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China’s EV sales are on the “kuai che” train, which is pretty slow

April 2, 2015

A friend in China recently asked me for my thoughts on the electric vehicle sales numbers in China. I realized I hadn’t thought about them much! That’s odd for one who blogs about China and electric vehicles, but then I haven’t been posting much lately. Alas, other, better-paying tasks have been taking up my time. My friend’s question was a good one, however, and I decided to answer it with, finally, a blog post.
It’s fair to say that China’s new energy vehicle policy (which includes battery-electric, plug-in hybrid electric, and hydrogen fuel-cell vehicles) has been consistent if not entirely realistic. The numbers put forth in the original policy in 2010 were completely unrealistic. That has since been modified several times.
As in many countries, there isn’t much demand for NEVs in China without government subsidies. China’s subsidy policy was also unrealistic, to the extent that it was limited in its time frame. It’s easy to see when the last policy ended – just look for a huge dip in NEV (and let’s face it, we’re only talking about BEVs and PHEVs, collectively plug-in electric vehicles or PEVs, for now) production numbers.
Why have NEV production and sales numbers suddenly spiked again? Because in late 2014 the government confirmed its subsidy policy for PEVs. Automakers aren’t interested in producing NEVs without assurance that the government won’t “reward” them. Of course, they also face pressure from the central government to produce NEVs, but they resist that pressure by only paying lip service to such production until it becomes clear there is government financial backing.
So, what were the NEV sales figures for January-February (sales figures in China for the first two months of the year are generally reported as one number because the Chinese New Year holiday moves around and has a big impact on numbers for the month in which it falls.)?
In January and February, 12,853 NEVs were produced in China, and 12,440 were sold. Of that, 6,519 BEVs were produced and 5,996 were sold. As for PHEVs, 6,334 were produced and 6,444 were sold. Those are pretty small numbers considering 4 million light vehicles were sold in China in the first two months of 2015 according to LMC Automotive, including 3.46 million passenger vehicles and 571,465 light commercial vehicles. But the NEV sales are a big jump over 2014, when year-end sales for BEVs were 45,048 units and for PHEVs 29,715 units.
The big jump in 2015 numbers is still a far cry from the volumes China will need to reach its target of a cumulative 336,000 units produced and sold in 2015. That is a bit more realistic than the original target of 500,000, however. The production target for 2020 is still two million units, and total number of NEVs on the road by then is still five million, as near as I can figure.
Targets aside, let’s consider the sales numbers for the first two months of 2015. Who were those sales to? What kind of vehicles were sold? Key questions. I doubt consumers did much of the buying. I’ll bet a lot of them were sold to municipal fleets. That doesn’t really matter. I have long maintained that the primary market in China for PEVs will be municipal fleets, including buses, taxis, and passenger vehicles. Still, I’d love to see a breakdown of the sales.
Meanwhile, with some certainty regarding the central government’s policy support continuing, China’s state-owned automakers have gone bonkers over PEVs. But their strategies differ markedly, as my twin ChinaEV, the Chinese website at http://www.chinaev.org, points out in a March 31 story. It looks at plans by Beijing Auto (BAIC), SAIC, and Guangzhou Auto to introduce a cumulative 25 new NEV models over the next three years. BAIC focuses on battery-electric passenger vehicles and delivery trucks; SAIC focuses on PHEV passenger cars, with “more emphasis on vehicle performance and mileage”; and Guangzhou Auto plans both BEV and PHEV passenger car launches.

SAIC showed a big line up of PEVs at the 2014 show. What will it have this year?

SAIC showed a big line up of PEVs at the 2014 show. What will it have this year?


Of course, pricing and especially more public charging posts will be key contributors to consumer sales for all these models, if they all make it to market. And since local governments own all three, you can bet that the local governments will be making some NEV purchases.
I’m headed to Shanghai in a few weeks to attend Auto China, among other things. It will be interesting to see how prominently NEVs figure in the stands this year. That also fluctuates based on policy. I’ll report back.
Around five years ago, I remember John Du, head of GM’s China Lab in Shanghai, telling me that there was no going back on China’s plans for NEVs. “The train has left the station,” he said. Well, turns out Du was correct, but that train is like the slow train I once accidentally bought a hard-seat ticket for in China about 15 years ago. This was labeled at “kuai che,” or “fast train.” In reality, it was very slow. It stopped at every town. What should have been a 2.5 hour trip took five hours. But I got there. I should have taken the “tebie kuai che,” it turned out (“especially fast train”).
China’s NEV train is a kuai che. But it will eventually get there.

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9 Comments leave one →
  1. zz0b2q permalink
    April 2, 2015 11:56 pm

    I believe that before 2020, China will include Low Speed / Short Range EVs into the nationwide cumulative goal of 5 million vehicles. These Low Speed vehicles are increasing in numbers at a much faster rate than the official NEV sales, and the sales are to real consumers, not to government owned fleets (buses, garbage collection vehicles, taxis). These Low Speed EVs would not receive, nor need National and City incentives, since their prices are in the 30,000 RMB range. They would not need nation-wide license plates, since they would be driven within their local area and provinces. So, China could declare victory on their NEV targets, saving face. And in addition, China would actually be achieving the larger GOAL: reducing dependence on imported oil. Everyone wins !
    David Reeck, retired from General Motors China.

    • April 9, 2015 3:50 am

      Hi David!

      • April 9, 2015 3:54 am

        OK, that response came with a hit of the carriage return…

        Hi David, I like your concept here, I think you’re right on the face-saving side of the equation. I am also curious to see, in the next little while, how car ownership changes. Much has been made of the idea that “Chinese people outside of big cities have never owned cars before”, and that the experience is new. How are people taking to the Didi Limousines and Uber experiences? Are people going to see such a need for a big troublesome 4-wheeled vehicle of their own if its easy to get a nice, clean big vehicle at their beck-and-call? Personally speaking, my desire to purchase a vehicle (and find a parking spot for one) has fallen dramatically since these services came to be… Is the car experience really going to be the same in China as it was in Europe and US?

        Actually, I hope not…

      • David Reeck, retired from General Motors China permalink
        April 9, 2015 5:21 pm

        Robert,
        Good questions.
        I think that American, for example, have had ‘car ownership’ for decades. Not a big deal to them. Americans have gone from cars to vans to SUVs, and we older Americans are now wanting to downsize (house and car and …).
        Chinese like to OWN things. For example, why would a Chinese want to buy a rundown small flat in Shanghai for over RMB 4 million, rather than rent the same unit for about RMB 2,500 per month ? (133 years of renting at constant RMB value).
        For cars, owning a car is a HUGE status symbol. And since it is portable, Chinese can show off (gain face) to their “hometown” relatives at Spring Festival / Chinese New Year, and to their work colleagues where they live.
        So, I think that Chinese will need to ‘get over’ the car owning experience before evolving to any car sharing norm.

    • April 9, 2015 5:31 pm

      Both of you, what do you think the future of low-speed EVs is? Jack Perkowski just had a column in Forbes claiming that LSEVs are the real future for EVs in China, there are 4 million on the road, they aren’t expensive, people in inland cities will buy them for daily transportation, charging isn’t an issue because they use lead-acid batteries and can be plugged in anywhere, etc. I feel like I disagree but can’t substantiate that belief. For one, the central government isn’t keen on LSEVs and there are no national standards for them, though that may happen. Also, isn’t the central government leery of the massive environmental problem from all those used lead-acid batteries? LSEVs have been around for decades. If they were going to be the answer, why didn’t that happen a long time ago?

  2. zz0b2q permalink
    April 2, 2015 11:57 pm

    Nice article, Alysha ! Keep them coming 🙂

  3. David Reeck, retired from General Motors China permalink
    April 10, 2015 1:51 am

    First of all, I do think that the Low Speed (Short Range) EVs have an expanding future in China. Yes, these LSEVs can typically be plugged in anywhere, because they do not use a Charging Station with the Chinese GuoBiao charging standard (or any Charging Station standard). So, a simple extension cord (3 pin, 220 Volt AC, single phase) is sufficient. (Normal household electrical outlet / receptacle). This is independent of Lead Acid or Lithium-ion battery cells. But, the important aspect is that Lead-Acid batteries are much less expensive, and more tolerant of mis-matched battery cells. The central Chinese government is split on these LSEVs. For example, MOST has historically supported them. TsingHua Univ (Prof OuYang MingGao, the most famous and knowledgeable academic person) strongly supports LSEVs, and has a company that has manufactured them. MIIT is against them. Local / Provincial governments strongly support their “hometown” LSEV manufacturing company. They provide jobs. To regulate the quality of LSEVs, there was an agreement between two agencies (maybe MOST and CATARC ?) to ensure good / safe design and manufacturing capability. ShiFeng of ShanDong province scored very well on the evaluation, for example. ShiFeng is the largest producer, to my knowledge. In Western countries, lead acid battery have been used for 100 years (for example the battery that provides power to start internal combustion engines) and the batteries are safely (to the environment) re-cycled. China can easily re-cycle lead acid batteries like they recycle most everything else (millions make a living in the recycling of corrugated, styrofoam, glass, copper wires, plastic bags . . . . .
    I think the Price Point (about RMB 30,000) has been coming down and the incomes have been rising, so these LSEVs are now affordable to millions of people. In the big cities like ShangHai and BeiJing, for example, the 3-wheel LSEVs are very common. They are typically cheap taxis or delivery vehicles. It seems they are less common inside the Inner Ring roads. But, in the PuDong area of ShangHai, they are everywhere. Some of these LSEVs are now also being upgraded to Lithium-ion batteries.
    Again, the higher level goal is to ENSURE ENERGY SECURITY (reduce dependence on imported oil), and not dictate mobility technology, even if it requires more coal burning electrical power plants, in my opinion.

  4. April 10, 2015 4:54 pm

    I don’t believe LSEVs are allowed in the city center in Shanghai, which is why you don’t see them there. Thanks for the good info. The question remains, if they are out there why haven’t they become more popular earlier?

  5. David Reeck, retired from General Motors China permalink
    April 11, 2015 9:21 pm

    Your question : why were LSEVs NOT popular earlier ?
    As I stated, I think that the prices are coming down, as the incomes are increasing (the “sweet spot” has been reached).
    More provinces are supporting LEVs. In addition to ShanDong, the historically well known supporter, HuNa and AnHui, to name two are recently supporting their homegrown LEV manufacturing companies and making provisions to issue special license plates for these LSEVs. Car ownership, in general, is spreading and these vehicles are MUCH lower price (30,000 RMB) than normal cars (about 100,000 RMB and up). Need any more reasons ?
    David Reeck

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