2020 China’s New Energy Vehicles Market: Revolutions and Opportunities

The new energy vehicle market has been going through a far-reaching reform this year in China and beyond, with the challenges of a pandemic and slumping global economies. Seasoned economist Zeping Ren recently published a report combing through the happenings and trends this year in China’s new energy vehicle (NEV) market.

The NEV market in China is experiencing four revolutions on the supply side, according to Ren’s report. 

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First, the industry is becoming increasingly diversified. Led by Tesla, joint ventures and new companies are altogether reshuffling the industry and creating their respective niches. 

Second, with government subsidy declines and the economy weakened by the pandemic, overall sales of the NEV market dived by 44% in the first half of 2020. In the meantime, private households showed a growing inclination to purchase new energy vehicles. 

Third, the NEV industry has become an increasingly competitive arena for technology and Internet companies such as Huawei, Tencent and Alibaba, who in turn made NEV products more and more intelligent thanks to their partnerships with automobile makers.

Fourth, infrastructure development has been expedited in China, and the number of charging stations grew substantially, from 66,000 in 2015 to 1.32 million by July 2020. In the meantime, private charging stations have become mainstream in China, accounting for 57.8% by the first half of 2020, compared to 12.2% in 2015. 

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In November, joint venture SAIC-GM-Wuling Automobile led NEV sales in China, followed by BYD, then Tesla, with the top 3 taking up 46.5% of the NEV sales of the month, according to China Passenger Car Association (CPCA). In terms of the challenges Chinese NEV makers are faced with, Ren also proposed a few suggestions in regard to the directions the industry should be headed in to lay a solid foundation for high quality future developments. 

First, the government should lead in the electrification process. New energy vehicles should take the lion’s share in vehicles used in public transportation, logistics and taxis. 

Second, core technology research needs to be encouraged with tax deductions, state funds, as well as other supportive measures. 

Third, cross-industry cooperation is vital to NEV developments and innovations. As technology advances, people’s needs will become more extensive and cars will become more than just tools for transportation. Automobiles need to integrate with players in telecommunications, internet and other spheres to thrive. 

Fourth, the NEV industry can’t progress without well-equipped infrastructure. Smart charging in communities should be promoted, as well as the separation of batteries from vehicles to optimize the charging process and establishing standards for battery changes.