NEV Production & Sales Hit Million Mark: Secrets Behind Its Counter-cyclical Boom
时间：2019-01-01 21:21:04 来源：本站 点击：8次
The year 2018 quietly drew to a close amid a booming new energy vehicle market.
This assessment stems from encouraging figures released recently by the China Association of Automobile Manufacturers (CAAM): from January to November of this year, the output and sales volume of new energy vehicles (NEVs) hit 1.054 million units and 1.03 million units respectively, both breaking the million-unit threshold.
Over the same period last year, neither output nor sales of NEVs exceeded 800,000 units. Against the backdrop of cyclical economic downward pressure this year, how did NEVs stage such an impressive turnaround? What landmark events unfolded in the NEV market in 2018?
As the year came to an end, Guoshi Today reviewed major policies and events that shaped the development trajectory of the NEV industry in 2018. These milestones help us sort out the industry’s development context and direction over the past twelve months.
In February this year, four central authorities including the Ministry of Finance, MIIT, the Ministry of Science and Technology and NDRC jointly issued the Circular on Adjusting and Improving Fiscal Subsidy Policies for the Promotion and Application of New Energy Vehicles. The document stipulated that overall fiscal subsidies for NEVs in 2018 would be cut by more than 30%.
In fact, the phase-out of NEV subsidies kicked off back in 2017. Subsidies were slashed by 20% from the 2016 level, and the cutbacks became deeper and more refined in 2018.
Subsidies for NEVs would continue to shrink in the upcoming 2019. According to CAAM, NEV subsidies for 2019 would be reduced by at least another 30% based on the 2018 standard, marking the official countdown for the phasing out of NEV subsidy policies.
Despite successive subsidy cuts, the output and sales of NEVs maintained robust growth. Experts explained that while cash subsidies were trimmed, supporting policies multiplied. Preferential rules on license plate applications, unlimited road access and discounted parking fees all boosted NEV sales to varying degrees.
The gradual withdrawal of subsidies is an irreversible trend. NEV manufacturers are urged to fully prepare countermeasures and break reliance on government subsidies at an early date. Even enterprises temporarily leading in sales cannot afford to slack off; only by continuously sharpening technological competitiveness can they sustain market advantages.
Dual-track Promotion
On April 1, the long-awaited Parallel Management Measures for Average Fuel Consumption of Passenger Vehicle Enterprises and New Energy Vehicle Credits (the Dual-Credit Policy) officially took effect.
Though its credit calculation mechanism is relatively complex, the policy primarily pushes automakers to advance on two fronts simultaneously: cutting fuel consumption of traditional gasoline vehicles and developing new energy models. Enterprises failing to meet standards will face penalties such as suspension of declaration and production of high-fuel-consumption vehicles.
Prior to the rollout of the Dual-Credit Policy, few automakers were actively engaged in NEV production. Statistics show that among the 124 enterprises selling or importing passenger cars in China in 2016, less than half launched NEV products. Driven by the strong incentives of the Dual-Credit Policy, the market share of NEVs began to climb steadily afterwards.
Notably, domestic brands occupied over 90% of the NEV market when the new policy was first implemented. Later, foreign brands sought joint ventures with local automakers to comply with the policy. Representative partnerships include Volkswagen’s stake acquisition in JAC, Ford’s cooperation with Zotye, and Great Wall’s joint venture with BMW.
Fueled by the powerful incentives of the Dual-Credit Policy plus relaxed government investment controls on the NEV sector, more such joint ventures are expected to emerge in the future, bringing unexpected new alliances to the public eye.
Welcoming Foreign Investors
In April this year, the National Development and Reform Commission announced phased opening-up for the auto industry, removing foreign ownership caps for special-purpose vehicles and new energy vehicles starting in 2018. This marked the relaxed investment regulation on NEVs mentioned above.
The announcement came amid escalating Sino-US trade frictions. Some observers claimed that China’s removal of ownership caps was a concession made under trade war pressure.
However, a review of China’s past auto industrial policies reveals that these opening-up measures were independently formulated and advanced based on China’s own long-term interests. Far from being a compromise, they demonstrate China’s growing strength and determination to further open its market.
Debates over lifting foreign ownership caps extend beyond trade relations, centering on the impacts on Chinese domestic auto brands.
He Xiaopeng, Chairman of Xpeng Motors, stated that the removal of ownership caps may become a pivotal turning point transforming China’s auto industry from large-scale to high-quality development. Domestic manufacturers will be forced to ramp up investment and accelerate innovation, with consumers ultimately reaping the benefits.
Beyond policy rollouts, new enterprises ramped up layout in the NEV sector throughout the year.
WM Motor, Xpeng, Byton and other emerging EV startups successively launched mass-produced models, sparking fierce competition between traditional and new automakers. Meanwhile, global lithium battery giants including Samsung, LG and Panasonic re-entered China to compete for the domestic battery market. NIO and BAIC BluePark were successively listed, opening a new chapter of capital operation in the NEV industry.
While new EV startups flourished, 2018 turned out to be an extremely tough year for Tesla.
Deliveries of the Model 3 had been Tesla’s top priority since the previous year. In 2018, Elon Musk devoted nearly all his energy to boosting Model 3 production capacity. In an end-of-year interview, Musk described the road to resolving Model 3 production bottlenecks as “hell”, saying he felt he had aged five years in one year.
Nevertheless, Tesla received a major boost in 2018: the approval to build a factory in Shanghai. Musk noted that the Chinese plant would differ from Tesla’s US facilities. Named the Dreadnought, Tesla’s next-generation factory would integrate battery production and vehicle assembly lines.
Public opinion on Tesla remained sharply divided. Analysts repeatedly warned of Tesla’s looming bankruptcy, while Tesla fans dismissed such claims as alarmist out of firm brand loyalty.
Looking back on the year, the prosperous surface of the NEV market concealed numerous unresolved challenges. Range anxiety persisted, quality defects and safety accidents occurred frequently — how can automakers win consumers’ trust? Faced with an influx of foreign competitors, how can Chinese brands upgrade product competitiveness? These questions demand deep reflection from China’s NEV industry.
Song Qiuling, Deputy Director-General of the Economic Construction Department of the Ministry of Finance, once publicly stated that China’s NEV industry stands at a critical stage where progress requires persistent efforts, and backwardness is inevitable without forward momentum.
Many industry insiders argue that the actual state of the NEV sector is far less promising than year-on-year growth data suggests, with various unresolved issues remaining. Even so, we sincerely look forward to and wish Chinese NEV brands better performance in the coming year.
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