric bicycle decreased from 390 yuan in 2017 to 340 yuan at the beginning of 2018, and now it has dropped to 280 yuan, a decrease of 28 yuan. 2%; The 48V20Ah battery, which went from 600 yuan in 2017 to 540 yuan in early 2018, has dropped below 480 yuan, a drop of 20 percent. The drop was so large and so fast that dealers who had stocked up were forced to sell at a loss and were "afraid to hold on" to subsequent sales. It follows that this round of "price wars" has been no less bloody than previous ones.

When the "price war" becomes a normal market situation, the "price mechanism" that should stimulate the normal development of the market completely fails, and vicious competition runs rampant in the market, which will also lead to the ecological destruction of the entire industry and the loss of the "soil" for the healthy development of the industry. Some industry insiders pointed out that the lead-acid battery "price war" broke out in previous years. If the industry leader did not raise the price voluntarily later, the battery and electric bicycle industry could suffer a devastating blow.

The consumers who seem to benefit from the "price war" are actually the victims of the "price war". Low price competition often leads to some products shoddy, and frequent changes of sales price, also let consumers to the brand and product lost of trust, especially in the context of the current travel alternative products emerge in endlessly, "price war" is likely to let the consumer give up electric bicycle slowly, resulting in the industry gradually shrink of the market.

As a product of the market, "price war" has its inevitability and rationality. However, in the lead-acid battery industry of electric bicycles, the "price war" seems to have lost its "regulating ability" and become the "black hand" that pulls the industry into the vicious competitive mire. Electric bicycle lead battery price war has been repeatedly industry experts, business leaders, dealers, and even consumers criticized, then how to solve this industry "stubborn disease"?

First of all, leading enterprises in the industry should not set off a "price war" maliciously. They should respect the law of market development and eliminate backward small enterprises by means of "survival of the fittest" to purify the industry.

Secondly, enterprises in the industry should constantly intensify technological innovation, product research and development, and product added value, improve product differentiation, and resist the risk of "price war". For example, by differentiating products and technologies, the company can enter target market segments and sort out its core competitiveness. Implement differentiated operation to attract consumers and win the market through its own products, services and other characteristics; Improve service quality and create value for consumers through high-quality service... Differentiated competition can create more new markets and make enterprises more competitive.

At the same time, the industry enterprises can initiate the establishment of industry price strategic alliance, through the price constraint mechanism that is widely recognized by the alliance enterprises, restrict product pricing and resist the unhealthy and even malicious "price war" in the industry.

To protect the interests of consumers, protect the rights and interests of middlemen, and protect the healthy development of the industry is not only the responsibility and obligation of leading enterprises of lead batteries for electric bicycles, but also the common responsibility of many enterprises in the industry. In the "price war" increasingly fierce today, the whole industry should join hands to maintain the fair order of the market of electric bicycle lead battery, in order to promote the healthy development of electric bicycle lead battery industry.

The page contains the contents of the machine translation.