Almost six in ten new cars sold into Chinese auto market could be electric by 2030, according to new predictions released this week by analysts at HSBC Quanhai.
The bullish prediction comes after Chinese electric vehicle sales defied expectations last year by growing 8 per cent. HSBC had previously expected them to shrink by 5 per cent.
The significance of the prediction is the sheer scale of volumes that this represents. China is already the world’s biggest auto market, with 21 million sales a year. So while Norway already has a 75 per cent market share for EVs, a majority of new car sales in China would deliver more than 10 million electric cars a year onto its roads.
Analyst Yuqian Ding said the shift to electric is happening faster than she had thought possible, driven in part by a growing interest from younger Chinese drivers, in part by aggressive government incentives.
The unexpected boost prompted Ding to revise her sales growth projections for 2021, when she expects volumes to grow by 41 per cent (up from 19 per cent previously). But she added: “The real story further out.”
She has now raised her projections for EV penetration (percentage of new car sales) to 19 per cent in 2025, and to 39 per cent by 2030, but said this could prove conservative.
“We … don’t rule out it happening faster, so provide a bull case scenario with 58 per cent EV penetration in 2030,” she wrote in a research note, entitled “China electric vehicles – believe the hype.”
One of the most aggressive new government policies last year was the Shanghai local government’s decision to restrict the use of cars registered outside the city. EVs – or “new energy vehicles” (NEVs) as they are known in China (a term that also covers hydrogen fuel cell) – were exempt from this restriction. That built on existing registration exemptions for EVs.
The Chinese EV market also saw a boost from the launch of the Wuling Hong Guang Mini EV, a tiny, incredibly cheap car that is currently the fastest-selling EV on the planet, overtaking the Tesla Model 3 in January. Since its launch in July well over 160,000 units have been sold, all of them in Asia.
China also has by far the biggest network of charging stations, accounting for 82 per cent of the world’s publicly accessible fast chargers in 2019, according the International Energy Agency.
Ding said changing attitudes towards EVs among the younger generation were also pushing growth.
“As Generation Z consumers –those born between 1995 and 2005 – start to have more disposable income they are becoming the main demographic cohort for buying cars,” she wrote.
“[T]hese younger buyers are better disposed towards EVs (as opposed to cars with traditional internal combustion engines) and are more tech savvy, which supports our constructive view both for EV growth and the importance of autonomous driving.”
She added this generation was “more receptive to local brands”. However, her note contained an extensive section outlining the continued advantages Tesla has over Chinese brands whose EVs are based on ICE models, rather than EV-dedicated platforms.
The rosy outlook for China’s EV market contrasts starkly with Australia’s. On Wednesday, the Electric Vehicle Council reported 6,900 electric cars were sold in Australia in 2020, up 2.7 per cent increase from 2019, and accounting for just 0.7 per cent of total Australian car sales.
The EVC’s chief esecutive Bhyad Jafari said “hostile” government policy towards EVs was holding the market back. “Our governments are apparently doing everything possible to ensure Australia is stalled with its hazards on while the rest of the world zooms into the horizon,” he said.
James Fernyhough is a reporter at RenewEconomy and The Driven. He has worked at The Australian Financial Review and the Financial Times, and is interested in all things related to climate change and the transition to a low-carbon economy.