There seems to be no end to the incentives blues, with the Chinese plug-in market plunging 46% year over year (YoY), and this time both powertrain technologies crashed at the same speed (-47% for BEVs, -46% for PHEVs), a worrying drop, considering the overall market was down just 6% YoY.
In the midst of this adverse environment, October’s plug-in electric vehicle (PEV) share was just 3.5% (2.7% BEV), dropping the 2019 PEV market share to 5.5% (4.3% for BEVs alone). That is still above the 2018 result (4.2%), but should the market continue this red until the end of the year, the 2019 share shouldn’t be much different from 2018.
The main reason for this string of drops lies in the subsidy changes that happened on June 26, when “new energy vehicle” (NEV) subsidies were cut off completely for vehicles with fewer than 250 km (155 miles) of electric range (in an overly generous rating system) and even those with higher range saw their subsidies halved. However, the reasons do not end there. Besides the general drop in the local automotive market, I think there must be some GF3 Osborne effect also going on, affecting not only Model 3 deliveries, but also everything close to it.
This is changing the face of the market, as it is now a less subsidy dependent market, with smaller, cheaper models unable to compensate for the subsidy loss. Meanwhile, the most expensive end of the market continues to thrive, helping foreign OEMs to increase market share, now up to 14%.
In October, the nameplate that made the biggest impression was the #3 GAC Aion S, which continues to ramp up production every passing month, no mean feat considering all the doom and gloom around it.
Here’s last month’s top 5 best selling models:
#1 – BAIC EU-Series: This electric sedan scored another win, this time with 7,623 units registered. The Beijing Auto model continues to be King of the Hill thanks to an attractive design and specs (215 hp, 416 km / 260 mi NEDC, $32,500), but considering that many of its main competitors are taking a hit, the question remains: How long will BAIC’s electric sedan remain immune to the current pessimistic environment?
#2 – Baojun E-Series: With the end of subsidies for most of the small city EVs unable to reach the minimum 250 km range for support, the few that still have access to subsidies have seen their sales rise, and none more spectacularly than the Baojun E-Series, Shanghai Auto and GM’s offspring. It seems the tiny two seater has won the lottery with the new rules, winning consecutive podium positions. October was no exception, having 4,636 units registered. The updated range, thanks to a new 24 kWh battery, is the crucial element to reach the minimum range requirement for subsidies, which added to its competitive price before subsidies (CNY 93,900 / $14,700), making it an appealing model, especially considering its modern design and features.
#3 – GAC Aion S: Things are going well for the Aion S as well. The sleek sedan continues to improve its performance every passing month, having established another record yet again, 4,217 units registered, reaching 3rd place in October, its 4th top 5 spot in a row. A sedan inspired by the Tesla Model 3 formula, GAC is betting everything on its new dedicated EV lineup, Aion. Besides the Aion S sedan, the recently landed LX also promises to make an impact in a few months (more on that below). But back to the Aion S, beyond the stylish (and aerodynamic — 0.245cd) 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. The real killer, though, is the price: around 180,000 CNY / $26,000 before subsidies.
#4 – BYD Yuan / S2 EV: The small crossover was one of the subsidy cut victims, while previously it clocked 6,000-plus performances regularly, now it is happy to cross 3,000 units, which it did last month (3,227 registrations). While the BYD model has competitive specs (58 kWh battery, 410 km /255 mi NEDC range, 163 hp motor, $25,000), the truth is that the overall negative environment is taking its toll on Yuan sales and BYD buyers seemed to rush to make their purchases before the changes occurred.
#5 – BMW 530Le: The current success of BMW’s luxury sedan in China has taken a lot by surprise, but it seems it is here to last. In October, the luxury sedan scored 2,764 registrations, providing it another top 5 presence. Even without access to subsidies, the leader in the luxury category should continue selling around 3,000 units per month (and let’s face it, subsidies for cars at this price level don’t really make that much of a difference, the owners just use the money for some nicer alloys or optional creature comforts). Approximately 3,000 sales a month is well above its direct competitors, which would happy to reach 1,000 units in one month!
The market is now adapting to the new reality, now that certain models have lost access to subsidies.
We’ll start with the position changes. The Chery eQ tied the BYD Tang PHEV in 4th place, but the most important change happened in the second half of the table, with the GAC Aion S jumping 5 positions, to #14, with the stylish sedan now being halfway to securing a top 10 position this year, which would be a great starting point for a top 5 (or podium?) spot in 2020.
The GAC star player, along with the BMW 530Le and the Tesla Model 3, currently seem to be the only players with the potential to climb positions going into the year end. Most of the other models are seeing sales dry up.
Outside the top 20, a mention is due to the MG eZS compact crossover, with the Shanghai Auto nameplate scoring 2,549 units, its best result so far, allowing it to be #6 in October.
With MG having high hopes for the electric crossover in export markets, these strong numbers in its domestic market are a good sign for the success of the nameplate elsewhere.
In the Best Selling Startup race, while Xpeng had a horrible month, with only 505 registrations, WM Motors and its Weltmeister EX5 EV saw 2,056 units delivered, a new year best. And NIO did even better, by delivering 2,526 units (2,220 ES6 and 306 ES8), this being its third best result ever and representing 61% growth YoY.
I wish the best of luck to NIO. Despite the heavy losses, the brand has potential. Let’s hope it has enough resources to launch the compact crossover ES3,a model said to be launching next year, which will be essential for the brand to win scale and find its way into profitability. If the Chinese EV maker survives the next two years, I believe it will have a bright future ahead, even in overseas markets.
Looking at the manufacturer ranking, BYD (18%, down 1 point) is losing momentum, while below it, BAIC (12%, up 1 point) isn’t much better, all while #3 SAIC (11%, up 1 point) is benefitting from the new environment to gain share.
Off the podium, Geely (5%, down 1 point) is slowly losing charge, unlike GAC, which now has 3% share and is on an upward trend.
Will natural selection help the market become more competitive? For now, the best foreign carmakers (Tesla, BMW, and VW have 3% each) are already above most of the local OEMs, in a highly competitive market. It seems in the future only some 5 or 6 Chinese EV producers will be able to run with the best of the foreign brands. Any bets on who that will be?
Cool New Kids
This month the highlight would have been the BYD e3, the sedan version of the compact hatchback e2 model, but something more important (sorry, BYD) landed last month:
GAC Aion LX — Riding on the success of the Aion S sedan, GAC is now launching the second model of the Aion lineup, the LX. A midsize SUV, this could be considered the sequel “Model Y” of its “Model 3,” only … it’s more than that. With a big 93 kWh battery (and NCM 811 cells), in its top-of-the-range version, the automaker announced 650 km (404 mi) of range using the NEDC evaluation cycle, or some 400 km / 250 mi in the real world. It also features AWD, and a 300 kW drivetrain, acceleration from 0–100 km/h (0–62 mph) in 3.9 seconds. Impressive stuff, isn’t it?
With prices starting at 250,000 CNY ($35,000) in the base version (70 kWh battery, 2WD) and a sleek design, this model has everything to be a success. However, it has to fight against the preconception that Chinese EVs are cheap and not up to foreign OEM standards. Like NIO knows all too well, no matter how good the product is, the more upmarket a Chinese EV maker goes, the harder it becomes to make a successful product. For that reason alone, I do not expect the Aion LX to sell in the same high numbers as its sedan brethren, so if a 10,000 unit/month sales target is possible for the Aion S, GAC should be happy if the LX reaches 5,000 units/month sometime in the future.
If you prefer to see the sales charts with “Others” included, they’re here: