The Chinese Electrical and Rechargeable Hybrid (VEB+VEHR) market could be boosted by low priced cars
- The market for electric and rechargeable hybrid (BEV + RHEV) passenger cars and light commercial vehicles (PC and LCV) in China is down 5% in the first quarter of 2017 compared to the first quarter of 2016, although it had increased by 53% in 2016 compared to 2015: 507 000 units relative to 331 000 one year earlier. It was in fact the strong tax incentives to purchase this type of vehicle that boosted the Chinese market in fiscal year 2016, and in early 2017, the reduction of the tax incentive had the inverse effect on sales. In any case, sales of BEV and RHEV represented less than 2% of the total Chinese market in 2016.
- The Shanghai Fair held in April 2017 showcased many BEV + RHEV concept vehicles. The Chinese government has stated their objective to have 3 million BEV + RHEV (called NEV - New Vehicles in China) sold per year from 2025. To achieve this goal, the government is examining the possibility of setting production quotas of BEV + RHEV for each OEM producing in China or importing more than 50 000 vehicles (quotas of 8% in 2018, 10% in 2019 and 12% in 2020). This quota project is currently under negotiation and could be delayed by 1 year, given the large gap to bridge (today BEV and RHEV are only 2% of the automobile market in China).
- Today, the BEV + RHEV leader in China is BYD who sold 100,000 units locally in 2016. On the European carmakers side, both the Volkswagen and Renault-Nissan groups plan to enter the BEV and RHEV market in China by proposing models at low prices.
- Volkswagen is expected to begin production of a low-cost 100% electric car (BEV ) in joint venture with Chinese manufacturer JAC in 2018. The German manufacturer plans to sell 400,000 units by 2020 (nearly 10% of its sales in China) and 1.5 million by 2025 (nearly 30% of its sales in China). One understands the effort that Volkswagen will have to provide to reach 400 000 sales in 2020, 4 times more vehicles than what BYD sells today, and 1.5 million in 2025.
- Renault-Nissan, meanwhile, is expected to launch a low-cost 100% electric vehicle (BEV ) in 2019, in joint venture with Chinese manufacturer Dongfeng. To optimize costs, the choice of the platform would be based on that of the KWID (A) segment, produced today in India. This architecture would be electrified and adapted to Chinese customer expectations. The model would be released under the Renault, Nissan and Dongfeng brands. Renault-Nissan's objective would be to sell the model at around 10,000 euros, which is almost two times less expensive than the competitors' electric cars currently on the Chinese market. No sales target has been communicated by the Franco-Japanese group.
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