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China Plug-in Volumes for Q3-2017 and October-November

Over 490 000 plug-in passenger cars were delivered from January to November 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) are the clear winners, increasing 5 % in the mix, to 81 % of all NEV sales. From 2017 onwards, central NEV subsidies are reduced by 20 %, local subsidies are cut in half. The increase over the same period last year is less than in previous years and now stands at 60 %, although it has been growing in the last months. Most NEVs are sold in China's mega-cities, where ownership restrictions for ICE cars make BEVs an easy choice.

NEV passenger car sales reached a new high in November, with 84 000 units delivered and an estimated share of 3,2 % in an otherwise sluggish overall car market. We expect another record in December, not in terms of share, but in terms of volume. We forecast a total of 577 000 units for the complete 2017, a 65 % growth over 2016. The NEV passenger car sales is growing 20 times faster than the car market as a whole.

The Chinese Government has announced ambitious NEV share mandates of 10 % credits 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 2,9 % 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 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.

first China Plug-in Volumes for Q3-2017 and October-November image

Many Minis - Few Compacts

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 EV is available at less than 100 000 50 000 RMB (ca 12 500 6400 Euro) after central and local subsidies, the BAIC EC-Series costs around 160 000 RMB (€20k) before and ca 60 000 RMB after subsidies. This is more than 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. Despite the recent decline in PHEV sales, BYD has two segment leaders, with the Song and Tang SUVs.

second China Plug-in Volumes for Q3-2017 and October-November image
third China Plug-in Volumes for Q3-2017 and October-November image

High BEV Share

Few other markets have more than 80 % BEV share in the plug-in vehicle mix. Taxation, subsidies, usage restrictions and mandates for deployment are designed to drive the market towards pure electric propulsion.

Among the 22 new Plug-ins shown on the Guangzhou Auto Show for into in 2018, only 5 are PHEV. Check here for more details from our fellows at WattEV2Buy. These new models will further support a high BEV share, going forward.

Incentive policies are also favouring e-range and battery energy density, encouraging the industry to offer  BEVs with higher capacity and also PHEV with longer e-range. Today, 300 km NEDC are the norm for mid-size BEVs and PHEVs have variants with up to 100 km e-range, higher than for any model from western OEM.

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