The China Electric Vehicles market is anticipated to register a CAGR of over 25% during the forecast period (2020 - 2025).
- With the growing environmental concerns, and rise in exhaust emissions, the country has been focusing on and working toward the development of sustainable transportation. This, in turn, has resulted in the electrification of its transport sector.
- During the forecast period, the country may also witness growth in the adoption of electric buses, as more than 30 Chinese cities have made plans to achieve 100% electrified public transit by 2020, including Guangzhou, Zhuhai, Dongguan, Foshan, and Zhongshan in the Pearl River Delta, along with Nanjing, Hangzhou, Shaanxi, and Shandong.
- Also, the sales of the cars have been decreased gradually mainly due to the economy lockdown. This declining trend has further continued during the first quarter of 2020 due to the outbreak of Corona Virus across the country. The government had announced country lockdown, due to which production and dealerships facilities were shutdown.
Key Market Trends
Increasing Adoption of Electric and Hybrid Vehicles, due to Government Norms
With rapid urbanization and increase in the vehicle sales, China is determined to reduce the exhaust emissions from the vehicles. Meanwhile, the country also intends to reduce its dependence on oil imports, in turn, driving the demand for and sales of electric vehicles in the country.
Additionally, some major cities and provinces are imposing more stringent restrictions. For instance, Beijing only issues 10,000 permits for the registration of combustion-engine vehicles per month, in order to encourage its inhabitants to switch to electric vehicles.
Also, the government of China had lifted taxes or has given a considerable amount of tax exemption on purchase of EVs. These initiatives by the government have attracted a lot of customers to purchase EVs in this country For instance,
- In April 2020, the China government has introduced 10% service tax waiver for electric vehicles to boost the demand of the market due to Covid-19 impact.
Currently, vehicle manufacturers such as Toyota and Honda have been dominating the hybrid vehicle segment in China, with their models such as Toyota Corolla Hybrid and Honda Accord Hybrid.
- In the first three quarters of 2019, Corolla Hybrid sold 38,540 units in China, which has accounted for nearly 20% increase of total hybrid deliveries during the period.
Such measures are aiding China to formulate a resolute and optimistic prospect for the development of electric vehicles in the country, which is expected to drive the market.
Passenger Cars Segment Experience Highest Market Share
Currently, the passenger cars segment is experiencing more demand than commercial vehicles, and it is projected to continue its dominance during the forecast period. The growth is attributed to the increasing population which is catering to the growth in EVs and stringent government emission norms. For instance, The Chinese government is implementing China 6 norms for pollution control in the region which are stricter than previous China 5 norms and are based on EURO 6 norms, form July 2020, which results in supporting the demand of micro hybrid vehicles in this region.
Also, the demand for EVs and plug-in hybrids are expected to decrease widely, as the subsidies for them are reducing. Electric vehicle manufacturers have been signing contracts or deals with China battery manufacturers. For instance,
- In November 2019, BMW Group has signed a contract of USD 4 Million to buy batteries from CATL, a Chinese battery manufacturer, to support its vehicle electrification drive.
Growing income levels and environmental concerns in China are also few major factors which is driving the market over the forecast period. This, in turn, is expected to result in increased investments in passenger cars in China.
The China Electric Vehicles market is dominated by few players such as BAIC Motors, SAIC Motors, Honda Motor Company, Geely Motors, and BYD Co. BYD is the leading player in the Chinese electric vehicles market, owing to the increasing orders for its passenger cars and electric buses from the domestic and international markets. SAIC is expected to be the second-largest company, followed by Geely Motors and BAIC Motors. Companies are investing heavily in research and development for the innovation of advanced products and technologies.
- In February 2020, Honda Motor Company, Ltd. has announced to begin its sales of all new Honda Fit Hybrid vehicles. It is equipped with Honda’s 2-motor hybrid system which drives the vehicle with an electric motor, which results a better fuel efficiency and smooth drive.
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