China’s Auto Market Slowdown Finally Hits New-Energy Vehicles
By Scott Kennedy and Qiu Mingda
In some ways China’s new-energy vehicle (NEV) market is the envy of the world. In 2018 over 1.2 million NEV passenger vehicles were sold, and that figure could climb to over 1.7 million in 2019. Equally impressive, the proportion of vehicle sales that are NEVs has been rising over the past few years, from barely 0.1% in 2014 to over 5% now (see Figure 1). Electrification is coming to China’s auto sector more quickly than in any other market in Asia, Europe or North America.
However, those numbers can be deceiving. China’s automobile industry has slowed down significantly over the last two years. In 2019, the slowdown finally hit the NEV segment. NEV sales in May 2019 were only 2.0% higher than the year before, a drastic drop in the growth of sales (see Figure 2). If China persists in reducing subsidies for NEVs, sales should continue to lag in the second half of 2019 and the overcapacity that exists in traditional cars will be more visible in NEVs as well.