China Plug-in sales reach 10% but that’s not the main story
Plug-in car sales in China breached the magical threshold of 10% market share in April 2021.
But that is not the main story.
Why? - because EV sales in China have been on the up for several years now, and as many analysts have noted, once they reached 5% in 2020 it was inevitable that the S curve effect would kick-in and consumers would start to move to the new EV models.
In China, with a limited legacy ICE car industry, a desire to avoid importing oil products to service its fleet, and concerns over public health from tail-pipe emissions it was inevitable EVs would become a fast-growing product.
No, the real story is three other factors, and they point possibly to a very large shift in the world of automobiles.
First - the rise of Chinese car manufacturers.
In the world of ICE, Chinese car-makers were not a significant player - often having to - at best - joint venture with the dominant global ICE brands such as GM and VW, rather than compete.
No more. Of the top 20 manufacturers in the Chinese EV list above only 2-3 are international brands such as Tesla, or JVs with GM such as SGMW.
A new generation of EV-savvy Chinese manufacturers such as BYD, SAIC, Geely and Nio are now not only serving their large home market of 28 million car sales per year, but are starting to mobilise to export their products.
In the EV world, China may start to become the dominant manufacturer: legacy ICE leadership by European and US companies such as BMW and Ford is far less certain when the key to dominance is mass-manufacturing battery capability, giant home markets and government planning - all of which China has in abundance.
Second - the diversity of car product as transport electrifies.
The best-selling car - by a mile - is the Wuling HougGuang Mini EV. We have discussed this car in other blogs, but this cheap (about $5,000) simple small EV car has created a whoile new market segment. It apparently appeals to the female under-35 segment which traditionally has not been engaged in transport purchasing decisions. Now that they are, sales have suddenly expanded.
This is only one example - as China starts to lead automotive development via EVs, other market niches, so far underserved, may start to emerge.
Third - as cars become simpler electric devices, China will likely come to dominate automobile manufacturing, as it has done in other manufacturing markets.
As cars become large platform devices, the diversity of model and market segment will likely continue to develop - mass customization has come the automotive industry.
And China with its quick pivot to EVs and 30% share of global sales, has the perfect opportunity to develop, test and sell a while variety of EV models and types - from mini EVs to large family SUVs such as the Li One - fourth on the list above (although only a hybrid version for now).
China now has a very large lead in knowing how to reach those markets at home - and potentially globally.
Joint ventures in EV manufacturing could be heading the other way soon with European and US OEMs looking to partner with eg SAIC and BYD to create local specialised vehicles.
The bottom line:
As we have noted before - as automobiles and energy move away from mining and combustion to manufacturing and electricity, the new force in EVs will be China.
The 10% EV market share of sales in April is not the story - it is only a small chapter.
To be continued...
