Analyses
28 avr 22

Is China’s dominance in the global EV market helping fleets?

Despite the pandemic, supply chain disruptions and price increases in energy and lithium, by the end of 2021, China had grabbed the number one seat in global electric vehicle (EV) production. According to the most recent figures, China will remain far ahead of North America and Europe in EV production this year, pointing to a solid global dominance in the coming years. 

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According to International Energy Agency (IEA), global sales of new energy vehicles (NEVs) in 2021 reached 6.6 million units, more than doubling the sales in 2020, which accounted for 3 million.

According to EV volumes in 2021, BEV and PHEV sales growth rate remained the same in Europe, while total market growth was 3.8% in North America and 4.7% in China. 

According to China Passenger Car Association (CPCA), China sold 3.31 million passenger cars globally in 2021, including (BEVs), plug-in hybrid vehicles (PHEVs) and hydrogen fuel-cell vehicles (HEVs) and grabbed a 53% share of the global market. Europe finished the year with 33% and the US with 11% (IEA figures state that China produced 3.4 million EVs in 2021 and reached 51.5% of the global market share). 

Commercial vehicle sales fall far behind

According to CPCA figures, China reached an all-time high global market share of 55% in 2018 and led new energy vehicle sales in the 2016-2019 period. In the pandemic year of 2020, Europe jumped ahead of China with 44% of NEV sales, and China dropped to 41%. 

Nevertheless, the statistics of March 2022 highlight an ever-strengthening EV market in China. Sales of NEVs increased 122.4% (year-on-year) in March 2022, reaching 455,000 units, only 10,000 being commercial vehicles. BEVs topped the March sales by 81% (366.000), followed by PHEVs with 19% (85,000). 

Since the beginning of 2022, 1.07 million NEVs have been sold in China, a year-on-year increase of 146.6%. According to data compiled by Electrive, the top sellers in the first quarter in the Chinese market are BYD (285,519 units), SAIC (192,012), and Tesla (182,174), Geely (47,986) and GAC Aion (44,874). 

In February, GAC Aion completed capacity expansion in its smart factory and reached an all-time high in March with 20,317 units. In the same month, BYD, which recently stopped manufacturing fossil fuel vehicles, sold 53,664 BEVs and 50,674 PHEVs.

BYD says the penetration rate of NEVs increased from 6% in January 2021 to 22% by the end of the year in China. 

Is it good news for fleets in China? 

The striking figures coming out of China may sound good for corporate fleets, but it primarily benefits end-users. The reason lies in the traditional approach to corporate mobility and the leasing infrastructure in the country, says Yves Helven, APAC expert at Global Fleet. 

According to Mr. Helven, the transition to NEV covers all use types of vehicles, from consumer to business. Yet, the meaning of the “company car” in the corporate fleet ecosystem isn’t the standard solution for employee mobility in China. What is preferred is mostly paying compensation to employees for using their private car or utilising alternative mobility options, such as public transportation, ride-hailing or taxi services, Helven explains. 

There are several reasons why company cars are not favored in China, according to Helven, these are: 

  • The company car is not a traditional solution, 
  • While it is getting stronger, operating lease options cover less than 1% of the fleets in China. 
  • Registration restrictions make it harder for companies to provide care to employees. 

China’s hydrogen ambitions 

The dynamics of the Chinese EV market are mainly triggered by long-term energy strategies, according to Yves Helven. Last month, China unveiled the “Medium and Long-Term Plan for the Development of Hydrogen Energy Industry (2021-2035)”. The plan includes producing 100,000-200,000 tonnes of green hydrogen by 2025. 

Mr. Helven says the focus of NEV transition in the red republic is now hydrogen. The country is applying its EV transition experience to hydrogen, most likely desiring to be the world leader in this area. 

Additionally, the central government sourced subsidies for EV projects prioritise bigger cities, which will electrify Tier 1 and Tier 2 cities faster than others. 

One last note Mr. Helven points out is the “Made in China 2025” plan, which was announced in May 2015. Appearing as an initiative to boost China’s heavy industries, the program focuses on ten key sectors, including new energy vehicles. 

“The energy transition to NEVs started many years ago in China, heavily accelerated by this plan”, he says. “It initiated to reduce China’s economic dependence from other countries & transform China into a high-tech country.”  
 

Authored by: Mufit Yilmaz Gokmen