China’s new energy vehicle (NEV) sales fell for a fifth consecutive month in November, extending a decline that began with a reduction in government subsidies over the summer, though some in the industry have expressed optimism that the market has bottomed out and will begin to recover next year.
Why it matters: China’s NEV market slump, part of a larger industry downturn, has sparked fears that a government-boosted electric vehicle bubble is bursting.
- NEV sales fell 43.7% year on year to 95,000 units in November after October marked the steepest rate of decline for the year, according to figures from the China Association of Automobile Manufacturers (CAAM) released Monday.
Details: China’s overall auto sales are expected to decline 2% to 25.3 million units next year, and may post flat growth as early as 2022, CAAM said at a conference in the central Chinese city of Changsha on Thursday.
- Chinese automaker BAIC’s electric car subsidiary, BJEV, expects all-electric vehicle sales next year will post a modest 6% year on year recovery to 850,000 units. Battery costs will also decline considerably over the next several years, said Jeffrey Zhao, an associate director at BJEV.
- The market will bottom out next year, as there is little room for further decline and the negative effects of subsidy cut is waning, a government researcher who declined to be named told TechNode on Thursday.
- Market demand will remain strong especially in the business market next year, Zhao said. BJEV expects to sell up to 450,000 new EVs next year to ride-hailing and taxi companies, as well as the public sector.
- As many as 50 Chinese domestic cities will electrify their taxi fleets next year, Zhao added. So far electric cars only account for 7% of the country’s 1.42 million taxi cabs, according to Zhao, citing figures from an industry association.
- CAAM last month reduced its forecast for the country’s 2019 NEV sales by 12.5% to 1.4 million units, but voiced hope for a recovery next year, said Xu Haidong, an assistant secretary general at CAAM.
Context: Beijing plans to further deregulate the NEV market according to a draft plan unveiled earlier this month, to allow the market to drive demand for NEVs including fully-electric, plug-in hybrid (PHEV), and fuel-cell vehicles.
- China will not stop supporting the development of fully-electric as its long-term strategy, the researcher said, and hybrid driving technologies, including PHEV and traditional hybrids, are practical temporary solutions for the mass market.