Features
12 Feb 24

New energy LCV sales are booming in China through government support

New energy commercial vehicle sales have surged in China in 2023, especially in the light-duty commercial vehicle segment. From light commercial vehicles (LVCs) to heavy-duty trucks, the adoption of all-electric, fuel cell, and plug-in hybrids displayed a remarkable rise in numbers, giving a more promising outlook for 2024.

New energy vehicles (NEVs), consisting of battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and fuel-cell electric vehicles (FCEVs), are the new trend in the commercial vehicle market of China. According to the figures presented by Interact Analysis, registrations of new energy commercial vehicles hit a new record high of 308,531 units in 2023, jumping 29.8% year-on-year. The penetration rate also increased by 10.8% in 2023, increasing sales in heavy, medium, light, and mini commercial vehicles and large, medium, and small buses. 

OEMs are pouring new energy LCVs into the market

Registrations of new energy LCVs exploded in 2023, reaching 242,000 units, displaying an increase of 46.4% compared to 2022 and the highest among all commercial vehicle segments. As a result, new energy LCV sales in China represented 78.4% of all overall new energy commercial vehicle sales in 2023. 

The gained momentum in the new energy LCVs stemmed from seeking cost-effective alternatives in urban mobility and the well-seized opportunity by the local manufacturers. The top eight manufacturers surpassed 10,000 unit sales in 2023. Geely led the new energy wave by intensifying its sales of new energy-light-duty commercial vehicles, accounting for 92.6% of the brand's sales. Geely sold 73,000 new energy commercial vehicles in the last year, a surge of 104.7% year-on-year. 

Another alternative, installing modular batteries, is gaining more popularity in China, growing 8.5% year-on-year and reaching 28.8 GW/h in 2023. Yet, due to the lower energy density of light-duty commercial vehicles, the average battery installation per vehicle unit was 94 kW/h in 2023, which stayed below the preceding two years, 113.7 kW/h and 138.3 kW/h in 2022 and 2021, respectively. 

All-electric dominates the heavy-duty truck market

The demand for heavy-duty trucks exceeded the market average, increasing 36.1% year-on-year, with sales reaching 34,000 units. 

  • Penetration of the new energy heavy-duty trucks increased by 5.5%, with sales of all-electric trucks surging by 34.3% compared to 2022, reaching 30,000 units, almost half being battery-swapping trucks. Overall, all-electric heavy-duty trucks dominated the market with an 88.9% share. 
  • Sales of fuel cell heavy-duty trucks surged 46.9% year-on-year, with 3,612 unit sales grabbing 10.6% of the market.
  • Hybrid heavy-duty trucks witnessed a striking 471.9% increase in sales in 2023, representing a symbolic 183 unit sales and signalling further growth.

Heavy-duty trucks lead the fuel cell transformation 

Fuel cell commercial vehicles also reached a new high in 2023, with sales increasing 50.1% and reaching 7,177 units. Despite the rising demand, it is unclear if China will achieve the goal of 50,000 fuel cell vehicles by 2025. 

  • Heavy-duty trucks accounted for 50.3% of all sales in the fuel cell commercial vehicle market in 2023,
  • Large and medium-sized fuel-cell buses dropped to 18.3%, following the shrinking demand,
  • Fuel-cell LCV sales jumped 162.9% year-on-year, reaching 2,127 sales and grabbing 29.6% of the fuel-cell commercial vehicle market. 
  • Installed fuel-cell systems increased 50.5% year-on-year, reaching 701.2 MW. Sales have pushed the conversion option aside, with the average installed power rating for fuel cell systems per unit slightly changing, reaching 97.7 kW/h in 2023 from 97.4 kW/h in 2022.

Over 190 manufacturers released new energy trucks for the Chinese market last year, with top OEMs grabbing 67% of the total market. Geely was the top player in this segment, too, by surpassing 30,000 units in sales (including heavy-duty, medium-duty, light-duty and mini trucks):
 

OEM         Sales (units) YoY Market share
Geely 30,396 95% 20,9%
Seres 12,956 156% 8,9%
Dongfeng 10,044 4% 6.9%
Foton  9,846 24% 6,8%
SAIC Motor  6,248 7% 4,3%
XCMG 6,182 110% 4.2%
Yutong 6,092 37% 4,2%
Guangxi Auto 5,429 10% 4,2%
SANY 5,334 27% 3,7%
Shineray 5,149 2% 3,5%
Source: Interact Analysis

 

Hybrid sales grew despite low demand

Hybrid commercial vehicles represented the fastest growing segment in 2023 with a year-on-year increase of 116.2%, primarily thanks to decreasing costs and flexibility in charging, reaching 6,711 unit sales. Large-sized buses, the top hybrid vehicle model in 2022, dropped significantly in 2023, from 50.8% to 16%, while sales of hybrid light-duty trucks increased 2.7 times in 2022, reaching a total of 5,120 sales in 2023. 

The game-changer subsidies are to continue 

The government subsidies have been vital for developing the EV market in China and now have a more comprehensive influence by expanding into the NEV market. Between 2009 and 2022, the Chinese government spent over 200 billion yuan (€25,8 bn) on EV subsidies and tax breaks, significantly reducing manufacturing costs and boosting the export strength of Chinese OEMs. 

The EV subsidies were set to expire in 2022, including tax exemptions and reduction policies, yet the figures in 2023 forced the government to think over and announce a new tax incentive package in June 2023. The most significant tax incentive ever announced by the Chinese government, amounting to 520 bn yuan (€67,1 bn), will provide tax breaks for EVs and NEVs for the coming four years. In 2024 and 2025, newly purchased NEVs will be exempt from purchase tax, reduced to half in 2026 and 2027. 

For the Chinese government, NEVs represent 'the primary focus of the automobile industry's transformation and upgrading'; therefore, the adoption is to increase further in 2024, without a doubt. 

The main image is courtesy of Shutterstock, 1103544050.

Authored by: Mufit Yilmaz Gokmen