Despite a first-ever annual decline in China’s low- and zero-emission vehicle sales in 2019, an analyst from Swiss banking group UBS is positive on the market and expects that it will rebound this year, he said Tuesday.
Why it matters: Beijing’s heavy promotion of EVs over a 10-year span has left many questioning whether there was ever any actual consumer demand amid fears that the widespread EV slump will extend into another year.
- A researcher from a government think tank expressed optimism that the market will bottom out and begin to recover this year during an interview with TechNode earlier this month. The negative effects of subsidy cut has been waning, the researcher added.
Details: Growth of an additional “100,000 units at the very least” can be expected in China’s new energy vehicle (NEV) sales this year, Paul Gong, a China auto analyst at UBS, told journalists during the company’s Greater China Conference in Shanghai on Tuesday.
- A rebound in the EV industry is achievable given an increase from big foreign automakers that are on track for large-scale delivery of their China-made EVs this year, alongside the pressure from the dual-credit scheme, an NEV production mandate implemented in April 2018, Gong added.
- China began subsidizing electric vehicle purchases in 2009 to boost adoption, pouring a staggering amount of funds to the tune of RMB 13.78 billion ($2 billion) into local automakers including BYD and Chery in 2018. The support led to fraud, and the authorities began cracking down on cheats in 2015, fining five automakers for defrauding the government of RMB 1 billion in subsidies.
- Despite some misuse, policy stimulus has still managed to facilitate EV adoption including the build-up of supply chain and charging infrastructure, Gong said. He added that flexible subsidy policy is a key driver of technology innovation and has helped curb fiscal profligacy.
- China’s electric vehicle technology has advanced rapidly in the past two years. The average estimated range of registered electric vehicle models increased 60% to around 400 kilometers (250 miles) at the end of 2019, according to figures from the Ministry of Industry and Information Technology.
Context: China’s NEV sales dropped for the first time on an annual basis in 2019, declining 4% year on year to 1.2 million units, the China Association of Automobile Manufacturers (CAAM) said on Monday in a release.
- December sales fell 27.4% to around 163,000 units compared with the same period last year, though the decline narrowed from the more than 40% seen in October and November.