New energy vehicle market expected to rebound
December 3, 2019 Category China News Round-up, Weekly
China’s new-energy vehicle (NEV) market is likely to see a sales rebound next year as auto makers roll out more new products to lure buyers, but more supportive government policies are needed, auto executives said. China has been a keen supporter of NEVs and has implemented production quota requirements for automakers. However it cut subsidies for NEVs substantially this year as part of an overall plan to reduce subsidies, making the vehicles costlier. In October, NEV sales fell 45.6% from year-earlier levels.
Prior to the subsidy cut, China’s market for NEVs, which include plug-in hybrids, battery-only electric vehicles, and those powered by hydrogen fuel cells, had been a bright spot, with sales jumping 62% last year. “For next year, we foresee the NEV market will continue to grow, maybe not as dramatically as in the past,” Stephan Woellenstein, Volkswagen Group’s chief in China, told Reuters in an interview on the sidelines of the Guangzhou Autoshow. A key part of the revival is linked to more big automakers launching NEV models, he said. This would help NEVs become more mainstream. “This normally makes a difference and will also change consumer perceptions and drive the market.”
Volkswagen is ramping up production of electric cars to about 1 million vehicles by the end of 2022, enabling the German carmaker to leapfrog Tesla and making China the key battleground. Volkswagen is preparing two Chinese factories to build electric cars next year. The Chinese plants will have a production capacity of 600,000 vehicles. Tesla is still trying to reach its goal of making more than 500,000 cars a year by building a new factory in Shanghai. On November 22, Tesla officially unveiled its Model 3 electric vehicle manufactured in its Shanghai gigafactory, and it said it would start delivering the cars before late January. However, as it has not yet obtained the regulatory permit to drive on Chinese roads, the Shanghai-built Model 3 currently can only be used for in-store display. Volkswagen, Toyota, Mercedes Benz and Tesla all showcased newly-launched electric vehicles at the Guangzhou Auto Show, the Global Times reports.
China’s Great Wall Motors and German carmaker BMW unveiled their joint venture Spotlight Automotive in Zhangjiagang, Jiangsu province, to co-develop and produce electric vehicles for the global market, including electric Mini’s. The 50:50 joint venture has a total investment of CNY5.1 billion. Construction of its plant will start in 2020 and is to be completed by 2022. Wei Jianjun, Chairman of Great Wall Motors, said the partnership will speed up his company’s globalization drive. Great Wall is the largest pickup and SUV producer in China.
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