China reported a double-digit decrease in electric vehicle (EV) sales for a sixth consecutive month in January, and warned that the Covid-19 outbreak was weighing on automakers already under significant pressure.
Why it matters: Already struggling amid a broader downturn which began in late 2018, EV companies in China are more vulnerable than traditional automakers during the crisis surrounding Covid-19, a flu-like virus which has sickened 55,649 and killed more than 1,300 in China as of writing.
Details: January sales of new energy vehicle (NEVs), which include all-electric and plug-in hybrid cars, plunged 54.4% from a year earlier to 44,000 units, the China Association of Automobile Manufacturers (CAAM) said Thursday (in Chinese).
- NEV sales dropped more sharply compared with overall auto sales in China, which fell 18% year on year to 1.94 million during the same period.
- The association mainly attributed the sales decline to the week-long Spring Festival holiday, which began earlier than usual this year. The number of working days in January was five days fewer than the last year.
- The outbreak had a limited impact on the market in January as Spring Festival historically produces a lull in sales, though CAAM warned that it would have a bigger near-term effect on the country’s auto industry than the 2003 SARS (Severe Acute Respiratory Syndrome) outbreak.
- Experts worry that reduced individual income will restrain both trade-in and new car sales across the country in the coming months, since discretionary spending on tourism, dining, and other consumption has cratered.
- The outbreak has also brought the entire auto supply chain to a halt, triggering widespread part shortages, as local manufacturers were forced to extend downtime during an extended holiday.
- Only 59 car manufacturing facilities, less than a third of the industry total, resumed production as of Wednesday, CAAM said.
- Figures from China Passenger Car Association (CPCA) showed a more than 50% year-on-year drop in NEV sales last month, and February is expected to fall 30%.
- CPCA expects a significant decline in EV demand from both individuals and businesses in February, compounded by low oil prices.
- The EV enterprise sales may also get hit by a shrinking demand in ride hailing, as people mostly stay indoors for weeks as part of government control measures. EVs are popular in ride-hailing fleets.
Context: China reported an annual decline in NEV sales for the first time in 2019 to 1.2 million units, declining 4% from the previous year.
- NEV sales sank by more than 40% year on year for two months in October and November. The decline narrowed to 27.4% in December.