Fallout from China’s focus on developing a robust fully electrified vehicle market is placing automakers under significant pressure in the absence of actual consumer demand, an executive from the country’s biggest automaker said on Thursday at a trade event.
Why it matters: China bet big on fully electric vehicles to accelerate clean technology development amid a broader push for global leadership in core technologies. However, sales have cratered following a reduction in government subsidies, a series of vehicle fires, and persisting concern over battery range from consumers, dubbed “range anxiety.”
- China’s new energy vehicle sales slid for a fourth consecutive month in October, which accelerated during the month to 45.6% year on year to 75,000 units, according to figures from the China Association of Automobile Manufacturers (CAAM).
Details: Automakers are under great pressure as losses have mounted due to a lack of real demand from consumers, Wang Yongqing, a general manager at SAIC-GM said on Thursday at the Guangzhou Auto Show, Caixin reported.
- Wang explained that just over 100,000 NEVs out of the 872,000 units sold in China during the first three quarters of the year were sold to individual consumers, while the rest were deployed for ride-hailing by business clients.
- High battery costs and the low resale values have curbed EV adoption, Wang said, adding that car companies will be “in a very difficult time” if consumer demand does not pick up.
- SAIC, China’s biggest automaker and General Motors manufacturing partner, reported a 13.7% year-on-year decline in overall auto sales to 4.95 million units during the first ten months of the year. It did not reveal the NEV sales information.
- Didi Chuxing, the country’s biggest ride-hailing platform, recently revealed that 967,000 fully electric vehicles, more than a third of the country’s total volume sold, were registered on its platform.
Context: As of the end of 2018, NEVs accounted for only 1% of all vehicles on the road in China. As a result, Beijing is relaxing its existing NEV mandate rules, which required automakers to produce a certain number of NEVs to achieve credits.
- Bogdan Bereanda, a vice president of Delphi Technologies, told Caixin (in Chinese) that plug-in hybrid electric vehicles have more advantages than fully electric vehicles, a consumer preference that may become clear over the next few years.