No stopping strong global EV sales growth
China’s month-on-month new electric vehicles (NEV) sales rebounded in August after month-on-month declines in June and July.
The drop-in sales between May and June was the first drop since September 2016, but Fastmarkets MB had expected Chinese NEV sales to dip temporarily after the June subsidy changes came into effect because consumers and NEV manufacturers would have to adjust to the new subsidies. The fact that NEV sales started to rebound in August suggests the adoption of NEVs is back on course after hitting the subsidy road-bump in June. Sales in Europe and the United States continue to grow rapidly.
Looking at the data going back to 2015 shows that China’s July sales have routinely been lower than June’s, so it may be that this year’s sales were only negatively affected for one extra month, that being June when the subsidy changes came into effect.
According to China Association of Automobile Manufacturers (CAAM) data, NEV sales reached 595,000 units in the first eight months of the year, which was up from 318,000 units in the same period in 2017 and 250,000 units in the same period in 2016. Those are growth rates of 87% and 27% respectively, which suggest exponential growth.
China now accounts for 50% of global plug-in passenger vehicle sales and 70% of electric commercial vehicle sales, and the country is a major exporter of e-buses. Indeed, almost every week there are announcements from cities around the world that they are updating their bus fleets by buying e-buses, more often than not from China.
Even with the dip in NEV growth rates in June and July, Fastmarkets MB still expects Chinese NEV sales to be well over 1 million units this year, because over the past three years sales in the second half of the year have outpaced first-half sales, with an average of around 70% of annual sales completing in the second half. On the basis of this calculation, annual NEV sales this year could be as high as 1.3 million units. This would be greater than the consensus forecast for 1.1 million units in 2018.
The rapid growth in unit sales is bullish for demand for battery raw materials, but the subsidy changes are even more bullish for raw material demand as the subsidies promote NEVs with longer drive ranges that will require larger battery packs, as well as higher energy density batteries.
Looking at individual car sales data shows some interesting trends. Some makes/models are growing from strength to strength, such as Tesla Model 3, BAI C (BJEV), SAI C and BYD Qin, while some others seem to be struggling to see steady demand growth. The reason for the latter is probably because so many new models are being launched that auto manufacturers face increasing competition. In China, there are now around 100 plug-in NEV models to choose from, up from around 56 in June 2017. In the US, there are 42 plug-in electric vehicles from the major producers, up from 27 in 2015.
In Europe, demand for battery electric vehicles (BEVs) grew by 39% to 88,286 units in the first half of the year, while plug-in hybrid electric vehicles (PHEVs) grew by 46% to 94,999 units and hybrid electric vehicles (HEVs) grew by 34% to 305,209 units. As for market share in Europe, out of all new registrations, 57% of vehicles were petrol, 36.3% were diesel and 6.9% were alternative powered vehicles, of which 3.6% were HEVs, 1.7% were electrically chargeable vehicles and 1.7% were non-electric alternative powered vehicles, such as liquid petroleum gas fueled vehicles (LPGVs) and natural gas fueled vehicles (NGVs). Diesel’s market share fell to 36.3% in the second quarter, compared with 45.2% in the same period in 2017.
In the US, in the first eight months of the year, BEV sales grew by 88% to 118,248 units, while PHEV sales climbed by 23% to 71,798 units. It is interesting that in Europe PHEVs are more popular than BEVs, while in China and the US, BEVs are more popular. The reasons for this seem to be that in the US the Tesla BEVs dominate the market, while cheap fuel prices mean the advantage of running a PHEV is not as great as in countries where there are high fuel costs.
In China, subsidies have and are encouraging BEVs, but the sudden rush to buy PHEVs in the first half of this year may have been driven by the fact that the subsidies would no longer be available on NEVs that could not drive 150km on one charge. As PHEVs tend to have low range on electric and as they were a quick way to jump the license queue, the well-telegraphed policy changes may have prompted a rush to buy a PHEV before the subsidy door closed on them.
Across the main auto markets, growth in electric vehicles is booming. Generally, forecasts have compound average growth rates (CAGR) of around 20-27% for plug-in EV growth. So far this year, growth rates for BEVs and PHEVs have been running at 42% in Europe, 57% in the USA and 107% in China – all well above CAGR rates. This raises the risk that forecasts may be underestimating the scale of growth in EVs, as well as in lithium-ion batteries.