The electrification of domestically produced agricultural machinery still lacks three efforts
There is always a process from quantitative change to qualitative change in things, marked by the arrival of the singularity moment. Recently, BMW announced the official discontinuation of internal combustion engines in Germany and stated that German factories will fully transition to producing electric vehicles in the future. Some have interpreted this event as the arrival of a singularity in the global automotive industry's electrification.
Those familiar with the electric vehicle industry should immediately think of BYD's announcement in April 2022 to completely cease production of fuel vehicles and instead vigorously promote pure electric vehicles. After that, BYD's electric vehicles began to soar, and later remembered that the moment when BYD announced the cessation of production of fuel vehicles should also be a singularity in China's transition between electric and fuel vehicles.Global energy transformation, low-carbon production is a global trend, and more importantly, the low-carbon economy nurtures huge business opportunities. From steam engines and internal combustion engines to electrification, every change in energy methods will create countless business opportunities. Currently, the global automotive industry is undergoing a comprehensive transformation towards electrification, and the singularity has passed. The electrification trend in the global construction machinery industry has become increasingly clear, The speed of electrification in Chinese construction machinery enterprises is significantly faster than in Europe, America, Japan, and South Korea, and BYD in the Chinese construction machinery industry is about to emerge.
If there is no comparability between agricultural machinery and automobiles, the construction machinery industry and agricultural machinery are truly close neighbors. The electrification of construction machinery is significantly faster than that of the agricultural machinery industry, which at least indirectly proves that the electrification of agricultural machinery is feasible. The electrification of agricultural machinery requires three essential factors: timing, location, people, and others. The author believes that the singularity of domestic agricultural machinery electrification will first ignite three fires.
1、 Reference: The Great Action of Electrification in Construction Machinery
From a global perspective, the conceptual stage of electrification has passed, and a "three electric" supply chain and ecosystem based on the electric vehicle industry chain have been established globally. The cost of electric vehicles has also reached a range that users can afford, and electrified products have been widely accepted. The era of global electrification has arrived.
The focus of enterprise electrification is on implementation. BMW has announced the complete cessation of production of internal combustion engines in German factories by 2023, which is a signal that without producing internal combustion engines, BMW will definitely switch to electric vehicles in all respects without exiting the market.
On August 2, 2022, Sany Lithium Energy Co., Ltd. was established, but as early as 2020, Sany Heavy Industry reached a cooperation agreement with battery leader Ningde Times; XCMG has directly laid out its battery business. In October 2023, XCMG Group launched its first power battery, and on November 15th, XCMG's first new energy loader production line was completed and put into operation; Zoomlion Heavy Industry has established a key technology and component industry channel for the new energy development of engineering machinery, covering two key technology chains of lithium-ion and hydrogen fuel, from components to complete machines, hardware to software. It has achieved comprehensive, independent, and controllable development of key component technologies for new energy, and has extended its technological accumulation and advantages to other fields such as agricultural machinery.
The impulse of power batteries, the core resource for controlling electrification in domestic construction machinery, is highly likely inspired by European, American, and Japanese construction machinery companies. In February 2022, John Deere Holdings acquired Austrian battery manufacturer KreiseI Electric, a European company that develops high-density and durable battery modules and packs, as well as fast charging technology; In February 2023, Caterpillar also announced its investment in Lithos Energy battery technology company; On November 10th, Volvo Group announced that it would acquire the Proterra battery business for $210 million; On November 20th, Komatsu announced the acquisition of American battery solutions company ABS to promote industrial electrification.
Among these enterprises, John Deere, Zoomlion Heavy Industries, and XCMG all have business in the agricultural machinery sector, with Deere being the world's leader in agricultural equipment. The electrification resources of construction machinery will definitely benefit their agricultural machinery business and have spillover effects on the entire industry.
2、 The electrification of agricultural machinery is on the verge of large-scale application
For domestic power agricultural machinery enterprises, they are facing unprecedented challenges as a whole - the increasingly fast-paced upgrade of emission standards.
In 20223, with the implementation of the National IV standard, many enterprises cannot keep up with the pace of technology. For example, in the National III stage, the Dongfanghong diesel engine was unable to handle the high-pressure common rail fuel injection technology and had to fully adopt the Bosch pump technology from Germany. If we continue to follow the traditional fossil energy technology route, it will be three years, at the latest, five years. By the implementation of the National V emission standard, a large number of power enterprises will fall behind, At that time, most domestic power products are highly likely to be replaced by multinational giants.
In addition, in terms of power shifting and CVT technology, there is a huge gap between domestic agricultural machinery and multinational companies in Europe and America, which cannot be caught up with in the short term. What is even more frightening is that we have finally caught up on this road. However, when multinational companies in Europe and America switch to electrification or other new tracks, under the new technological route, domestic agricultural machinery is likely to still be in a catching up position. This is the embarrassment currently faced by domestic agricultural machinery, so route selection is very important, Here, we have to ask: will domestic agricultural machinery continue to narrow the gap with Europe and America in power shifting and CVT mechanized products, or will it change to a different track to compare speed?
3、 The singularity of agricultural machinery electrification is coming, we need to burn three fires!
The electrification of agricultural machinery is no longer a matter of whether or not to do it, but how to do it. For domestic agricultural machinery enterprises, they are now racing against time and also competing with competitors. The core of the competition is not strength, but determination and speed of action.
But the electrification of agricultural machinery will not come automatically. If measures, plans, and policies are not appropriate, it may also prevent or delay the pace of domestic agricultural machinery electrification. Therefore, it is essential to burn three fires.
1. Policy Fire: Clear support from subsidy policies and genuine investment in gold and silver
It is necessary to recognize the impact of subsidy policies on the agricultural machinery industry. To some extent, the subsidy policy for the purchase of agricultural machinery is a barometer of the agricultural machinery industry. Enterprises that are supported by policies will actively participate, while those that are not supported by policies will greatly reduce their enthusiasm. As long as the subsidy policy exists for a day, this situation is difficult to change.
Whether traditional agricultural machinery can quickly switch to electric agricultural machinery depends on policy support and intensity. There is a ready-made case in this regard - the subsidy policy for electric agricultural machinery in Shanxi Province.
In 2016, the Shanxi Provincial Government issued the "Implementation Opinions of the General Office of the Shanxi Provincial People's Government on Promoting the Development of Electric Agricultural Machinery", which included electric agricultural machinery awards and subsidies in ten policies to strengthen agriculture, benefit farmers and enrich farmers, and arranged a special fund of 50 million yuan. The subsidy standard for electric agricultural machinery is generally between 50% and 80%. It was the first to carry out pilot work for electric agricultural machinery awards and subsidies nationwide, and 20 counties including Yangqu, Yanggao, and Wuxiang became the first batch of pilot projects.
Under the replenishment, there must be someone actively responding. Of course, six enterprises have produced 71 new electric agricultural machinery products in five major categories, including small electric agricultural machinery in hilly and mountainous areas, orchard electric agricultural machinery, and facility agricultural electric agricultural machinery. As of the end of 2017, Shanxi has established 56 demonstration points for electric agricultural machinery equipment, introduced 425 sets of various types of electric agricultural machinery equipment such as plowing and leveling machinery, seeders, and plant protection machines, and used 49.933 million yuan in subsidies for electric agricultural machinery, Assist 12000 farmers in purchasing 14000 new electric agricultural machinery products.
Shanxi's attempt in the policy of electric agricultural machinery was not a flash in the pan, but rather the pioneer of large-scale subsidies for electric agricultural machinery. From a phased perspective, it was successful, but the subsequent failure to expand the results was directly related to the lack of continuation of subsidy policies.
In short, the subsidy policy for the purchase of agricultural machinery will play a decisive role in the development of domestic electric agricultural machinery. The support of policies, the timing of policy implementation, the level of support, and the direction of policy support are of great significance to the domestic electric agricultural machinery industry.
The singularity of electric agricultural machinery requires the purchase subsidy policy to ignite the first flame - with clear support and genuine investment.
2. The Fire of the prairie: Leading by Large Enterprises and Groups
So, the awkwardness of the current industry is that almost all powerful enterprises are involved in electric agricultural machinery, but globally, there is still no electric agricultural machinery that has truly been put into commercial application (except for China's plant protection unmanned aerial vehicles, among which DJI Technology is a representative enterprise).
To break through the predicament of electric agricultural machinery, companies need to step forward and cheer up. These companies are highly likely to be giants similar to Tesla, as well as traditional fuel vehicle industries such as BYD, BMW, and Volkswagen.
The author predicts that electric vehicles have already built a supply chain and other infrastructure for the electrification of the global equipment manufacturing industry. The "three electricity" resources of the automotive industry can be shared by the construction machinery and agricultural machinery industries. The electrification of the construction machinery industry has not seen a "lone hero" like Tesla. On the contrary, large enterprises are advancing together, and theoretically, the radio electrification of the agricultural machinery industry will be several years behind that of the construction machinery industry, So the electrification of the agricultural machinery industry, which is stepping on the shoulders of the two giants of automobiles and construction machinery, is unlikely to be a lone warrior like Tesla, but will quickly become popular and flourish.
But no matter what, in the initial stage, there must be a company that dares to be the first to eat crabs and has dug the way, so that companies following behind will rush forward.
3. Fire of Technology: Choose the Right Route and Find the Best Application Scenario
The automotive industry ultimately chose pure electricity, and currently, construction machinery companies tend to prefer hybrid oil electric technology. The difference is only between light hybrid and heavy hybrid. The electrification of agricultural machinery requires two important choices: one is the choice of electric technology route, and the other is the choice of application scenarios.
Specifically, different technical routes should be selected for different categories of agricultural machinery or different operating scenarios. For the same type of agricultural machinery, different technical routes should be selected based on different operating scenarios or other factors.
For example, for tractors, according to the current technological level, the optimal technical route for light load operations below 100 horsepower is pure electricity, while for heavy load operations above 150 horsepower, hybrid is suitable.
Electric agricultural machinery must find the best application scenario, which is the key to breaking through. 100 years before Watt, someone invented the steam engine, but it has not been commercially applied mainly because a suitable application scenario was not found. It was not until around 1790 that someone used the steam engine for long-distance coal transportation in coal mines. Firstly, the efficiency of manual coal mining was low, and there was a practical demand for power machines, especially for coal transportation; Secondly, the cost of coal as a fuel source for steam engines is almost negligible; Thirdly, the coal mining industry has abundant profits, and coal mine owners have the ability to purchase expensive machinery.
Electric agricultural machinery mainly needs to find the best application scenarios in order to mature the technology, establish the industrial chain, and rapidly reduce production costs. The successful halo effect will enable more people to follow up and use it, thus forming a virtuous industrial cycle.
Conclusion: In order for anything to succeed, it is necessary to have the conditions of favorable timing, location, and people. None of them are indispensable. The three fires mentioned above are: the first is favorable timing, the second is harmonious people, and the third is favorable location. If all three are met, China's electric agricultural machinery innovation will be just around the corner.
