Chinese EV: from subsidies to market promotion

Chinese authorities have published the sales figures of new energy passenger vehicles in the country during the period January to March 2018 highlighting a significant growth comparing to previous years.

Facts and figures

• In March, 55,723 new energy vehicles were sold, versus 27K units in 2017 and 16K units in 2016
• During full Q1 2018, 116,918 new energy vehicles were sold, up 136% against 2017 figures

Analysts link the growth to 2 reasons. The large number of local subsidy policies and the fact that state subsidies will be reviewed later in 2018. In other words, the Chinese buyer wants to ensure maximum discounts while they are still available.

Electric or hybrid?

The new subsidy policies will divide the new energy vehicles in 3 separate categories with different subsidy rates for each category. For instance, the A00 class (mini vehicles) will be most impacted, with a strong reduction (or even cancellation) of subsidies, incentivising OEMs to focus on other categories.

Anticipating on the new regulations, the Chinese public is also showing more interest in fully electrical vehicles; almost 80K units were sold in Q1 2018 versus less than 40K in the same period last year. The Plug-in hybrid market share is also increasing, but sales are still not at the same level.

The success of electric has reflected on all 3 major Chinese producers: BYD (e5 Series), BAIC (EC Series) and JAC (IEV Series).

Help the superior and support the strong

As subsidy schemes are changing, the manufacturer’s sales approach is expected to change as well. China's new energy market is expected to gradually move from subsidy promotion to market promotion, which means more efforts to be done by the EV manufacturers. Practically, we’ll be seeing an explosion of new models to appear on the Chinese market, giving the public more choice and enhancing mutual competition between brands. Just to quote some examples, WEY will soon launch the P8, its first PHEV as well as BORUI and other brands.

Joint Venture brands

The EU, JP and US joint venture brands (such as BMW, VW) are not sitting and waiting. BMW’s X1 PHEV has been heavily promoted by the brand and has reached unprecedented sales of 855 units in March.