Market Trends of China Electric Vehicles Industry
Tremendous Adoption Rate of Hybrid and Electric Vehicles due to Government Norms
With an increase in vehicle sales and rapid urbanization, China is determined to reduce exhaust emissions from vehicles. Meanwhile, the country plans to lessen its dependence on oil imports, boosting the demand for and sales of electric vehicles in the country. Furthermore, many key cities and provinces are imposing more strict restrictions. For instance, Beijing only issues 10,000 permits for the registration of combustion-engine vehicles per month to boost its inhabitants to switch to electric vehicles.
Growing government regulations improving electric vehicle adoption and robust expansion adopted by OEMs and suppliers in the region to accommodate rising demand from the automotive industry in China are expected to create a positive outlook for market growth during the forecast period. For instance, the Government of China is encouraging people to adopt electric vehicles. The country has already made plans to phase out diesel fuel, which runs the current generation of tractors and construction equipment. The country plans to ban all diesel and petrol vehicles by 2040. Also, in January 2021, BYD announced that it bagged a cumulative order to supply 1,002-unit pure-electric buses to Bogota, Colombia. These buses are scheduled to be delivered during 2021 and continue into the first half of 2022. They will be put into operation on 34 bus routes across five regions of the city.
The Chinese government invested in building charging stations across the country to promote electric vehicle sales. For instance, in January 2022, the Chinese government announced plans to build enough charging stations for 20 million electric vehicles by 2025.
For electric vehicles, the Chinese government has provided tax exemptions or lowered taxes. These initiatives by the government have attracted a lot of buyers to purchase EVs in this country. For instance, in September 2022, China's Ministry of Finance (MOF), the State Taxation Administration (STA), and the Ministry of Industry and Information Technology (MIIT) announced purchases of new energy vehicles (NEVs) that occur between January 1, 2023, and December 31, 2023, will continuously be exempted from vehicle purchase tax. Furthermore, China's Ministry of Transport offers subsidies and other benefits for the development of low-emission bus fleets, thereby further positively influencing the market. For instance, 61,000 more new energy buses were sold by Chinese bus makers in 2020, despite the pandemic. Such events are assisting China to formulate a resolute and optimistic prospect for the development of electric vehicles in the country, which is anticipated to propel the market.
The Passenger Cars Segment is Anticipated to Dominate the Market
Currently, the passenger cars segment is witnessing more demand than commercial vehicles, and it is expected to continue its dominance during the forecast period. The growth is due to the growing population, which provides for the growth of EVs. Stringent government emission norms are expected to drive sales of EVs. For instance, the Chinese government implemented China 6 norms for pollution control in the region, based on EUR 6 norms, in July 2020, which resulted in promoting the demand for hybrid vehicles in this region.
Several competitors have been driving the battery-electric vehicle market in China, along with generous government support. China extended the incentives related to the purchase of new energy vehicles (NEVs) until 2022.
Some non-automotive companies, like Alibaba, are entering the rapidly growing EV market in the country. For instance,
- In January 2021, Alibaba Group announced two electric models in the country under the IM (Intelligence in Motion) brand in partnership with SAIC Motor. Battery cells for these vehicles are provided by CATL. Of the two models launched, one is an electric sedan, and the other is an electric SUV. The sedan is anticipated to be launched first, with presale starting at Auto China 2021 in April, and the SUV may hit the market in 2022. The company informed that the vehicles may offer a 93-kWh battery, while a 115-kWh battery will be available as an option. Henceforth, the sedan may provide a range of up to 874 km in the NEDC cycle.
- In December 2020, Hyundai Motor Group announced its plans to present an electric-only platform in 2021, utilizing its battery technology to cut production costs and time.
- In September 2020, Tesla Inc. announced that it worked on reducing the cost of its EV batteries and increasing production. The cheapest Tesla was priced at USD 36,500 in 2021.
Due to the high number of local electric components and vehicles and the government's key national strategies and plans, it is expected that the country's market will achieve extraordinary growth in the coming years.
