Good morning, Mr. Tan. I have a question for you. Can you please give us a specific answer when you are going to get retired?
Why are you so concerned about my retirement time? I can tell you now specifically that the party committee and the government have already asked me to go on serving the business. Currently, I have not considered about retirement yet. Personally, I am very happy to go on serving the business and keep creating value to our shareholders. Thank you for your question.
Thank you for your question. Next question is from Chen Zhenhao, CICC. Thank you.
Good morning, Mr. Tan. I am Chen Zhenhao. I have a question for you. I saw now that you provided the QA forecast, and you also provided your annual performance for 2020, as well as your forecast for the first quarter. Can you please share with us about more details? Thank you.
Last night, we provided our 2020 annual result and the first quarter report, the forecast, to all our shareholders. In 2020, our net profit eligible to shareholders is CNY 9.2 billion, increased by 1 percentage than 2019. As you all know that Weichai Power is an international multinational group, and we have a lot of our business in the overseas markets, which generated about 30%-40% of our total revenue. A lot of our business are in Europe and America. Because of the pandemic, all our overseas business witnessed a drop in the sales revenue, and the profit also dropped a lot. However, the business operations were very well, and there has no loss yet. This means about CNY 800 million- CNY 1 billion profit.
If you look at it this way, our actual growth actually is higher than 2019 by two digits. That is to say, 15%. I have to emphasize that in the domestic market, our profit compared with 2019, also increased by 25%. I hope that our investors have to understand our reports systematically. Thank you for your question.
Thank you. Thank you, management.
Thank you, management. Next question is from Gao Deng, Changjiang Securities. Thank you.
Good morning, Mr. Tan. I am Gao Deng from Changjiang Securities. My question is about the carbon peak. What kind of impact will there be to Weichai Power, and what deployments have you made? Thank you.
Thank you for your questions. The carbon peak is a commitment made by Chinese government to the world. And being a business, there's no way for us to bargain with the government. Particularly, you know that Weichai Power is a leading business in the diesel motor and diesel engine industry. We have to fulfill our responsibilities to society, and we must have this spirit. And actually, we are forced. We have to keep improving our carbon elimination technologies and upgrading. While we hit this target of carbon peak, this will definitely generate great influence to how we improve our business and how to develop core technologies. Currently, we are still a leader in terms of technology in the industry. Be it the conventional energy, we have already started getting closer and closer to the top players in the world.
We have already deployed on the fuel cells, the hybrid power, the pure electric power, so on and so forth. Different technology paths are moving forward systematically. Be it conventional energy or new energy, it all up to who is going to pay the bill or whether the customers are going to pay the bill or not. We think that we have to prepare ourselves well by adopting different technology paths so that we can have the capability to adapt to the changes in the market. Before 2025, our target is to set up the capacity of production and sales of 2 million units of diesel motors, particularly in the heavy-duty commercial vehicle area, plus the China heavy-duty motor.
Our market share is already 50%. Through the measures in energy conservation and carbon emission reduction, particularly after the National VI standard being implemented, we introduced advanced technology to our business and formed our own controllable self-technology advantage, so that we can always keep the core technologies in our hands, in Chinese hands. For us, we have already seen a competitive advantage in the industry. We know that last year, the imported brands counted less than half, and we have already built up the capability to marching closer to the top player in the world. Thank you for your question.
Thank you, management.
Thank you, management. Next question is from Li Tianrun , Credit Suisse.
Good morning, management. My question is about new technology. Last year, you launched a heavy-duty diesel engine, reaching about 50% of heat efficiency, which aroused a lot of people's attention. Can you please explain it to us, what kind of value will this new technology bring to the company and to relevant business sectors? Thank you.
As you know that we launched the first heat energy 50.25% of a motor engine in the world. It was the first in the world, and it was recognized as a first breakthrough by the industrial associations in the world, and it is ready for commercialization. I put it in this way, if it is the 49 ton of a heavy-duty vehicle, if it runs for 100,000 km, then it can save about CNY 1,500 of oil consumption. If this truck runs about 300,000 km, then it can save about CNY 40,000- CNY 50,000. If this truck is in use for six years, then, all the savings will be enough to buy a new truck. This will be a great value to our customers. This will be the major direction of this technology with high returns. We cannot compete with the low value. We have to compete with high value.
Thank you very much for your question.
Thank you very much, management. Next question is from Chen Linzan from Southern Fund. Thank you.
Good morning, Mr. Tan. We have noticed that in Weichai Power, in your equipment manufacturing, your R&D investment is very high. Can you please share with us, with so high investment in R&D, what will be the influence to the value creation to the shareholders? Thank you.
As we all know that Weichai Power is one of the leading manufacturers in China in terms of equipment manufacturing. We have been investing in R&D for many years, and the investment has been very heavy. In 2020, our R&D investment was 4.22%. Actually, this is an average figure. If, say, talk about the engine or the motor, it is 6%. It is true that our R&D investment has been very, very high or one of the most high investments among the peers. Your question is a very good question because many shareholders have told us that, "Well, you have invested so much money in the R&D, so will it influence our returns?" I do not think it will influence our value creation to our shareholders, but rather, we will be able to keep creating value to our shareholders.
This has been a very important condition that Weichai Power has been able to keep improving our business year after year. On the 24th of May 2019, Premier Li Keqiang visited Weichai Power. I also made a proposal to Premier Li about the fees, for example, with a reduction of 75%-100%. You may have already noticed that this proposal has been adopted by the government into Premier Li's government's working report. This will definitely help enhancing our R&D and innovation capability in China. If you look at our 10 years of development, it is because of the heavy investment in R&D that we were able to develop so many technologies and the products in different stages, along with the changes of government policies and regulations, as well as the changes in customers' demands.
We are always ready to introduce new products and the technologies to the market so that we can realize a stable, healthy, continuous growth. These are the benefits of investments in R&D. In the future, our investment in R&D will not reduce. Meanwhile, while we investing more capital into R&D, our profit has been improving steadily all these years, and there has been no fluctuations in the past. Thank you for your question.
Thank you.
Thank you, management. Next question is from Wen Kang, Tianfeng Securities. Thank you.
Good morning, management. I am Wen Kang from Tianfeng Securities. I have a question for Mr. Yuan Hongming. We noticed that your market share dropped slightly in 2020. Just want to know what is the reason and what is target for 2021. Thank you.
Thank you. So, very good questions, and this question is exactly what we have been thinking about. In 2020, our overall market share dropped. I think we have to look at what are the reasons from inside. In 2020, we realized about 15% of our growth YoY, it is a little bit more than 15%. Our net profit, we also realized CNY 1.5 billion. Even though there has been increases, however, if you look at the whole industry, we are still faced with some major challenges. Specifically, number one, what is the adaptability of our products to the market? In 2020, it seems that something was not good enough in terms of adaptability of our products to the market. This is a major issue that we are facing with. That is why in the second half this year, we have to resolve this issue.
The second reason is that our capacity is not sufficient enough. Actually, during the peak season or the busy season, our production capacity was not sufficient enough to support the demands in the market. This is the second reason. The third reason is that it is true, we were impacted by the pandemic last year. In this industry, I should say that we are one of the players in the market that are heavily invested by the pandemic, because we have a lot of components and supplies. A lot of them are from Hubei. That is why these are the third reason. So, t hree reasons, but of course, if you combine these three reasons together, even though we realized the growth, but our market share still dropped. This is the first point I want to make. The second question, our target for this year is 200,000 units.
We hope that we can increase our market share this year. That is why we set two goals. The first one is about 200,000 units this year, which stands for above 10% of growth. The second goal is about market share. We hope to realize 15% of our market share. This will stand for a very big increase in our market share. Through our operations performance in the first quarter, so far, it is very good. In the first quarter, compared with the first quarter last year, we have already grown a lot. However, compared with the first quarter in 2019, basically, we realized about over 50% of our growth already. This is the current situation. Thank you for your question.
Thank you, management. Next question is from Lin Tzu-Hsuan from Huatai Securities.
Good morning, management. I am Lin Tzu-Hsuan from Huatai Securities. I have a question for Mr. Yan Jianbo. Can you please tell us, foreign companies like ZF Friedrichshafen, they started selling AMT their gearboxes. How to deal with this competitor? Thank you.
Thank you for your question. Under the leadership of Mr. Tan, we have been growing our business by focusing on our key business and building a good operations environment by improving our competitiveness. We have already received very high recognition from our customers. In 2020, we raised our sales by 14%. Our net profit increased by 11%. In the first quarter, if you look at the market, we have been continuous with our leadership in the market. We are a leader. As for the AMT products, after multi years of iteration and development, our major products of AMT as for the commercial vehicles, including the heavy-duty truck, the medium-sized truck, and the light car, o ur product is very competitive. The transmission rate is 99.8%, with a life cycle of 500,000 km of a long cycle turnover of fuel.
So, we were able to resist the competition pressure from the overseas players. Our advantage is that we have a very good price-performance ratio, we have a very good local network, and we are good at serving local customers with the local production. Meanwhile, we have synergy from different members in the group. Our goal is to make sure that our products are affordable and the customers can use them well, so that we can create a greater value to our customers by delivering more comfortable passenger vehicles and good services through the automatic gearboxes. Lastly, currently, our production capacity of AMT products is already 60,000 units. Our goal for this year in sales is about 50,000- 60,000 units. At the end of the year, our capacity will be up to 200,000 units altogether.
We will be able to satisfy all the needs from our customers. The performance in the first quarter is very good. From January to February, our sales already exceeded the data for last year. Therefore, you can see our sales has created another new high in the first quarter. Thank you for your question.
Thank you, management. Next question is from Liu Yawei from Jinglin Securities. Thank you.
Mr. Tan and management, good morning. I am Liu Yawei from Jinglin Securities. I have a question for you. You just announced that you are going to invest in the air compressor. It is about the hydro cell. Can you please share with us more about this strategy? Thank you.
Thank you for your question. Weichai Power has been dedicated in developing the hydro energy powered city, hydro energy powered society, as well as the fuel and diesel, and the engines. These are our deployment. Our goal is not for the sake of profit-making, but for sustainability. For the air compressor, it is the fuel cell. Actually, it is the core component in the fuel cell. Actually, it is just as a lung to a human being. It is a lung to the fuel cell. FISCHER Spindle Group has over 100 years of history. It is also an SME technology. Its air axis and the turbine technology is leading ahead of others in the international market. It is irreplaceable and we have been communicating with them over three years.
By grasping these key technologies, we will be able to realize the big growth in the air compressor, as well as the production cost. Currently, the price for the hydrogen energy powered engine, i n 2019, it was CNY 15,000/kW , and now, it is CNY 5,000/kW in 2020. I believe that before 2025, it will be about CNY 1,500/kW , which is possible. Therefore, for the hydro energy powered fuel cell, the technology is available for us. The critical point is that we have to realize the breakthroughs in managing the hydro energy in biotechnology measures in the future. I am not saying that the hydro energy powered engine will be the only choice in the market. Actually, it is only for the segmental markets. Through the secondary refining, we can realize our technical growth goal. Thank you very much.
Thank you, management.
Thank you, management. Next question is from [Jingyi Deng], China Securities Daily. Thank you.
Good morning, management. I just want to understand what will be the benefit from the cloud age and the 5G technologies. Thank you.
The coming of the cloud era and 5G era, for heavy duty engines, particularly those big cylinder, high speed generators, this will be a very good opportunity b ecause cloud, big data center, they all need to have backup generators, usually for three to four lines, and t his is regulated by the law. After 10 years of growth in Weichai Power, the high speed, big cylinder generators are now ready for commercialization. For this business segment, every year, it will bring about over CNY 5 billion of market size. In the past, in this capacity range, basically, we had to import other brands from Europe and America. Weichai Power has already finished our series of deployments and already started entering into this market segment massively.
Every year, we are growing exponentially to totally replace the imported brands. For this, this is a very big market, not only for China, but also for the world, because [inaudible] the value is very, very big. The total market size about 150,000, 140,000 units. For China, it is also a very big market. We hope that this will be a market segment that can also generate values to our shareholders. Thank you.
Thank you, management. Next question is from Chen Sizhu, Changjiang Securities. Thank you.
Good morning. I am Chen Sizhu from Changjiang Securities. Our question for you is that we noticed that you made an announcement about the splitting of [Non-English content]. Just want to understand why it is going to get listed and what will it bring to new technologies. Thank you.
Weichai Power is very diversified. If you look at our business structure, it is a very diversified business. In the past, I communicated with investors quite a lot. Many people do not understand and felt confused. Actually, it is very simple. If you look at our business structure carefully, what safety elements can we bring to our investors? What are the hedges we can provide to our investors? From 20 years ago, it is about CNY 4 billion, and now it is over CNY 200 billion. You can find the logic. In the past, under Weichai Power, all our strategic resources were able to get listed by splitting, but that was not allowed by the laws and the regulations. Recently, the laws and the regulations changed. For some scientific and technological companies, if it is not a core business, then it can be split and get listed.
This is the reason why. For [Non-English content], in the past few years, for this business, it creates about CNY 80 million- CNY 100 million revenue to the company. Actually, it is 1/3 of its business in China, and 1/3 is overseas market. For this business, for the spark plug, we need ceramic technologies in the spark plug, particularly for the sensing technology. We have this core technology so that we can get rid of their high-end sensors that we needed to import from other countries. We hope that we can build up our new growth of our business. For the storage solid, the oxidized fuel cell, the core ceramic technology, so i n this case, the new technology will form a new synergy to us. This is about the spark plug company. That is why we want to split this business from our main business.
By introducing strategic investors, we can optimize this business structure, particularly for those with innovative or innovation-oriented talents, we can introduce the equity incentive mechanism to attract those talents so that we can create values to not only the holding company, but also to our shareholders and to our business. Thank you.
Thank you, management, for taking the question. Next question is from Fang Fei from Goldman Sachs. Thank you.
Thank you, management. May I ask you, Mr. Tan, that for the Linde Hydraulics, for the hydro presser, can you please tell us about your plan whether it will get listed after splitting? Thank you.
Thank you for your question, v ery important question. For the Linde Hydraulics hydro power presser, 10 years ago, it was a strategic business for us, t hat is why we acquired it, and we had over 90% of equity shareholding. After 10 years of growth, its core technologies have been localized already. For the hydraulic presser, for this brand, Linde Hydraulics brand, it is a very well-known brand in the world. When we enter into the market, we do not want to withdraw the brand after some big issues. Even though it is not our core business, however, we hope that through it, we can set up a new business ecology. Therefore, we estimate that we are going to have the Linde Hydraulics presser listed separately.
We have noticed that in the capital market, the investors have caused greater attention to the hydraulic presser business. In the second half next year and the first half of 2023, it will get listed. This year, the shareholding reform will be done this year. We hope that after listing, it can generate about CNY 2 billion revenue to our business. The Linde Hydraulics presser has its own advantage. It does not do any low-end market. It only focuses on the excavators as well as other engineering machineries with over 200,000 tons. For the Linde Hydraulics presser, it is very well- known that its pressure is as high as 500 bar . Our hydraulic pressing system is also very well- known. Through the matching and optimization of the control system, we establish our competitiveness.
Our fuel consumption is lower by 15% at the same duty of operations, which is already approved by the market. We have our service network as well as the resources. We can provide value-adding services to our customers. You know that the service is very costly in the engineering equipment. So currently, the market size for this type of equipment is about CNY 20 billion-CNY 24 billion. In the past, we had to rely on imported machineries, and we could only make some small to medium-sized hydraulic presser equipment. As for those with the capacity of over 20 tons, we could not do it, and we could not replace the imported equipment. After about three years of verification, all our technical indicators already exceeded some of our competitors.
So, in this process, we established a system. Some hydraulic presser companies, for example, the [inaudible] and the Kawasaki, so they do the equipment, but they do not have the hydraulic presser equipment. That is why we can do everything. We can create more value to our customers. It is estimated that before 2025, we can generate over CNY 10 billion of revenue. Thank you very much.
Thank you very much.
Next question, please.
Next question is from [Geng Yuan], from Shenwan Hongyuan Securities. Thank you.
Thank you, Mr. Tan. I am analyst [Geng Yuan] from Shenwan Hongyuan. We noticed that the Weichai Power Group acquired the Lovol Heavy Industry. Just want to know what benefit will there be after the acquisition. Thank you.
As you know that at the end of last year, we announced that we completed the acquisition of Lovol Heavy Industry. After the acquisition, we will develop the synergy between the two companies so that we can give full play to the electricity control, the new energy, the autonomous driving, so on and so forth, in order to realize a breakthrough in our agriculture equipment industry, which is known for big but not strong situation. As a result, we will be able to upgrade our agriculture equipment upgrading and help with the modernization of agriculture equipment.
In the future, in the agriculture industry, the post-1990s, the post-2000s, those new farmers, those young people, they will be definitely pro high technology. After this acquisition, by making use of the synergy, we will be able to have a new capacity about over 100,000 units of large horsepower engines as a new room for growth. We have already succeeded in our development of CVT. In the past, we had to import from the other countries. In the past, the other players, the foreign players, they did not sell CVT hydraulic presser machine only. They just sold everything as a total, as a whole machine. Now, we have our own CVT hydraulic presser unit. Currently, we have developed and applied 240 hp. As for the 250 hp, now, it is under verification. From this 240 hp, we are now extending downward to 150 hp.
For this 150 hp, this is also international trend. Why this trend is not growing so fast? It is because the cost is too high. We have our very big advantage, which is that through the Fast Gear, the heavy duty, we can finish this CVT manufacturing. All the technologies and the processing facilities are ready, so we can finish the CVT manufacturing by ourselves. This will be a new growth of our business. Thank you.
Thank you, management, for taking this question. Next question is from Shen Wei, UBS. Thank you.
Thank you, management. I have a question for you. We noticed that in [inaudible], your revenue dropped slightly, but we are happy to see that in the first quarter, it began to coming back. Can you please share with us what will be your target for 2021?
Thank you for your question, v ery good question. It is also a very important part, as reflected in our annual report this year. Chinese investors, the value adding of KION was not realized, but its impairment was fully reflected in our share price, and in our annual report. I believe that this understanding from our investors is not fully correct. Last year, about CNY 800 million-CNY 1 billion of our revenue is from KION. It is because of the reduced sales of KION. The profit margin also dropped. However, its share price just keeps going up. Why? Because among the medium-sized to big-sized groups in the U.S., KION is the only one that didn't have any loss and maintained positive cash flow. Because of the pandemic, KION also integrated massively with Linde forklift.
During the integration, there were some increase in cost. But from this year, KION will just bounce back and improve its profit margin greatly. If you look back, they actively did such integration, but i f you look at the share price of KION, it was EUR 24 when it was listed. Now, the maximum is EUR 82, and now the share price is about EUR 30 something. Yesterday, it already went up to EUR 81 something. KION is winning more and more orders, and its number of orders is already historical high. The Dematic from the United States received over EUR 3.7 billion of total order amount, increased by 32%. Because of more online purchases during the pandemic, you can see in the United States, from Amazon, we received more orders for equipment.
Therefore, you can see there was such a big increase in the United States. In 2021, we estimate that the revenue will be EUR 9.15 billion to EUR 9.75 billion, up by 10%-17% as expected. This will be a very rarely seen for any overseas business. Meanwhile, we also invested in the new energy forklift project. In October last year, the construction started. In this October, the construction will be completed. The new capacity will be something around 26,000 units. The KION is now operating very healthily. The share price today is EUR 83. Thank you for your question.
Thank you, management. Next question is from Yang Xianyu, Zhaoshang Securities. Thank you.
Good morning, Mr. Tan. I am Yang Xianyu from Zhaoshang Securities. My question is, in the next round of heavy-duty truck downgoing trend, how would you deal with that kind of a scenario? Thank you.
Wow, thank you for your question. This is an industrial scenario and let me tell you something about the industry. Particularly from 2005 till now, there have been about three cycles of the heavy-duty truck changes. People may not have a very good understanding of it. In the past, 70% of the heavy-duty trucks are self-loading trucks. When the government started to invest more self-loading trucks, and if less investment from the government, then less self-loading trucks. Currently, it is below 20% of self-loading truck, if you look at our product mix. So, it is not a very big mainstream truck for us. This is number one. The second point is that for the heavy-duty trucks, it will not go on growing in this exponential way, and definitely, it will need a period for adjustment. This period will be over very quickly.
After the National III being phased out, now, the government is establishing the National IV vehicle plan, the phasing out plan. I can tell you responsibly that before 2025, the National IV or below trucks will be all phased out. This means that there will be a new incremental demand in the future. So, do not worry too much. For the capital market, please understand it well. Definitely, there will be adjustment. For example, last year is 1.65 million units altogether. But do not look at this total number all the time, look at other figures. This is a historical high, and these are the 1.57 million units ensured. According to this figure, I believe that when we implement the National VI standard after the 1st of July, there will be a period for adjustment, but that period won't be a big one.
The adjustment won't be one, the period won't be long, and National III will be phased out gradually. This will be an industrial change. For Weichai Power, as for the dependence on the heavy-duty engine for the heavy-duty trucks, this dependence has dramatically reduced. If you look at our business structure, our dependence on those heavy-duty trucks also reduced. Because of such a reduction of dependence, our structure adjustment also made progress. If you look at our profit from 2005 till now, its contribution is getting less and less, and it is estimated that in the future, it is about 40% only or less than 40% in terms of contribution.
The total number of vehicles will be going up, but in terms of the number of heavy-duty trucks, it will be getting less and less. In the future, I believe that for those large cylinder business, the hydraulic presser business, as well as the wind power, wind power is very, very popular now, as well as the other large duty powers, they will be replacing important units completely. In the past, we couldn't do it, we had not the capability to do it. Now, w e have more orders and the economic quality is also improving. That is why our business is booming. This month, it is also 150 units.
Think about this, the 150 units per month, what kind of a value will it bring to us? Meanwhile, for the new energy and IoT for vehicles, that will be other opportunities for the 2025 strategy, which will also mean very stable and healthy growth in our business. Thank you.
Thank you, management. Next question is from Xing Chongyang from Huatai Securities. Thank you.
Good morning, management. Good morning, Mr. Tan. Can you please share with us what is the additional issuance of CNY 13 billion? What is the purpose? Thank you.
Let me take your question very briefly. We already talked about it last time. We have already deployed fully for the mid to long-term demands of the fuel cell industry, about CNY 2 billion. Why? This is about hydro cell and the solid oxygen cell. This will be a new deployment. Plus, the CVT, which means that we are going to invest CNY 2 billion-CNY 3 billion. For the large cylinder investment, we will need another CNY 3 billion in investment, particularly for each series platform of high-end engines, which are about 250 hp, to 250 hp, the oil consumption with heat efficiency over 50%. That will need CNY 4 billion. We do not exclude the possibility that while Europe and America's economy are not recovering, many European countries and the Americans, we have to take these opportunities in our strategic resource acquisition. Thank you for your question.
Thank you. Next question is from Peng Fei from Daily Economic News.
Good morning, Mr. Tan. I am Peng Fei from Daily Economic News. Can you please share with us about why selling the Weichai (Chongqing) Automotive, you sell it to Sinotruk? Thank you.
Very good question. Weichai Power, actually about 10 years ago, we already established that Shaanxi Heavy Duty Automobile will be our key focus in our commercial vehicle series. In our Weichai (Chongqing) Automotive, there is a strategy, and we tried to enter into the SUV and pickup production. As you know that we did not invest heavily. However, for these strategic resources, we just returned to them. In this process, there was a loss about $300 million-$ 400 million each year. We cannot keep losing all the time, particularly we see opportunities in our strategies.
That is why we decided that we sell it to Sinotruk, the heavy-duty truck, the Sinotruk, because Sinotruk, in the areas like light truck, they are very capable. That is why we just restructured to Sinotruk. Sinotruk got this resource. Meanwhile, the heavy-duty truck, Sinotruk, combined it with a light truck SUV, particularly the focus on the pickup, so that all the business segments are brought along. At the same time, the gearboxes that we acquired before are now under utilization again. In this way, this will be a win-win. We no longer lose every year. For both companies, I think this will be a very good result and value adding to shareholders for both companies. Thank you.
Thank you, management. Next question is from Wu Xiaofei, Guotai Junan Securities. Thank you.
Good morning, Mr. Tan. Can you please share with us more about after the implementation of National VI and Non-Road Stage IV, what challenges and opportunities are there for you? Thank you.
So, National VI and the Non-Road Stage IV, we will definitely follow and keep progressing firmly. Being the Chairman of the Board for Weichai Power, I can make a commitment to you all that we will definitely pushing it forward steadily. I had a meeting with the leaders from the Ministry of Ecology and Environment. I also said very clearly about it. What will be the influence to us? For this implementation, it will support our entry into the high-end market fully with our full series of products. In the past 10 years, we invested over CNY 30 billion. Our products are now over, and our expenses are now over, and we don't have to invest anything more in it.
All the products are now ready to be used in the high-end market. It won't influence our revenue. I can tell you that for the National VI development, it is not something that an ordinary engine developer or manufacturer can do. It's only for companies like us. We can do it, and we can do more, and we can create more value and more revenue. Thank you.
Thank you, management. Next question is from Liu Liyu from Northeast Securities. Thank you.
Good morning, management. I'm Liu Liyu from Northeast Securities. My question is about you acquired the Shengrui 8AT. What is the purpose and what is the future plan for that? Thank you.
Weichai Power announced about the acquisition of [inaudible], the 8AT. The 8AT is a manufacturer of the gearbox for sedan cars. Why did we acquire it? Let me tell you the reasons. We think that in the future, the pickups, light trucks, hybrid energy vehicles, they all have a lot to do with 8AT, so w e decided to acquire 8AT. It will be the first company in China that has the 100% proprietary intellectual properties, and technically, it is very advanced. Also, it is a small company. Nobody else can use it. With the acquisition, we can also realize breakthroughs, particularly in terms of our production processes, technical processes.
We can apply these technologies in our SEVs, not only in our own products, but also to all our customers in China. Particularly 8AT, our hybrid gearbox, which will be able to support the demands of our light commercial vehicles, as well as satisfying the fourth phase of oil consumption standard as required by the law. Before 2025, our sales target for 8AT is 500,000 units, trying to build up a production capacity of 1 million, so that it can be a new driving force for our business in Weichai Power. Thank you.
Thank you, management. Next question is from Song Tianyi, Dongfang Asset Management. Thank you.
Good morning, management. I am Song Tianyi from Dongfang Asset Management. I have a question for you. How to separate this double million strategy? Thank you.
As you know that Weichai Power started our business from engines, and now it is not only engine, but also the engine energy as well as the whole vehicle. Before 2025, because of the whole series of products are already developed readily, particularly from a small 2 L to now 560 L of diesel engine, w e have finished our deployments of all products in different series. We have already established very clearly that for the commercial vehicles, the sales will be 1 million; the engineering machinery, 400,000 units; and the agriculture machinery, 300,000. Particularly, for the new energy, it is about 200,000, expectation 100,000, so that we can form a 2 million units of capacity. I think this target is workable, is realizable. In this process, all the engine companies will definitely be attracted to the leaders. This will form a new advantage to us. Thank you.
Thank you, Mr. Tan.
Thank you, management. Next question is from Yin Xinchi from CITIC Securities. Thank you.
Good morning, management. Good morning, Mr. Tan. We noticed that in the light truck industry, there are some new regulations and guidelines. I just want to understand what opportunities they will bring to Weichai Power. Thank you.
The pickups or the light trucks, 2 million units per year, particularly the Sinotruk or China heavy-duty trucks last year is at 200,000 units. The Shaanxi in Laiyang, Yantai is 10,000 units. This is incremental for us. We do not do the low-value things, and if it is not profitable, we do not do it. Recently, because of the governance and compliance on the over duty issues, the regulations are getting more and more stringent. The government has discovered a series of safety issues. That is why there are more laws and regulations on light trucks. Initially, the guideline is that for the blue-plate pickups will be adjusted, and only with the 2.5 L, can you get a blue plate. Above 2.5 L, you do not have a blue plate, but a yellow one.
So below 2.5 L, for example, 2.3 L, 2.0 L, that is a blue plate. Above that, it is a yellow plate. For this whole industry, this will be a big influence. For such a product in China, between 2 L- 2.5 L product, we do not have a perfect one yet. It so happens that we have already acquired Yangchai. We have now all these products ready in our product line. It is estimated that for this below 2.5 L, this year, we are going to add about 100,000- 200,000 units. It will not change big. As for the 3 L, that is to say 130 hp- 170 hp, 4.1 L, that is 220 hp. We already launched a greater lot to the market. We showed our competitive advantage, and this change of laws and regulations, for us, it is good news. It is a very big opportunity. Thank you.
Thank you, management. Next question is from Wen Kang from Tianfeng Securities. Thank you.
Good morning, management. I am Wen Kang from Tianfeng Securities. A question for you. What is your take on the natural gas engine in the future? What will be the trend? Thank you.
The natural gas during the National VI period is already available. I think, for the natural gas, we have some special features. In Europe and the U.S.A., the application utilization is not very big, but they already realized that the natural gas is a very good option. Currently, we have already working on the natural gas engine for 23 years, and we have been the leader in this market segment. Currently, our natural gas engine has been stabilized about 60%. This year, it will be up to 65%-70% of market share. So, we are a dominant leader in the market.
I think that during the National VI period, the natural gas engines, because of the gas consumption and putting aside winter season, in autumn, in spring, in summer, its gas price can drop to CNY 3- CNY 3.5, CNY 3- CNY 4. Therefore, the operations cost has great advantage. Therefore, its market share, I believe that in the future, our market share will further increase to 20%, p articularly for the short to mid-haul. Therefore, for the natural gas market, we can also show our capabilities in R&D through our Weichai Power products. Thank you for your question. We will take the last question because of the time. Thank you.
Thank you, management. Now, I would like to invite the last question from Chen Zhenhao, CICC. Thank you.
Good morning, management. Good morning, Mr. Tan. Just want to ask a question. There is a government policy on the governance of the over company emission. Now, it is becoming more and more a new normal. What kind of opportunities do you see there? Thank you.
The governance on the over duty or the over emission, this resolves another issue that we have been facing all the time. That is for those heavy duty, super duty engines, for some engines, we have to adjust our engines systematically. We are lucky that in the past 10 years, from a 15 L, 13 L, 11 L, basically, for each liter, we have our engines readily matchable. Three years ago, we developed the 10H. These are from 380 hp- 460 hp. We just kicked in. And three years ago, only about 10,000- 2,000 units. And now, we have much, much more.
And then for the 6 L, 7 L, and 8 L, particularly for the mixes, for the mixes in the city area, in the municipal area, they were not allowed. If it is a 7 L, 8 L, they will be allowed to use in the city areas. So, that is why our 8 L, 7 L engines will be definitely short of supply because of strong demand in the market. The market share will be about 80%. For each capacity, each duty phase, we have our products. Thank you very much for your questions. And finally, I want to thank on behalf of the management of Weichai Power, I thank all the investors very much and hope that we can keep communicating at any time so that our team can keep creating value to our shareholders. Thank you.
Thank you, management. This is the end of the 2020 results presentation from Weichai Power. Thank you for your attention. Thank you.