Electric Cars Are China Auto Industry's Lone Bright Spot
While China has decided to phase out incentives to those buying new-energy cars, it has yet to unveil a new subsidy plan for 2019.
(Bloomberg) -- Electric cars are holding their own in China, the world’s biggest auto market, even as the industry has seen a slump in overall sales for seven straight months.
Deliveries of new-energy passenger vehicles, which include pure-battery, plug-in hybrids and fuel-cell cars, more than doubled to 85,000 units in January, fueled by a rush before the government scales back subsidies for the zero- and low-emission automobiles by 2020. By contrast, total passenger car sales tumbled almost 18 percent to 2.02 million units in the month, according to data this week from the China Association of Automobile Manufacturers.
While China has decided to phase out incentives to those buying new-energy cars over the years, it has yet to unveil a new subsidy plan for 2019 that would cut the discounts. At present, buyers can get as much as 75,000 yuan ($11,130) from both the central and local governments for a pure-electric e5 sedan made by BYD Co., which offers a driving range of 450 kilometers (280 miles) per charge. That would save the customer a third of the cost.
Restrictions on car ownership in some mega-cities such as Beijing and Shanghai to ease congestion and pollution are also playing a significant role in improving EV sales, said Bill Russo, founder and chief executive officer of Shanghai-based consultancy Automobility Ltd. Most of the EVs are used by ride-hailing and car-sharing services, he said.
The rising demand is prompting carmakers to boost production and add new models. Tesla Inc. is accelerating its push in China with a planned manufacturing presence, and the U.S. company will compete against electric cars by global brands such as Volkswagen AG and BMW AG as well as dozens of local manufacturers seeking a piece of the pie.
To contact Bloomberg News staff for this story: Yan Zhang in Beijing at yzhang1044@bloomberg.net
To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Sam Nagarajan, Ville Heiskanen
©2019 Bloomberg L.P.
With assistance from Bloomberg