Sales Blogs/China

China NEV Sales for 2019 Q3 + October

The steep decline in China’s NEV sales continues and it is accelerating. Preliminary results for October indicate 48 % fewer deliveries than in October 2018; even October 2017 was higher. The slump started in July, after the announce subsidy reductions became effective and the recent trend has confounded policy makers and market observers alike. Purchase incentives for NEVs have been cut before, but this time, the usual recovery after 2-3 months did not materialise. The prolonged crash was unlikely a part of the plan. The MIIT, setting the course for the NEV industry, is determined to deflate a sector that showed signs of overheating and is being overcrowded by new-comers with uncertain viability. Apart from subsidy cuts, new barriers for entry have been established, limiting the number of manufacturing subcontractors, demand a minimum of R&D funds and production capacity. Requirements for battery capacity and esp. safety were increased another time. Battery fires and recalls have high public awareness and cause suspicion. The combined effect of measures and events is now broad based. Even the market leaders post big losses in their NEV business and the volume erosion among smaller players with 2-3 years of market presence speaks trouble. The overall Chinese car market has been in decline for 16 consecutive months now, while the sales of NEVs kept growing, at least until June. It is for the strong results from H1 that year-to-date, the balance is still positive. 963 000 NEV passenger cars and LCVs have been delivered from January to October, 19 % more than in the same period last year. The forecast for 2019 has a lot more uncertainty than last year. Our contacts in China do not expect a recovery during the last 2 months of the year. Our outlook for 2019 is a volume of 1,1 to 1,2 million NEVs, (Cars, SUVs, MPVs and LCVs) in a light vehicle market of 25,4 million, 8 % lower than 2018. The best estimate, 1164k, converts to a NEV share of 4,6 % and zero growth over 2018. The fundamentals, like Government targets for EV deployment, ICE restrictions, EV portfolios and charging infrastructure investments speak for further NEV growth, but we do not see the sector returning to the relentless 60-100 % growth rates of previous years. Officials have re-stated the target to produce 2 million NEVs (BEV, PHEV, FCEV) in 2020. This includes 150k-200k of commercial vehicles and buses. With the current conditions and sentiment, these numbers could be hard to reach, but we expect at least an improvement relative to the current situation.

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