China’s BYD Auto has emerged as the country’s leading BEV manufacturer this year
China’s fast-growing battery-powered electric vehicle (Bev) market is becoming increasingly competitive, as domestic manufacturers step up production and intensify new product launches. While the overall market continues to expand to new highs, with more than five million BEVs expected to be sold this year, competition is also rising rapidly as the market becomes better supplied and as supply-chain bottlenecks to ease.
China has become by far the world’s largest BEV market, driven by a decade of favourable government policies and incentives. This has helped nurture a large number of independent start-up companies while established vehicle manufacturers have also set up dedicated BEV manufacturing divisions and subsidiaries. This year these companies have begun to chalk up some substantial sales numbers as more capacity has come on line.
A significant proportion of the Chinese BEV market is made up of small low-cost cars, led by the SAIC-GM-Wuling joint venture with its hugely popular Hongguang mini-car – with an estimated 400,000 sales in the first eleven months of the year. But the main industry battleground appears to be developing in the mid and premium segments, which have been prioritised due to the higher potential margins, and foreign brands are now beginning to feel the heat.
Covid restrictions over the last three years have also left the Chinese consumer more price-conscious and therefore less inclined to splash out on expensive, premium models and brands, leaving some of the country’s high-profile startups such as Nio, XPeng and Li Auto also struggling to pass on rising costs to consumers.
China’s BYD Auto has emerged as the country’s leading BEV manufacturer this year. Deliveries of new energy vehicles (NEVs) surged threefold to 1.63 million units in the first eleven months of 2022, including just under 40,000 exports, despite significant production stoppages in the second quarter. BEV sales almost tripled to 799,000 units. BYD has a broad range of BEVs, with prices starting at around US$15,000 for Dolphin compact hatchback after subsidies – well below any Tesla, Nio and Xpeng model.
GAC Group’s main BEV operations come under GAC Aion, which reported a 128% jump in BEV sales to 241,149 units in the first eleven months of the year. SAIC, China’s largest vehicle manufacturing group, is also stepping up its BEV drive under its British MG brand – starting with the launch earlier this year of its first model based on a dedicated BEV platform, the MG4 five-door hatchback. Exports to Europe began in September, with global sales of the model expected to exceed 150,000 units in its first full year.
Tesla remains a major player in the Chinese EV market, but there are signs it is beginning to feel the heat from rising domestic competition. Deliveries from its Shanghai plant increased by just 63% to 655,000 vehicles in the first eleven months of 2022, according to the China Passenger Car Association, including record production of over 100,000 units in November. Sales in China are estimated at just over 402,000 units year-to-date with a further 253,000 units exported.
Activity at Tesla’s Shanghai plant this year was also held back by extended stoppages due to Covid lockdowns and a shutdown in July to expand production capacity to over one million units per year.
In October Tesla cut the price of its Model 3 in China by 5% to between US$37,000 and US$50,000 help it compete, while prices of the more popular Model Y SUV range were cut by 9% to US$41,000-US$57,000 – helped in part by local subsidies. In early December the company announced additional discounts on its Model 3 to help support flagging sales, while additional incentives are also offered by local governments.
Mercedes-Benz also cut prices of its EVs in China last month in response to falling demand, with the price of its EQE sedan model cut by 10% while the luxury EQS model now costs almost 20% less.
While Shanghai remains Tesla’s largest and most profitable production base worldwide, reports have emerged in the last few weeks that the US EV maker is looking to significantly reduce production costs of the Model 3 replacement, said to be due out in the third quarter of 2023, by reducing the number of components, prioritising content, simplifying key areas such as interior trim and even using a small-car platform.
Competition in China’s BEV market will only increase in the next few years, as global brands such as Volkswagen, BMW, Mercedes and General Motors also ramp up local capacity and production, while domestic players such as SAIC, FAW, GAC and many other implement ambitious production plans of their own. While China’s BEV market is expected to continue to grow strongly over the next decade, as it matures will become a much more competitive environment.
Automotive Industry News & Analysis | Market Research – Just Auto
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