China’s
AEV market has rebound in June 2017, after some sluggish trend in the beginning
of the year. However, fierce competition and probable oversupply might endanger
the market in the future.
Source: Shutterstock
Sales
of alternative energy vehicles (AEVs) saw a 33 percent bump in June to 59,000
sales, the latest CAAM data shows. The output volume even rose up to 65,000
units. This leads to an accumulated sales volume of 195,000 in H1 2017, which
represents a 14.4% year on year increase.
According
to market intelligence firm CCM, several segments of the AEV industry,
including vehicle manufacturing, vehicle spare parts, and vehicle leasing are
developing very fast in China currently.
China
is leading the worldwide electric energy vehicle market for some years now. In
2016, China has registered about 352 thousand new electrical vehicles. The USA
in comparison has only registered 159 thousand cars, which are even highly
concentrated in the Californian market. In fact, China has already surpassed
the USA in the number of new registrations in the year 2014, and the gap is
rising since then.
In
the first half of this year, sales volume of such NEVs totaled 195,000
vehicles, up 14.4 percent.
The
second largest economy worldwide has ambitious plans for the vehicle industry.
China wants to achieve a share of not less than 11% for sold cars shall be
alternative energy vehicles by 2020. In total numbers, this will be about 2
million units of cars by the end of the decade, from a sale of 507,000 units in
2016.
However,
the abandoning of AEV subsidies by the government has caused a drop in sales by
many China’s manufacturers, including the world’s largest AEV manufacturer BYD
in the first quarter of 2017. According to CCM’s research, the profit of BYD
fell by 29% in Q1, while the sales even decreased higher by about 34%. The
competition in China’s AEV market will even get fierce in the next years, as
car manufacturers are required to sell at least 8% AEV in their total car sales
in China by 2019.
China’s
AEV market is still highly concentrated. In 2016, the top-10 domestic
manufacturers accounted for over 96% of electric car sales in China. Chinese
AEV manufacturers are also enjoying high market share globally. For instance,
nine Chinese electric vehicle brands were ranked among the global top 20
manufacturers by volume.
Not
only the AEV market in China saw a rebound in June, but the vehicle market in
general was able to recover in that month. In April and May, the vehicle sales
in China dropped by 2.2%and 0.1% respectively, which were the first months of
decline after the booming year of 2016 in China.
China
has rapidly grown to become one of the globally most important markets for
automobiles. As Chinese automobile, original equipment manufacturers continue
to increase their presence in international markets and international
automobile companies increase their presence in China, the Chinese consumer
will highly influence the types of cars produced.
However,
the near future will bring an increase in industrial competition in China’s
market. Examples are ongoing joint ventures of China’s enterprises with
international companies, like Volkswagen with Anhui Jianghuai. In China, an
industrial tycoon with authentic international view, leading core technology in
electric battery, electric motors, and electronic control, as well as R&D,
manufacturing and marketing pattern that guide the auto industry’s future has
not yet made its appearance. Therefore, for domestic auto enterprises, the top
priority is to seize every minute to accumulate AEV technology and brands in
order to get an edge in future’s competition.
Secondly,
the symptom of surplus capacity in China’s AEV industry is existing. In the
past two years, with the explosive growth of the output and sales volume in the
local AEV market, the related upstream and downstream industries have all been
effective stimulated. As a matter of fact, one of the specific
performance is that the explosive increase strength in AEV sales volume has
motivated the rapid development of power battery industry as well as also
driven the market demand for the key material in power battery, lithium resource. Even though the discussion on whether there is surplus capacity in domestic
AEV industry is a little earlier than it should be, the development pace of AEV
industry still needs attention.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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