Thursday, August 22, 2019

Electric Vehicles Will Win Big in a Recession

Electric Vehicles (Credit: oilprice.com) Click to Enlarge.
The news on vehicle sales is indicative of the growing economic headwinds.  Data published by the China Association of Automotive Manufacturers showed auto production down 12.4% in the first half of the year in what is the world’s largest car market.  Chinese auto production in 2018 was down 4% to 27.8 million units, the first time since 1990 that the country’s car sales have contracted on an annual basis.

June sales for passenger cars were up, but this has been attributed to dealers offering big discounts to reduce inventories of vehicles that do not meet new exhaust emissions standards introduced from July in 17 Chinese cities and provinces.

In contrast, China’s New Energy Vehicles (NEV) fared far better.  NEV sales last year were up 79% at 1.1 million NEV passenger cars plus 60,000 light commercial vehicles.  According to data from EV-Volumes, this made up 4.2% of new sales in the light vehicle sector.  The first half of 2019 saw total sales of 633,000 NEVs and an average market share of 6.3%.

The depressed state of the conventional auto market, but sustained buoyancy in NEV sales means the latter’s market share is higher than it otherwise might have been.

NEV sales in China for the remainder of the year are expected to fall foul of much-reduced subsidies to manufacturers, particularly for models with smaller batteries and shorter ranges.  The subsidy reduction from July is also likely to have inflated first-half sales.

Nonetheless, taking the changes in support schemes into account, EV-Volumes forecasts growth of 55% over 2018 to this year for NEVs in China, representing a 6.7% share of the market.  The market for conventional passenger cars is likely to see a second year of contraction.

China is and remains the epicenter of NEV production and growth, particularly when the e-bus and the e-truck market is taken into account.  According to a recent report from Bloomberg New Energy Finance (BNEF), China’s e-bus fleet numbered 421,000 at the end of last year, about 98% of the world market.  The global market for this segment grew by 32% in 2018, according to BNEF, which forecasts that China’s municipal e-bus fleet will rise to 600,000 by 2025.

According to EV-Volumes, 2019 is likely to see 140,000 new heavy electric vehicle sales, predominantly in China, up from 120,000 in 2018.

European NEV growth at 34% last year was stunted by the introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLPT), which required many EV models to undergo battery upgrades, leading to a lack of availability.

In contrast, US EV sales rose sharply, by 79%, largely as a result of increased availability of Tesla’s new Model 3.  The figures suggest that EV sales outside of China, far from suffering the downturn in the global car market, will rise quicker with increases in production capacity, supply-chain improvements and the roll-out of charging infrastructure.

Read more at Electric Vehicles Will Win Big in a Recession

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