G7 price limit Russian crude oil? Imported cars usher in the "forbidden area" market

author: SUNPRO POWER Marketing

2022-07-07

In these two days, with the rising temperature, the sound of insects has gradually increased. The sound of mosquitoes flapping their wings can be heard in the ear, which also makes people realize that the hot summer is coming. Today is the small heat of China's 24 solar terms, which means the beginning of summer heat, and reminds people in the northern hemisphere to pay attention to heatstroke prevention.

The hot weather will inevitably make people irritable, but a statement last week cooled many hearts. Because this may cause the oil price to hit another record high, reaching $380 per ton!

G7 limited purchase of half price Russian oil

At the just concluded G7 summit, I believe many people have seen the joint statement issued by the G7, which mentioned the need to gradually eliminate dependence on Russian energy, and discussed restrictions on the purchase of Russian crude oil and customized price thresholds.

According to Kyodo news agency. The Japanese Prime Minister delivered a speech in Tokyo on the 3rd of this month. The G7 said that it would not allow domestic purchases of Russian crude oil that exceeded half of the current oil price in order to reduce Russia's foreign exchange revenue, support the stability of the global energy market and reduce its impact on the economy. He also highlighted low - and middle-income countries.

Pessimistic expectation of the market

Ironically, contrary to political goals, the market expects that this move may lead to another rise in oil prices. Analysts at JPMorgan Chase said this could lead to a reduction in supply in Russia to counterattack. Will make crude oil prices rise to a record high, is expected to reach $380 per ton! Even higher than this price.

North European bank conservatively predicted that Brent crude oil could rise to $200 if Russia reduced its daily supply by 2million barrels. This is undoubtedly a disaster for the low - and middle-income countries mentioned above.

Demand for energy transformation in Japan

Since the beginning of the year, the rise in oil prices seems to have become a normal state. When you refuel at a gas station, you can often hear "full up".

In 2021, Japan announced a ban on the sale of fuel vehicles after 2035

However, for Japan, it does not seem to care about the impact of rising oil prices, but to respond to the needs of domestic energy transformation. The typical phenomenon is that because it is significantly different from other cars, the Japanese young generation began to buy Tesla as a fashion. This is an incredible thing in Japan, which is known as the "forbidden area for imported cars".

Pure electric makes imported brands return to the Japanese market

In Japan, local auto brands account for more than 90% of the market share, and people prefer to choose local brands. Some traditional international brands withdrew from the market in the competition many years ago. However, recently, due to global energy problems, the demand for energy transformation has been increasing. It also ushered in the transformation period of new energy in Japan's automobile market.

It is a good opportunity for international brands to return to the market. After 12 years of withdrawal from the Japanese market, Hyundai is ready to re-enter the Japanese market with pure electric vehicles and fuel cell vehicles. Hyundai Motor plans to pre sell the electric vehicle IONIQ 5 and the hydrogen energy vehicle NEXO in Japan from May this year, and deliver them successively from July.

Hyundai IONIQ 5

The dilemma of energy transformation of Japanese car enterprises

The technological revolution of global new energy vehicles has given Japan a deep accumulation and leading edge in the field of hybrid power, but the pace of pure electric power has been slow. This has also led to more opportunities for imported brands to return to the market by using pure electric vehicles.

According to Nihon Keizai Shimbun, the global sales of pure electric vehicles reached 4.6 million in 2021, up 2.2 times that of 2020, surpassing the hybrid vehicles that Japanese car companies are better at for the first time. This worries well-known car companies such as Toyota and Honda, which may affect their market share in the future.

Carbon emission data statistics of world famous automobile enterprises

(Source: IHS Markit)

Cost reduction of pure electric vehicles

In fact, the "pure electric" dilemma of Japanese car companies is mainly caused by the energy structure. At present, the Japanese government still prefers hybrid vehicles in the electrification strategy.

The main reason is that the energy for power generation mainly depends on coal and natural gas, and the energy consumption price of pure electric vehicles is more expensive.

Before using more renewable energy power, Japan tried to take the overall improvement of fuel economy as the goal and try a phased strategy, that is, hybrid electric vehicles gradually replace old vehicles, and then gradually replace them with pure electric vehicles.

Toyota electrification strategic objectives

If Japan can purchase a lower cost energy portfolio like Europe, it will speed up the reduction of energy costs, thus providing better market conditions for pure electric vehicles.

Of course, for countries and regions such as Japan, which are seriously short of natural resources and land, it is obvious that there are few alternative energy options, but not none.

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Looking at global energy policies, countries are gradually abandoning traditional high polluting energy, and relevant policies all point to the peak carbon emissions target of 2050. Many countries have made it clear that fuel vehicles will stop selling after 2035, and fuel energy will further reduce market share in the future.

The G7 oil price limit is also inevitable from the perspective of carbon emissions. With the marketization of renewable energy such as photovoltaic, the use cost of energy will gradually stabilize. Entering now may allow enterprises to explore new markets in advance.

Thanks for watching!