Stock take: China EV sales rise dramatically

While the UK’s plug-in electric vehicle market grew by 74% in 2021, growth of the same segment in the world’s largest car market more than doubled that rate. Official figures from the Chinese automotive industry reveal that last year sales of plug-in hybrids and EVs saw a staggering 158% increase on 2020. But what’s behind the numbers and who were the main winners and losers? Let’s start with the data. In China, total sales of new energy vehicles (NEVs) – battery-electric vehicles and plug-in hybrids – topped 3.52 million units, just over half the global total One car, the Wuling Mini EV, accounted for around 12% of those sales alone BYD, the market leader in electrified vehicles, sold over 600,000 NEVs NEVs made up 13.4% of all car sales in China For Autocar Business webinars and podcasts, visit Autocar Business Insight That last figure is a significant one for the Chinese authorities since their target for NEVs to make up 20% of all new car sales by 2025 was within touching distance in both November and December and, if achieved over a full year in 2022, would mean the target was reached three years ahead of schedule. In fact, it’s important to recognise that 2021’s astonishing figures have their roots in more than a decade of investment and subsidies that have developed a home-grown industry of car makers, battery suppliers and infrastructure totalling in excess of £50 billion. But 2021 sales were less a result of subsidies than in any previous year because, although the Chinese government delayed their planned EV grant removal in 2020, it was still cut by a further 30% last year and now makes up only a tiny percentage of the purchase price. Instead, Chinese consumers have been cashing in on a perfect storm of EV excitement, numberplate restrictions in the largest cities for ICE vehicles, an increasingly diverse and capable choice of products, and home-grown brands that for the first time are considered on a par with overseas competitors. “Chinese consumers are increasingly more open to new energy vehicles from several aspects, not only because EVs have reached a maturity in terms of technology and convenience that is on par with ICE vehicles, but also because new EV brands now offer service that exceeds that of existing premium and luxury brands,” said Ashley Sutcliffe, PR director at the Geely Group, which launched its own premium EV brand, Zeekr, late last year. Zeekr is just one of many EV offshoots from established Chinese car makers – also including AVATR, Aion, Voyah and Ora – that has or is about to launch. That Ora is entering the UK market this year is a sign of the Chinese car industry's blossoming confidence. However, it’s not just China’s legacy car makers that are getting in on the act. Home-grown EV start-ups Nio and Xpeng, both now present in Norway and planning further European expansion in 2022, also saw significant sales increases in 2021. Nio, whose ES6 mid-sized SUV claimed 19th place in the overall best-sellers list for 2021, saw full year sales increase by 109.1%, while rival Xpeng, whose Xpeng P7 saloon was 13th, boosted sales by a market-beating 263%. Speaking on the wider market success of NEVs in 2021, Brian Gu, vice-chairman and president of Xpeng, said: “What has really moved this penetration rate is the availability of very good, smart EV products coupled with broader customer awareness and acceptance, and also Chinese user behaviours that are always embracing new products.” When considering Xpeng, it’s worth noting that R&D staff make up more than 40% of its workforce – “over 4000 employees, more than twofold our staffing at the end of 2020”, added Gu. Xpeng also claims to be the only global car brand other than Tesla to develop its key software technology entirely in-house. A former Tesla employee once claimed that “Tesla is not an automotive company, it's a tech company that builds cars”, and it’s this tech-driven focus among native EV brands that is capturing the attention of young Chinese consumers who no longer automatically turn to foreign brands. “Fifteen years ago the logo sold the product, but many people are now proud and happy to get into a Nio or an Xpeng,” said Tu Le, founder of Sino Auto Insights. “Digital natives are much more receptive to local domestic brands than their parents.” For all the hype around local EV brands, it’s worth noting that Tesla itself claimed second and third spots in the EV sales charts behind only the Wuling Mini EV, with both the Tesla Model Y and Model 3 selling more than 120,000 units apiece. But while Tesla flew the flag for foreign brands in China, there was less love for Volkswagen’s new ID-series models, which had a slow start but have gained momentum. VW conservatively estimated 80,000-100,000 ID sales for 2021 but official figures for the full year have fallen short at just over 70,000. This couples with a sizeable fall in sales of domestically produced cars, down from an average of 264,495 units per month in the second half of 2020 to just 174,384 in the five months leading to December 2021. This will be a critical year for the brand’s EVs in China, especially with new competition from fellow foreigners Ford and Cadillac with their Mustang Mach-E and Lyriq SUV. No analysis of the 2021 figures would be complete without recognising the incredible impact of the Wuling Mini EV. Launched in mid-2020, the car has allowed young Chinese consumers onto the road like nothing else since the VW Beetle or Ford Model T. Spurred on by a starting price of just over the equivalent of £4000, almost 400,000 Mini EVs found a home in China in 2021 and they have proved especially popular with women under the age of 35, a difficult market to capture. A mind-boggling array of customisation options, and a soon-to-be-launched cabrio version, have sustained intense interest throughout the product’s life cycle. “The Wuling Mini EV is the little train that could. It started off really hot and hasn’t slowed down. It’s almost a transactional buy since it’s so cheap”, said Tu Le. “People forget that there are still hundreds of millions of Chinese people who live in cities lower than Tier 2,” Tu Le added, referring to the unofficial hierarchy of Chinese cities based on GDP, politics and population. Only five cities – Beijing, Shanghai, Guangzhou, Tianjin and Chongqing – are considered Tier 1 cities, while a further 30 make up Tier 2, according to South China Morning Post. In total, more than 160 cities in China house over a million inhabitants, and the Mini EV has found a clear route into the hearts of many. Industry experts predict that in 2022 demand for electrified vehicles in China will continue to intensify and sales could reach just under six million units, but the China Passenger Car Association has sounded a note of caution due to the ongoing shortage of key components needed in EVs. They foresee supply only being adequate for the production of four million NEVs in China, and said: “The shortage of automotive chips that had hindered the growth of the car market has yet to ease. The best-selling models still need chips to reinforce their production and get their backlog of orders executed.” If there is one thing we can count on, however, it’s that the choice of increasingly competitive electrified vehicles in China will only continue to expand in 2022. Mark Rainford