Vehicle manufacturers in China have stepped up their new electric vehicle (EV) programs this year, helping to grow domestic demand and are now firmly targeting overseas markets with next-generation smart and connected models.
Europe in particular is becoming an increasingly important export destination for Chinese electric vehicles, with some markets, notably the Nordic countries, having some of the highest levels of electric vehicle penetration in the world while sales elsewhere are accelerating. quickly. The EU recently announced that it plans to phase out sales of international combustion engine (ICE) vehicles by 2035.
This renewed focus was evident at last month’s Paris Motor Show, where Chinese brands unveiled eye-catching production models covering a wide range of EV model segments. BYD has made a big splash with the Seal compact car, along with the Atto compact SUV and Han compact car, all battery-powered models. Great Wall Motor showcased its compact Ora funky Cat car and its unique Wey-branded Coffee 01 and Coffee 02 plug-in hybrids.
The Chinese electric vehicle industry is drawing considerable strength from its home market. Electric vehicle sales in the country are likely to account for at least two-thirds of the eight million electric vehicles expected to be sold globally this year. In the first nine months of 2022, electric vehicle sales in China doubled to 3.58 million units – excluding sales of plug-in hybrids (PHEVs) which increased 270% to 990,000 units – according to data at the wholesale issued by the association of the automobile industry CAAM.
This despite widespread production disruptions, significant disruption of supply chains and blockages in the first half of the year. By contrast, sales of conventional ICE vehicles fell 9.5 percent to 14.9 million units over the same period, a decline that has continued uninterrupted since 2018.
Electric vehicle sales in China this year are expected to account for nearly 20% of total vehicle sales in the country in 2022, with PHEVs accounting for a further 5-6%. Combined, these vehicles make up virtually all of the country’s so-called new energy vehicle (NEV) segment.
Inevitably, China has the best economies of scale in the electric vehicle industry globally and also the strongest battery supply chain, including the largest mineral processing capacity. The country’s first switch to electric vehicles a decade ago also enabled its companies to secure access to some of the largest reserves of battery minerals in the world.
According to government data, China has hundreds of startups operating in the electric vehicle industry, including offshoots of large conglomerates and conventional ICE vehicle manufacturers. However, many are small and still developing companies that are unlikely to end the decade. The most successful, including Nio, XPeng and Li Auto, have dominated the headlines over the past couple of years with attractive premium models equipped with the latest smart / connected technologies, inevitably with matching prices.
Nio Inc, listed on Nasdaq, sold approximately 84,400 electric vehicles globally in the first nine months of 2022, up 26% year-on-year and aided by the company’s entry into Europe in 2021, with the United States following in 2025 once the construction of a local plant has been completed. Growth in its home market has been more subdued this year, partly reflecting its high prices. Its latest model, the ET7, costs up to CNY536,000 (US $ 71,000).
Li Auto delivered 87,000 electric vehicles over the same period, aided by the launch of its L9 premium SUV in September, which cost nearly $ 64,000. The company has delivered 211,000 electric vehicles since it began production in late 2019. Xpeng sales have increased 300% to 56,404 units, helped by its more affordable prices ranging from $ 25,000 to $ 35,000.
However, it is the main producers in the country that are grabbing the bulk of the volumes and making the market increasingly competitive. BYD’s global electric vehicle sales increased 214% to 582,130 units in the first nine months of 2022, making it the largest electric vehicle manufacturer in the country so far this year, with an additional 593,191 electric vehicle sales (+ 307%) . Total NEV sales increased 255% to 1,175,321 units, with ICE vehicle production discontinued in March. The company recently launched the Seal battery-powered compact car in its home market priced at around $ 30,000, significantly lower than the Tesla Model 3.
Tesla delivered just over 483,000 vehicles from its Shanghai plant in the first nine months of 2022, making it the country’s second largest electric vehicle manufacturer so far this year after BYD. This includes 165,000 exports and 318,000 domestic deliveries, including 304,000 Model Ys reported. The company recently expanded the annual capacity of its highly profitable Shanghai plant to over one million units, despite having just opened a new plant in Germany and a second in the United States. In October, the company reduced the price of the Model Y in China by 9% to US $ 40,000, while the Model 3 price was reduced by 5% to approximately US $ 36,000 to support local sales.
The best-selling EV model in the country, SAIC-GM-Wuling’s Hongguang, is a mini-vehicle that retails for around US $ 5,000. Sales in the first nine months of 2022 are estimated at around 360,000 units while cumulative sales exceed 800,000 units. The company has launched eight small and mini EV models since 2017 and began production of the Air EV model based in Hongguang Indonesia earlier this year.
Large state-owned vehicle manufacturing groups have been slower to switch to electric vehicles, but are starting to make up for lost ground. SAIC Motor, the country’s largest vehicle manufacturing group with major joint ventures with Volkswagen and General Motors, is stepping up its drive to electric vehicle sales both at home and abroad. It owns the MG brand, which drives the company’s overseas sales. SAIC Motor sold just over 700,000 NEVs last year, including those produced by its SAIC-GM-Wuling joint venture.
In July, the company began exporting its MG4 Electric, its first “global” EV model based on its dedicated MSP EV platform, to Europe, to be followed by the Asia-Pacific, Latin American and European markets. ‘Australia next year. The company has set a sales target of 150,000 units for the model in 2023. Its overseas sales target for all NEV models in 2023 is 800,000 units, having sold 381,000 units in the first half of 2022.
Other local manufacturers that are rapidly moving into the electric vehicle segment include the state-owned GAC group. Its subsidiary GAC Aion EV recently launched the Y Plus SUV with projected monthly sales of 20,000 units, doubling the company’s current electric vehicle production after selling 150,000 electric vehicles in the first nine months of the year.
German vehicle manufacturers, including Volkswagen Group, Mercedes and BMW, are also aggressively expanding their Chinese electric vehicle businesses and are also investing in local R&D, while also trying to make up for lost ground in what it has become their largest single market globally. They too plan to make the most of local economies of scale and strong local electric vehicle supply chains to improve their competitiveness both in China and abroad.