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Recently, KSD, a joint venture of Shenzhen DEREN Electronics Co., Ltd., as the core supplier of Volvo, was invited to participate in the core supplier forum held by Volvo in Sanya, Hainan with the theme of "Work with one heart and move forward with Volvo". In this forum, Volvo released its brand-new strategy of electrification transformation in the future, which defined the future development direction for the whole supply chain.
Volvo's Global Strategy of Accelerating Electrification Transformation and Leading Luxury Brand Pure Electricity Market
Through this supplier forum, Volvo clearly conveyed its future development strategy and its own values, that is, "sustainability is as important as safety". As for safety, it goes without saying that Volvo has deeply rooted the concept of "Volvo equals safety" in the hearts of every consumer through years of deep cultivation in the field of safety. For sustainability, Volvo also showed a clear strategic plan in this conference:
l By 2025, it will be fully electrified, with 50% BEV (pure electric vehicle) +50% PHEV (plug-in hybrid vehicle)
l By 2030, it will be transformed into a pure electric luxury car enterprise
l By 2040, achieve comprehensive climate neutrality
Volvo does not equate "sustainability" with "electrification", but is committed to reducing the direct and indirect emissions of enterprises in an all-round way, so it will more actively respond to the carbon dioxide generated in the supply chain and operation links, and earnestly implement the circular economy strategy. Volvo, with its own practical actions, practices the ambition of developing and environmental protection peers.
Competitive Advantage of KSD as the Core Supplier of Volvo Cars
Volvo's electrification transformation will not only lead the market orientation of the whole luxury car brand, but also bring new business development opportunities for KSD.
KSD (hereinafter referred to as KSD) is a joint venture established by DEREN Electronics and Kroschu Company of Germany. Since its establishment in 2012, it has rapidly realized business cooperation with FAW-Volkswagen, Beijing Benz, Volvo and other first-line OEMs at home and abroad, among which Volvo Cars has developed the fastest. In 2020, KSD won the wiring harness business of Volvo related models, and then won the high-voltage wiring harness business of Volvo new energy vehicles, and was recognized by Volvo Cars as an excellent supplier in 2020 and 2021. It can be said that the business cooperation between KSD and Volvo has achieved a double harvest in market and word of mouth. The rapid development of business undoubtedly depends on KSD's own competitive advantage.
The Chinese shareholder of KSD is Shenzhen DEREN Electronics Co., Ltd.. Since its establishment in 1989, it has been deeply involved in the fields of automotive electronics and household electronics for more than 30 years. Especially in the field of automotive electronics, it has accumulated profound technical strength and good customer base, and maintained long-term business contacts with Geely Group and Volvo Cars. Based on the good strategic partnership between the two parties, KSD was able to successfully enter Volvo's supplier system, and quickly achieved a series of new business breakthroughs after that.
Kroschu, the German shareholder of KSD, is a well-known wiring harness design and manufacturing enterprise established for more than 120 years. In its development course of more than 100 years, it has won high recognition from famous automaker customers such as BBA, and gradually developed a unique wiring harness manufacturing system-Krosy. KSD implements 100% production and operation system consistent with European standards, perfectly realizes high-efficiency lean production and error prevention and correction in the process, and further strengthens the flexibility of manufacturing, thus ensuring product quality and responding quickly and flexibly to various requirements of domestic customers, which has won unanimous recognition and praise from customers.
KSD can not only manufacture automotive wiring harness to a high standard, but also design and development capability is our core advantage. KSD currently has 137 developers, Have the ability of the whole development process of wiring harness products from principle development to 3D/2D to later change and maintenance, and have experience in developing products for core models of Volkswagen, Mercedes-Benz, Volvo and other main engine factories, including many popular models of traditional fuel vehicles, as well as new energy vehicles that they make every effort to adapt to market changes. Facing the future new energy vehicle market, customers no longer only need a supplier who only produces and processes, but look forward to working together as partners who can jointly develop and incubate new models. KSD's advantages in design and development will help itself achieve further business growth, and will also help the OEM to complete the electrification transformation and layout more quickly.
Since 2019, affected by the epidemic, China's automobile market is facing severe challenges, but KSD developed its Tianjin factory against the trend in 2021. In 2022, KSD will once again make efforts to build a Chengdu factory, which is less than 3KM away from Volvo Chengdu base and will become the core production base for KSD to serve Volvo customers in the future. In line with the customer strategy, the completion of KSD Chengdu Plant will not only greatly shorten the supply distance and reduce process emissions, but also fully introduce Three Gorges Hydropower to achieve 100% clean energy. KSD will rely on the brand-new Chengdu factory to provide customers with the best quality products and services in a more flexible, faster and more environmentally friendly way.
Discussion on the future market prospect of new energy automotive wiring harness
At present, not only Volvo, but also the whole new energy vehicle market is a blue ocean. Among them, not only Tesla, "NIO-XPEV-LI" and other emerging forces emerged, but also established car companies such as Volkswagen and BYD continued to exert their strength. This not only brings a brand-new automobile consumption revolution to end consumers, but also brings new opportunities to the whole industrial chain. Among them, as the core components of the electrical system, wiring harness products and related suppliers can be described as "a vast world with great achievements".
At present, the electric motor is completely innovating the traditional internal combustion engine. The core of new energy vehicles is the three-power system, and the transmission of energy and signals by these three-power systems depends on wiring harnesses. Among them, such as high-voltage wire, battery wire and other wire harness, the product quality of wire harness put forward a higher level of requirements. The full automation of the production process, the electrical performance test of shielded wires and other process details are all raising a new threshold for the traditional low value-added manufacturing industry of "wire harness". Faced with these new requirements, suppliers with weak technical strength and slow upgrading and transformation will be gradually eliminated, whereas suppliers with strong strength will enjoy more opportunities for growth.
While the power source is electrified, the reason why new energy vehicles are quickly and widely recognized is that consumers' demand for "intelligence" is increasing day by day. Ten years ago, the angle of car seats had to be adjusted manually, but today's new energy vehicles can fully realize convenient functions such as automatic assisted driving, multimedia entertainment of car networking, NFC unlocking, etc., and the usability has undergone earth-shaking changes. Behind every electrical function, there is a wiring harness loop that is a hero behind the scenes. In the future new energy automotive wiring harness, the structure will be more complex, the functions will be richer, and the product price will be further increased. And these are all new opportunities for us.
DEREN Electronics has been deeply involved in automotive electronics for many years. In the field of electronic and electrical systems, In addition to the KSD team mentioned above, which supplies first-line luxury brands including Mercedes-Benz, Audi and Volvo, there are also many business units including DEREN Auto Parts, ZOB and Boladi, which provide full value stream services from early development to later manufacturing for domestic customers such as FAW-Volkswagen and other mainstream joint venture brands and independent brands. We firmly believe that the market of new energy automotive wiring harness will further expand. DEREN Electronics will further strengthen its strategic cooperation with major customers by virtue of its more comprehensive market coverage and its concept of "high-quality development", and realize the overall improvement from orders to profits.
2021 is the "first year" of China's new energy vehicle market. The sales volume of new energy passenger cars in China reached 2.99 million, up 169% year-on-year, and the penetration rate reached 14.8%. Compared with the penetration rate of 5.8% in 2020, it has increased by 2.5 times. China's penetration rate of new energy vehicles will reach 20% by 2025, which is likely to be completed ahead of schedule in 2022. With the national macro strategy of carbon peaking and carbon neutralization, and the increasing demand of consumers for intelligence, new energy vehicles and new energy automotive wiring harness will continue to maintain the momentum of rapid growth.
Opportunities are always reserved for those who are prepared! We have reason to believe that with the rapid development of the new energy vehicle market, DEREN Electronics will further broaden the breadth of product layout, strengthen the depth of cooperation with customers at home and abroad, and help the OEM to innovate and achieve high-quality development.
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