The Chinese market for Battery Electric Vehicles (BEV) grew by 4% in 2019 despite the subsidies reduction
- The market of passenger cars (PC) produced in China, all engines combined, fell by almost 10% in 2019 compared to 2018, to stand at 21.36 million units. In this context, the Battery Electric Vehicles (BEV) market managed nevertheless to experience growth of 4% compared to 2018, with a volume of just over 825,000 units. This volume only takes into account locally produced vehicles, in particular without taking into account imports as Tesla ones.
- The Chinese market remains the world's largest for this type of engine, ahead of the European Union + Norway + Switzerland market (Inovev estimates at 355,000 units) and ahead of the United States market (236,000 units). China, however, experienced some disturbances in 2019, not only because of the market overall development but also because of political decisions which had a direct impact on BEV demand.
- Indeed, at the end of March 2019, the government announced its new incentive policy regarding the purchase of so-called “NEV” vehicles (for New Energy Vehicles - PHEV + BEV + FCEV) with decreasing subsidies, passing for instance from 50,000 Yuan (nearly 7,300 Euros) to 25,000 Yuan (3,650 Euros) in the case of a BEV with a range superior than 400 km (NEDC cycle). This subsidies drop has the long-term objective of “cleaning-up” the market, avoiding dependence on subsidies and overcapacity, keeping only financially viable carmakers, which are not relying solely on subsidies and developing products with high technological content. In addition, and in order to maintain demand in the long term, the budget previously dedicated to subsidies will now be allocated to the development of charging infrastructure.
- These decisions had a direct impact on the short term demand, as the market had a disturbed evolution, with a sharp increase of 54% in sales in June 2019 (in anticipation of the application of the new politic) and a sharp fall of the same order at -58% the following month. However, and despite the possible announcement of a total end of subsidies, in the medium and long term, demand and supply of electric vehicles should continue to grow through the use of other levers (quotas, standards on vehicles and batteries, development of charging infrastructure….).
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