China may have the upper hand when it comes to electric vehicles (EVs), with multiple domestic car manufacturers starting up. As a result of the steady growth of EVs, China, now the world's largest EV market, has also seen a growing number of start-ups focused on building new energy vehicles.
The Chinese government has been at the forefront of driving the switch to new energy vehicles, as well as leading and dominating the EV market. By 2020, the Chinese government wants EVs to account for 12% of overall sales. On a global scale, the Electric Car Market size is projected to reach USD 1438.8 Billion by 2025 with a CAGR of 19.40%
When automakers roll out more new products to attract buyers, China's new energy vehicle (NEV) market is likely to see a sales boom next year(2020).
China was a strong supporter of NEVs and implemented automakers' quota production requirements. However, as part of an overall plan to reduce subsidies, it cut substantial subsidies for NEVs this year(2019), making the vehicles more expensive. NEV sales fell from year-ago rates by 45.6 percent in October.
Before the subsidy cut, China's NEV market, including plug-in hybrids, battery-only electric vehicles, and hydrogen fuel cell-powered vehicles, was a bright spot, with sales jumping 62% last year.
"We expect the NEV market to continue to grow for next year, perhaps not as drastic as it was in the past," said Stephan Woellenstein, head of Volkswagen Group in China in an interview.
A vital part of the revival is related to more large car manufacturers introducing NEV models, he said, as it helps to make NEVs more popular. "It typically makes a difference and will also change the perception of customers and drive the market."
One of the major factors driving China's NEV market is reducing prices. This price reduction can be attributed to the shift in large and small car manufacturers to release many new NEV's in the Chinese market.
"From my viewpoint, electric vehicles will be significantly cheaper in about two years than ICEs (internal combustion engine cars), as battery costs decline very rapidly and volumes drag down prices."
Since most electric cars sold in China are assembled by domestic companies, they have been able to keep their costs low. They are competitively priced in comparison to petrol-driven cars.
According to Toliver Ma, an auto analyst at Guotai Junan Securities in Hong Kong, the most popular range of EVs sold in China is priced between 80,000 and 100,000 yuan, making it appealing to cost-conscious buyers in the country.
Other factors that are driving the growth of Chinese NEV market are,
China's State Grid Corporation, the largest utility in the world, said earlier this year it was planning to build 120,000 public electric car charging stations by 2020. "EVs cannot expand without the charging grid," Infiniti's Meunier said. He further went on to add that " there is no reason to return to the internal combustion engine when you have the grid."
With China interested in reducing carbon emissions, the government offered discounts of up to 110,000 Yuan per unit to EV purchasers. Several changes have recently been made to its policy: subsidies for vehicles with a driving range of fewer than 150 kilometers have been withdrawn, while cars with a driving range of 300 kilometers will continue to receive the current level of subsidies. Those with more than 400 km driving fields are entitled to even higher subsidies.