The end-of-incentives hangover deepened in August for the Chinese plug-in vehicle market, with the market dropping a steep 12% year over year (YoY) and plug-in hybrids (PHEVs) crashing 51%. Amazingly, fully electric vehicles (BEVs) managed to grow, by 4%, a small increase over the 1% growth rate of July, which means BEVs are currently the only ray of light in the Chinese auto market (the overall market also dropped, by 8% YoY).
In the midst of this adverse environment, July’s plug-in vehicle (PEV) share was just 4.1%, dropping the 2019 PEV market share to 6% (4.6% for BEVs alone). This is still well above the 2018 result (4.2%).
The reason for this drop lies in the subsidy changes that happened on June 26, when “new energy vehicle” (NEV) subsidies were cut off completely for vehicles with less than 250 km of electric range, while those with higher range saw their subsidies halved.
From now on, we should see a less subsidy-dependent market, with PHEVs losing relevance (they represented 17% of sales in August, versus 22% YTD), several models unable to compensate for the subsidy loss, and others continuing to thrive, as we are now starting to witness.
This is just another factor adding up to the reasons why China is without doubt the most fast evolving plug-in market on earth, with several changes happening at the same time — be it foreign OEMs trying to get a piece of the NEV cake (or avoid fines imposed by the new quota system), local makers scaling up production with a never-ending slew of ever more competitive models, or the run for survival of the several startups on the market.
In August, the most important surprise in the model ranking was the SAIC-GM offspring Baojun E-Series winning #1, thanks to an amazing 8,698 units registered, a record result. But BAIC couldn’t really complain, placing two of its models in the remaining places of the podium.
Here are last month’s top 5 best selling models:
#1 – Baojun E-Series: With the end of subsidies for most of the small city EVs, unable to reach the minimum 250 km range requirement, the few that still have access to subsidies have seen their sales rise, and none did it more spectacularly than the Baojun E-Series, the offspring of Shanghai Auto and General Motors. With an irregular career up to now, the last few months of the tiny two-seater have been memorable. It registered a record 8,698 units in August, allowing it to be last month’s best selling EV in China, a first for any SAIC nameplate. The updated range, thanks to a new 24 kWh battery, was a crucial tool to reach the subsidy minimum range requirement, which added to its competitive price (CNY 93,900 / $14,700 before subsidies). It is an appealing model, especially considering its modern design and features.
#2 – BAIC EU-Series: The electric sedan scored 7,580 units last month, which is good by nearly every measure but because it lost the monthly Best Seller title to the Baojun E-Series, that ended a three month winning streak for the EU-Series. The design and specs (215 hp, 416 km / 260 mi NEDC range, $32,500) allow it to remain a popular choice, but with the competition increasing every passing month, BAIC has a tough job ahead of it, if it wants to keep leading the pack.
#3 – BAIC EX-Series: BAIC’s current good moment, with three models in the top 20, is explained by having competitive models in the three largest segments (sedans, crossovers, and city cars). The EX-Series is the bread and butter small crossover of the Beijing Auto stable (think Renault Captur or Kia Soul). Last month, it scored 6,568 registrations, a new year best. This is hardly a vehicle that makes your pulse accelerate (107 hp motor, 318 km NEDC range) — for that you can check out the #4 BYD Yuan — but the EX-Series effectively uses its killer price (starting at $21,000) to attract buyers.
#4 – BYD Yuan / S2 EV: To counterbalance the subsidy cut, BYD launched a basic version of the Yuan EV, called the S2, with a less powerful electric motor (only 70 kW / 93 hp) and a smaller battery (41 kWh), allowing it to keep the 6,000-something monthly sales result it was used to. With the brand prioritizing BEVs, battery demand is increasing faster than before, so higher priced models (Tang, Song, Qin, etc.) have priority over the Yuan, making it hard for the crossover to surpass the meh result of 5,468 units of August. The Yuan EV has unrivaled specs given its price (58 kWh battery, 410 km/255 mi NEDC range, 163 hp motor, $25,000).
#5 – GAC Aion S: A few months ago I was mentioning the big potential of this model, saying it could reach a 10,000 unit/month pace this year. And things are going well for the Aion S, because on its 4th month in the market, the sleek sedan is now at 3,815 registrations, reaching 5th place in August. This is its second top 5 spot in a row. Another sedan inspired by the Tesla Model 3 formula, GAC has high hopes for its new dedicated EV lineup, the Aion. Right now, we have the Aion S sedan, but a midsize SUV, the LX, will soon follow. The Aion S, beyond the stylish (and aerodynamic — 0.245 cd) looks, this new model bears some impressive specs: a 59 kWh CATL NCM 811 battery, 510 km / 318 mi NEDC range, and level 2 driving aids. But the real killer is the price: Around 180,000 CNY / $26,000 — before subsidies. Like Kanye West would say: “Now, I ain’t sayin’ it’s a Tesla-killer / But the Aion is messin’ with the best sellers…”
The market is now adapting to a new reality, now that certain models lost access to subsidies.
We’ll start with the most important position change, with the SAIC Baojun E-Series jumping 4 positions to the 3rd spot. This was one of the most surprising jumps, but considering that it is one of the few city EVs that still has access to subsidies, one can see where this sales surge comes from.
The other top 10 position change was the Changan Eado EV reaching the #10 spot, switching places with the JAC iEV E-Series, which has seen its deliveries dry up.
But the climber of the month shows up in the second half of the table, with the BAIC EX-Series shooting 6 spots, to #14, while its small sibling, the EC-Series, hangs on in #18.
Indifferent to the subsidies cut, the BMW 530Le climbed two positions, to #12, thanks to a record 3,001 deliveries in August, making it not only the best-selling luxury plug-in vehicle on the market, but also the best-selling foreigner on the table.
With the Passat PHEV losing access to subsidies, and Volkswagen now betting on the right horses (VW e-Lavida), expect sales of the midsize VW to dry up soon, making the best selling Foreign nameplate really a race between the #12 BMW 530Le and the #15 Tesla Model 3.
If the distance isn’t negligible (1,790 units) between the two nameplates, September should help the Tesla midsizer to close the gap significantly, with Q4 Shanghai production allowing the Californian to eventually surpass the Bimmer and win the 2019 Best Selling Foreigner title in China. It may even get a top 10 position to boot.
Elsewhere, the Nio ES6 is expanding production, reaching 2,366 units in August, allowing Nio to recover the Best-Selling Startup title, while SAIC’s MG eZS crossover registered 1,874 units, welcome growth for a model with high ambitions in export markets.
Talking about production ramp-ups, the much hyped GAC Aion S sedan just keeps on growing, having reached 3,815 units last month. Although the GAC sedan is still 1,500 units below the top 20, if the model continues to see its deliveries grow, it shouldn’t take long for it to show up in the ranking. Maybe already in September?
How high will the GAC sedan go this year? Top 10? It all depends on the speed of the production ramp up, but one thing is certain: The Aion S looks to be a strong contender for a top 5 spot in 2020.
A mention also for the 1,124 units of the e-Lavida sedan, the new star of the VW stable, now playing in the crowded (and profitable) field of compact sedans.
Looking at the manufacturer ranking, BYD (23%) leads comfortably, but has lost a bit of momentum, while below it, BAIC (12%, up 2 percentage points) and SAIC (9%, up 1 percentage point) remain in the medal spots.
Off the podium, Geely (6%) increased its distance from other, smaller players (Chery, JAC…).
Will this natural selection help the market become more competitive? Who knows, but for now, foreign carmakers have 12% share (Tesla, BMW, and VW each have 3%), which is still not a lot, but is already double what they had last year.
Cool New Kids on the Block
This month was relatively quiet, with only one new model deserving a mention:
Volkswagen e-Lavida — “Whaaat?!? Why does this 10-year old VW Jetta deserve a mention?!?! Booooring! This thing will be crushed by the Tesla Model 3, anyway.” Wait, wait, wait — don’t go just yet. Hear me out: The e-Lavida is the new BEV version of the VW Lavida, which is just the best-selling vehicle in China. It sold 33,000 units August alone, so even if only 10% of sales go to the BEV version, we are talking about 3,300 units per month. Now, that could become significant, right? So let’s look at it more closely. Sitting at the heart of the compact sedan class (4,67 mts), its specs do not stand out (278 km NEDC range, 100 kW motor), but they aren’t too bad either. In good old Volkswagen fashion, the price is also pure VW (as in, slightly above average): $21,000 after incentives. While the e-Lavida specs pale compared to other offerings in the same price level offered by some domestic players (the GAC Aion S comes to mind), the name “Volkswagen” still sells in China, so the German carmaker should still sell more than enough units to help it comply with the NEV quotas, which is, after all, the main reason for the EV conversion. Considering the landing month was already a four-digit performance (1,124 units), I think VW is planning to sell it in large volumes, of at least 3,000 units/month.
If you prefer seeing the sales charts with “Others” included, here are those: