New Energy Vehicles Are Gaining Great Popularity

By Jenny Hu

China sold 334，000 new energy ve- hicles in February， up 184.3% yearon-year， according to information released by the China Association of Automobile Manufacturers on March 11. The cumulative sales volume from January to February was 765，000 units， up 154.7% year on year.

The China Association of Automobile Manufacturers pointed out that from the automobile development trend in the first quarter， a series of policies have been unveiled with more favorable tax and fee cuts to help relieve the burden of enterprises， and the construction of large-scale infrastructure projects have been started since the first quarter， all of which play a significant role in promoting economic growth. At the same time， auto companies are also accelerating the pace at which they are bringing new products on to the market， and the auto market is expected to show steady growth in the first quarter.

According to the IEA’s optimistic forecast， global new-energy vehicle sales will reach 20 million units by 2025， with a penetration rate of about 17%. The compound growth rate from 2020 to 2025 is 45%.

Sales of new energy vehicles have surged in China

Although February’s auto market was affected on the one hand by declining subsidies and the upward price of raw material parts， and on the other hand by the Spring Festival holiday and the rebound from the pandemic， new energy vehicles still maintained strong sales momentum.

Nationally， data released by the China Association of Automobile Manufacturers showed that in February， the domestic new energy vehicle market output and sales completed 368，000 and 334，000 units respectively， up 2 times and 1.8 times year-on-year respectively. In terms of the penetration rate， from January to February this year， the market share of new energy vehicles has reached 17.9%.

Data from the Passenger Association showed that retail sales of new energy passenger vehicles reached 273，000 units in February， up 180.9% year on year， and the month-on-month decline was the lowest trend in February. Among the new energy passenger vehicles， 206，000 pure electric vehicles were sold， up 148.6% year-on-year；plug-in hybrid cars were sold at 67，000 units， up 369.3% year-on-year.

According to statistics， the production and sales volume of new energy vehicles in China generally shows the same growth trend from 2012 to the first half of 2021. In 2021， the production and sales volume of new energy vehicles in China reached the maximum value in recent years， which was 3.545 million and 3.521 million respectively， achieving a considerable growth. iiMedia Research analysts believe that the growth of consumer demand and manufacturers’ product strength promoted the rapid growth of new energy vehicle sales.

In addition， data shows that the amount of charging piles in China has shown a trend of rapid growth since 2012. By January 2022， the amount of charging piles in China has reached 1.178 million， and the three provinces with the largest amount of charging piles in China are Guangdong Province， Jiangsu Province and Zhejiang Province. iiMedia Research analysts believe that as an important “supply station” for new energy vehicles， the layout of charging piles greatly affects the development of the entire new energy vehicle industry.

Cui Dongshu， Secretary-general of the Passenger Association， predicted that despite the continuing pandemic， the effect of declining subsidies and raw material prices still exist， considering user demand and early undelivered orders， the sales of new energy vehicles in March this year will not be significantly affected. Cui believes that there are more uncertainties in the development of new energy vehicles this year than that of the previous years， so China still has a package of policies to support the stable consumption of new energy vehicles. According to an estimation of the Passenger Association， the scale of new energy passenger vehicles will reach 5.5 million in 2022， and the transformation and upgrading of the automobile industry will continue to accelerate.

According to the research of SPBD International， the sales penetration rate of China’s new energy vehicle industry this year has repeatedly exceeded expectations， and the breakout point of the industry has arrived in advance. With the help of policies， supply， demand and capital， it is predicted that the penetration rate of new energy passenger vehicle sales in China will reach 42% by 2025， with a compound growth rate of 29.7% from 2021 to 2025.

Energy saving and environmental protection are important factors for car purchases

Data from the survey on Chinese Consumers’purchases of new energy vehicles in 2022（hereinafter referred to as the Survey） show that 40.4% of Chinese consumers have purchased new energy vehicles， and 54.1% have not purchased new energy vehicles but have plans to purchase. The main reason for Chinese consumers to buy new energy vehicles is to save energy， which accounts for 75.8%， followed by good appearance and diverse functions， accounting for 43.5% and 42.8% respectively.

iiMedia Research analysts believe that with the increasing awareness of environmental protection， saving energy has become an important factor for Chinese consumers to consider when buying cars， and new energy vehicles have a high acceptance rate in China.

Pure electric vehicles and hybrid vehicles are currently considered by Chinese consumers to be the most promising types of new energy vehicles. Survey data of Chinese consumers’ opinions about the prospects of new energy vehicles in 2022 show that nearly 70% of Chinese consumers are optimistic about the prospect of new energy vehicles， 30.8% do not believe that the development prospect of new energy vehicles in China is either optimistic or not， and only 1.4% do not believe in the development of new energy vehicles. iiMedia Research analysts believe that the development of new energy vehicles is conducive to promoting the adjustment of China’s energy structure and to the sustainable development of the national economy. By the virtue of such features as energy saving and diverse functions， consumers are also optimistic about the prospects of new energy vehicles.

With the awakening of major automobile brands， Internet cars are emerging constantly. Similar products are increasing， and consumers have more diverse choices. Looking around the automobile market， many popular brands and models are now utilising the name of an “intelligent” car， integrating life services and car services into a car. Intellectualization and humanization have become important considerations for automobile consumers.

According to data from the Passenger Association， BYD took the crown with an overwhelming 86，700 vehicles sold in February， up 751.3% year-on-year， surpassing the total sales of players from the second to the sixth place and occupying a market share of more than 30%. SGMW and Tesla are ranked second and third respectively， with monthly retail sales of more than 20，000 vehicles. In addition， Geely and Chery were the only new energy vehicle companies to sell more than 10，000 units in February.

New car manufacturing forces represented by NIO， Weimar and Xiaopeng have entered China’s new energy vehicle market with capital and technology and won the favor of consumers with intelligent functions and eye-catching design. Chinese consumers no longer regard traditional car brands as the main choice for car purchases， and competition in the new energy vehicle industry is becoming increasingly fierce.

Safety， battery quality and battery life have become consumers’ main concern

On February 18， 2022， the China Consumers Association published an Analysis of Complaints Accepted by the China Consumers Associations in 2021， and at the same time released“some typical cases and suggestions for solutions”. Among them， one of the typical issues flagged by the China Consumers Association was that it is difficult to prove and protect rights of new energy vehicles. Consumer complaints are divided into eight main categories， including safety， battery quality， battery life， after-sales and price.

According to the survey data of reasons compiling Chinese consumers’ dissatisfaction of new energy vehicles， poor battery life accounts for 41.7%， high maintenance cost for 39.8% and imperfect supporting facilities for 36.7%. iiMedia Research analysts believe that because of the limitations of batteries， new energy vehicles may generally support a mileage of 100-700 kilometers. New energy vehicles are suitable for urban transport， yet not suitable for long-distance travel， which is a constraint for the development of China’s new energy vehicles.

Although the new energy vehicle industry has started taking shape and the industrial chain is relatively complete， with the continuous growth of the number of new energy vehicles， the contradiction of insufficient supply of charging infrastructure becomes increasingly intensified， and the overall construction scale has lagged behind. iiMedia Research suggested that charging infrastructure construction should be accelerated to become the focus of development. Government departments should issue guiding opinions about the new energy intelligent vehicle industry， encourage innovation and industrialization of wireless charging， intelligent charging and high-power charging technologies， and support the construction and operation of hydrogenation stations.

At the same time， the iiMedia Research report pointed out that although China’s new energy vehicles develop fast， China still need to be clearly aware that its development is still in the incubation period. Safety is still the main consideration for consumers to buy new energy vehicles， and eliminating major safety accidents is the top priority at present. China’s new energy vehicle industry should formulate new technical standards and safety standards， strengthen capacity construction of the supervision platform， and establish a “prior， in-process and post” monitoring system.

Several new energy vehicle companies raise prices

Since March， several new energy vehicle companies announced price increases for some of their models.

On March 17， Chery New Energy announced that the cost of several models of Chery New Energy continued to increase due to the impact of national policy adjustments and the continuous sharp rise in the price of battery and chip raw materials. Starting from midnight on March 17， Chery New Energy raised the price of some models by RMB 3，000-4，100， but mentioned customers who signed contracts with deposits would not be affected.

On March 15， Tesla China completed a wave of price increases， including price increases of between RMB 14，000 and 20，000 for the rear-wheel drive and high-performance Model 3 and the long-range and high-performance Model Y. Earlier on March 10， the price of the high-performance Model 3 and the long-range and high-performance Model Y were increased by RMB 10，000. On March 17， Tesla China’s website showed that the price of the rear-wheel drive Model Y was raised to RMB 316，900， an increase of RMB 15，060. This marks Tesla’s third price increase within 10 days.

On March 11， the Hongguang MINIEV came into the market. Six models were launched， which have the same power and range as the old model， but prices increased by RMB 2，000.

On the evening of March 15， BYD issued a statement about their price adjustment， saying that due to the continued sharp rise in the price of raw materials， BYD Auto would adjust the official suggested price of new energy models on wangchao.net and Haiyang.net by a range of RMB 3，000 to 6，000.

Car companies explained that the increase in prices of raw materials and accessories were to blame for this round of price increases.

“The cost of new energy vehicles is very sensitive to the prices of the supply chain， and the current prominent problem is the impact of rising raw material prices on the new energy vehicle industry chain，” said Sun Xiaohong， Secretary-general of the Automobile Branch of the China Chamber of Commerce for Import and Export of Mechanical and Electrical Products， in an interview with the media. Since 2021， spreading stagflation sentiment around the world， repeated outbreaks of COVID-19， chip shortages， upward prices of raw materials such as lithium and cobalt， and rising international freight rates lead to rising cost of new energy vehicles. At the same time， the Russia-Ukraine conflict and the corresponding sanctions and countermeasures led to a further supply shortage of nickel， a key material for power batteries， thus futures surge and the chip industry chain has also been affected.

“We should objectively and rationally treat the phenomenon of rising prices in the terminal sales market caused by rising prices of raw materials，” Cui Dongshu believes that from January and February， the year-on-year growth rate of new energy vehicle sales has reached about 150%. Although rising prices of new energy vehicles will dampen consumer enthusiasm in the short term， China’s diversified market for new energy vehicles will offset this phenomenon. On the one hand， car use is a rigid demand， especially as the epidemic has prompted many families to switch from public transport to private cars， and on the other hand， consumers have so far remained receptive to price increases.

At present， the State has introduced relevant policies to alleviate this situation. Xin Guobin， Vice Minister of Industry and Information Technology， said on February 28 that China would speed up the development of lithium， nickel and other resources to meet the production needs of power batteries and crack down on unfair competition such as hoarding and price gouging.

According to a new energy vehicles research report released by China Securities， at present new energy vehicles continue to maintain strong demand， and price hikes of such auto makers as BYD， GAC AION and Tesla did not really affect orders. It is expected that 420，000 to 450，000 new energy vehicles would be sold in March， and annual sales are expected to exceed 6 million.