• time;2024-09-24 15:59:30

In recent years, with the gradual increase in global attention to new energy and green low-carbon fields, China's exports of "new three types" products such as new energy vehicles, lithium-ion batteries, and photovoltaic products will exceed one trillion yuan in 2023, an increase of nearly 30%.

The new energy vehicles, which have shown particularly outstanding performance in the "new three types", have gone from the era of "market for technology" in the past to the continuous improvement of their international market position. Last year, BYD surpassed German brands such as BMW with its new energy vehicles, entering the top ten global automotive companies for the first time in terms of sales. This is also the first time in 70 years of Chinese automotive industry development that a Chinese brand has entered the top ten of the world rankings. More and more new energy product brands made in China are going abroad, becoming the "new engine" for China's high-quality economic development and providing "new momentum" for green and low-carbon development in countries around the world.

Nowadays, the rise of new energy vehicles has become a vivid example of the transition from electric to fuel driven kinetic energy conversion. In the current global consensus on low-carbon development, this wave of kinetic energy replacement is gradually overflowing to more fields. Among them, outdoor power equipment (OPE) is also undergoing a transition from fuel driven to electric driven, which is similar to the development trajectory of new energy vehicles.

01 "Oil to Electricity" Effect Spillover

An annual market space of $40 billion is waiting to be released

The Outdoor Power Equipment Industry (OPE) refers to all industries that design, manufacture, sell, and serve power tools and machinery for outdoor activities, maintenance, and entertainment. It includes lawn and garden equipment (lawn mowers, lawnmowers, leaf blowers, etc.), forestry equipment (chainsaws, loggers, etc.), and cleaning equipment (high-pressure cleaners, etc.), with a wide range of usage scenarios. According to Global Market Insights data, the global landscape machinery market is in a stable growth stage, with an expected market size of over 45 billion US dollars by 2025 and a CAGR of nearly 7.0%.

In Europe and America, OPE, especially lawn mowers, can be said to be a must-have product for family life, with strong demand. This is mainly due to the unique horticultural culture of Europeans and Americans, the vast lawn planting area, and environmental policies that restrict the sales and use of fuel powered equipment. The strong demand for lawn and garden maintenance has also driven the development of garden tools represented by lawn mowers.

Europe and America, as the main regional markets, naturally become the main battlefield of industry competition. Taking the North American market as an example, as early as 1948, nearly 600 companies in the United States shifted from the production of motorcycles, bicycles, and small agricultural machinery to the production of lawn mowers. The production of lawn mowers in the United States surged from 1.16 million units in 1951 to 7 million units in 1974, and although the market approached saturation, the average annual production remained stable between 5 million and 6 million units.

This is very similar to the situation in the early automotive industry: European and American countries, relying on their first mover advantage, "monopolized" the market for decades. But Chinese companies have taken advantage of the advantages of the new energy industry chain and achieved a new way of overtaking in the already "mature" European and American OPE markets, namely OPE product lithium electrification.

According to TraQline statistics, the market share of new energy garden machinery in the outdoor power equipment (OPE) field (excluding mount products) in North America has increased from 13% in 2010 to 36% in 2021. It is expected that by 2025, the lithium-ion OPE market size will reach 5.6 billion US dollars, and the market penetration rate will reach 17.3%.

02 days, favorable timing, location, and people

OPE lithium electrification is timely

In the context of the current energy structure transformation, the potential of the new energy market is enormous. Just as when the Internet flourished, someone put forward that "all industries are worth doing again with the Internet". Similarly, in the field of new energy, it can be said that "all power industries are expected to be replaced by new energy in the future

So, why OPE?

Firstly, the catalysis of various policies has brought "timing" for the OPE industry to quickly achieve comprehensive lithium electrification.

It is reported that California issued a fuel ban last year, requiring newly sold small engine products such as blowers, lawn mowers, chainsaws, and high-pressure cleaners to achieve zero emissions starting from January 1, 2024. This means that both retailers and distributors in the region can only purchase OPE equipment powered by lithium batteries for sale.

In addition, the State Council recently issued the "Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Trade in", which systematically deployed four major actions including equipment renewal. As an important component of China's manufacturing industry, equipment updates and upgrades are moving towards high-end, intelligent, and green directions. In this context, lithium-ion OPE equipment, as an important carrier for the development of new energy power, has increasingly highlighted its advantages in replacing traditional fuel products.

Secondly, China has accumulated rich experience in "oil to electricity" conversion and a complete industrial chain advantage in the new energy vehicle industry, which is called "geographical advantage".

Once again, the technology of using lithium batteries in OPE products has become relatively mature, with basic performance comparable to household fuel products, and even possessing advantages such as light weight, maintenance free, low noise, low vibration, and greater intelligence. At the same time, the current lithium-ion battery OPE has basically achieved parity with the same fuel OPE, and the cost of the entire life cycle is lower, which is called "harmony between people".

Overall, with the vigorous development of China's new energy industry, green energy is replacing traditional energy at an unprecedented speed, leading a profound transformation of the energy structure. The industry that relied on traditional energy in the past is standing at the forefront of comprehensive reform, while the outdoor power equipment (OPE) industry, with the support of policies, huge market potential, and the convenience of technological substitution, is expected to lead a new wave of energy revolution and become a new industry leader.

Article source: Reprinted from Securities Times website