China is about to introduce an automotive electric quota of 8% of all vehicles by 2018.
It sounds modest, but considering China is the largest car market in the world and major car producers are very worried, because 2018 is just around the corner. China is proposing a point system.
Troubled car manufacturer Volkswagen currently sells about 3 million cars in China, they need to produce 60,000 electric cars or plug-in hybrids with an electrical range of 50km, they would need to produce 120,000 vehicles. If they are unable to deliver on that quota, they would either have to throttle production or buy credits from other manufacturers at an unknown cost. Most German car manufacturers are not prepared for this sudden move. It means massive investments for these manufacturers. This development is a real wake-up call for the European car manufacturers.
Even BMW who is heavily developing in the electric space, will have a challenge ahead. In the first 3 quarters of 2016 BMW sold 379,000 cars in China of which exactly 1204 were electric vehicles plus about 600 plug-in hybrids.
There are more than 180 million cars on the roads of the People’s Republic. More than 20 million cars are sold every year.
VW for example still performs well, in despite of the diesel scandal. Four out of ten cars are sold by the Group is into the Chinese market. For the VW core brand it is even every second car. This has resulted into a huge dependency for VW over the years. So a leadership change in Bejing will have massive impact on the car market as China embarks on trying to become world leader in the Electric Mobility Market – at all cost.
Everybody who has been to China has experienced the air pollution in larger cities. China has already introduced regulations favouring electric vehicles. To register a new car in Bejing, you are only able to ‘bid’ for a permit at an auction competing again 700(!) other bidders. If you choose to register an electric vehicle – the registration is free!
Last year, according to official statements, 331,092 electric vehicles were sold in China. More than 90 billion yuan, billions of dollars worth billions of dollars, were state subsidised. At present, Beijing pays a subsidy of approximately 11,000 AUDs for an electric car from Chinese production. And depending on the city, further subsidies may be added.
A few months ago, the Chinese government announced that about 70 per cent of all e-cars sold in China were to come from purely Chinese manufacturers by 2020. In 2025, it should be 80 percent. What a statement and what a challenge to all the established car manufacturers worldwide!
Here is an overview on the electric vehicle market in China from an article “China Electric Car Sales Up 188%, Still Dominated By BYD” by cleantechnica.com
“The Chinese market had some 34,000 new EVs zooming the streets last month, a 188% increase over the same month last year, in-line with the annual growth rate. EV market share surpassed the 1% barrier in July, reaching 1.1% of new car sales.
At this rhythm, the Chinese EV market is headed to reach some 400,000 sales and 1.5% market share by December 31st, which not only would beat North America (USA + Canada + Mexico) and Europe as the top-selling market, both in volume and market share, but would also make it the largest market fleet-wise, with nearly 700,000 units in the streets.
All the while, 96% of the market belongs to domestic brands. For the record, of the 4% left for foreign brands, 2% belongs to Tesla, 1% to Porsche, and a remaining 1% is for the remaining automakers….”
Do you know some of those brands?