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China NEV Volumes for Q2 of 2017 and Year-to-Date

181 200 units plug-in passenger cars were delivered from January to June 2017, including imports. China continues to be the largest market for Plug-ins (or New Energy Vehicles, NEV, as they are called in China). Pure electric vehicles (BEV) were the clear winners, increasing 6 % in the mix to 82 % of all NEV sales. From 2017 onwards, central NEV subsidies are reduced by 20 %, local subsidies are cut by around 50 %. As expected, the increase over 2016 H1 is less than in previous years and stands at 42 %. The result was also influenced by the  54 % decrease in January, when delays, or outright refusals in subsidy approvals created confusion among consumers and OEM alike.

The situation has now stabilised and the NEV share in passenger car sales reached a new high in June, with 2,5 %, in an otherwise sluggish overall car market with just 2,1 % increase for 2017 H1. We expect shares to follow a positive trend throughout the remainder of the year, with NEV passenger car sales reaching a total of 530 000 units for 2017. This would mean a NEV share of 2,1 % and 48 % growth over 2016. The NEV passenger car sales grow 20 times faster than the car market as a whole.

The Chinese Government has announced ambitious NEV share mandates of 8 % for 2018, 10 % for 2019 and 12 % for 2020, causing strong concern among many foreign OEMs. As one NEV unit sales receives a boost of up to a factor of 4 in the share calculation, the actual NEV shares to be achieved are considerably lower. LMC estimates 2,3 %  for 2018, 2,9 % for 2019 and 3,4 % for 2020, which is in line with our calculations. Still, the challenge is considerable. Non-Chinese brands stand for nearly 50 % of total passenger car sales, most of it produced in China, by J/Vs with Chinese companies. For NEV sales, non-Chinese brands stand for only 6 %, the lion share is from Tesla. Other foreign brands need to multiply plug-in sales in 2018 compared to 2016. And they need to be localised to receive subsidies and to avoid import duties . The alternative is acquiring emission certificates from over-achievers.

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China leads in Cars and Buses

For the complete 2017, we expect passenger car NEV sales to reach 530 000 units, 80 % of them BEVs and 20 % Plug-in Hybrids (PHEV). China remains the largest market for Plug-Ins by a considerable margin, with over 90 % of sales from domestic OEM, China is also the largest producer of Plug-ins.

Our detailed, regular reporting is for the passenger car market. In addition, over 190 000 commercial vehicles were sold in the NEV category in 2016. For 2017 we expect this number to reach 270 000 units,  80 % of them are 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.

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Half of sales are small cars and minis

An important reason for the Chinese lead in NEVs is their success in offering ultra-affordable EVs in the Mini (A) and Small (B) segments. The Zhidou D1 EV is available at less than 100 000 RMB (ca 12 500 Euro) after central and local subsidies, the BAIC EC180 costs around 160 000 RMB (€20k) after subsidies. This is still about twice a much as for a comparable, Chinese ICE car, but makes EVs accessible to a much broader consumer base.

Mid-sized (D) sedans are popular for mega city taxi services, compact and mid-sized SUVs are immensely popular among private buyers; Tesla is the leading brand for high-end NEVs in China. It can also be noted that there is only one PHEV among the segment best sellers, the BYD Tang.

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