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China Plug-in Sales for 2017-Q4 and Full Year – Update

Chinese Plug-in sales for 2017 have beaten all expectations. 603 300 605 500 plug-in passenger cars were delivered from January to December, including 22600 24 800 imports. On top of that come 198 000 commercial vehicles, mostly large, electric buses. China is, by far, the largest market for Plug-ins (or New Energy Vehicles, NEV, as they are called in China). 49 % of global plug-in volume was sold in China, for 2017, counting passenger cars only. The increase over 2016 was 250 000 units, or 73 %, which is over 30 times faster than the market as a whole. The boom is even more impressive, when considering that central NEV subsidies were reduced by 20 % and local subsidies were cut in half, compared to 2016. Most NEVs are sold in China's mega-cities, where ownership restrictions for ICE cars make BEVs an easy choice.

Since June, monthly sales consistently set new all-time-highs. In December, monthly sales passed the 100 000 mark for the first time, reaching a share of nearly 4 % in the Chinese passenger car market. The average share for the years stands at 2,4 %, which is higher than for any other larger economy with more than 1 million annual vehicle sales. For 2018, we expect another 50 % increase to 920 000 passenger cars and a share of 3,6 % for the complete year.

The Chinese Government has set NEV share mandates of 10 % for 2019 and 12 % for 2020. These targets can be misinterpreted as they include weighting factors in the carbon credit scheme. LMC and BNEF have estimated that 10 % and 12 % translate to 2,9 to 3,3 % for 2019 and  3,4 to 3,9 % for 2020 in real market share terms. Certainly achievable on a total market level. Still, the challenge is considerable for individual players. Non-Chinese brands stand for nearly 50 % of the total passenger car sales, most of it produced in China, in J/Vs with Chinese companies. For NEV sales, non-Chinese brands stand for only 4 %, with the lion share going to Tesla. Other foreign brands need to multiply plug-in sales until 2019 in order to comply. They also need to localise their offers to receive subsidies and to avoid import duties. The alternative is acquiring emission certificates from over-achievers.

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Exceptional gains, following sluggish start

Despite a sluggish start, due to a series of policy changes for New Energy Vehicles, once that production levels and subsidy approvals were back on track, shares resumed their previous growth trend, seen since 2015.

The growth accelerated in the last quarter of the year, to almost 4 % share in December. Chinese OEMs continue to absorb educed subsidies by price adjustments and value improvements, often by larger batteries and longer E-range, leading to increased sales. Clear winners are BAIC and Geely, incl. Zhi Dou.

For 2018, we expect Chinese NEV growth to continue at a high pace, with a 1,2 % share increase to 3,6 % for the complete year. This is based on a conservative volume growth estimate of 50 % over 2017. There is still an upside to this number; this year could even witness Chinese NEV sales surpass one million passenger plug-ins.

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Light and heavy NEV sales over 1,1 million this year

China remains the largest market for Plug-Ins by a considerable margin. Sales (incl. heavy NEVs) were 4 times higher than in USA, the #2 in the country ranking.  With over 90 % of sales from domestic OEM, China is also the largest producer of Plug-ins. For 2018, we expect NEV sales to reach 920 000 units, counting passenger cars, 82 % of them BEVs and 18 % Plug-in Hybrids (PHEV).

The BEV / PHEV mix is trending towards pure electric since the last 2 years. In 2017, 81 % of sales were BEVs, for 2018 we expect 82%. The BEV share is high in international comparison. Europe and USA typically have around 50 % BEVs in their plug-in sales. The reason is partly in the segment composition of Chinese plug-in sales. Half of the sales are in the Mini and Small segments, where PHEVs make little sense.

Our detailed, regular reporting is for the passenger car market. In addition, over 198 000 commercial vehicles were sold in the NEV category in 2017. For 2018 we expect this number to reach 210 000 units,  80 % of them being large buses, most of them fully electric. For electric busses, 98 % of world sales are in China, today. The domestic sales leader is Yutong, the export leader is BYD. We are maintaining a database for worldwide electric bus sales. It is available on request.


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