China Electric Car Market Report For October — Hot & Getting Hotter

Norway leads the EV revolution, but China is gaining ground rapidly. According to Bloomberg Hyperdrive (email), a total of 722,000 passenger cars and commercial vehicles with plugs were sold in China in the month of October. Battery-electric vehicles were 22% of the passenger car market and plug-in hybrids claimed another 9% share. BYD is at the top of the leaderboard in sales.

China’s share of global passenger EV sales has gone from 26% in 2015, to 48% in 2021, to 56% in first half of 2022. Bloomberg’s Colin McKerracher says he expects a big surge in the final months of this year that could push the total EV market share  in China to 60%. In trucks, buses, and two-wheeled vehicles, China is even further ahead.

Here are five takeaways from EV sales in China this month:

1) The average range of electric cars is rising steadily. There are now almost 250 different battery-electric models for sale in China’s passenger car market, and the average range of models sold so far this year was 420 kilometers (261 miles) as measured by the NEDC standard. Micro cars like the Wuling Air average less than 250 kilometers of range while large sedans and SUVs often offer 500 miles of range or more. The average range across all segments has risen 42% since 2018.

2) Lithium ion phosphate (LFP) batteries keep taking more market share. Because they use no cobalt or nickel, they generally cost less than other types of EV batteries. The number of new EV models in China using LFP batteries is rising quickly and now accounts for half of all models coming to market. This is leading to major downward revisions in forecast demand for cobalt and highlights how the EV market is able to adapt to different price dynamics and external pressures, Bloomberg says.

3) The efficiency of EVs in China is improving slowly but steadily. Despite rising average ranges and associated battery pack sizes, the average efficiency of EVs has improved by about 2% per year since 2018. That’s mostly due to more efficient motors and power electronics, better thermal management systems, and efforts to cut weight in other parts of the car. The largest vehicles have seen the biggest improvements, despite their average battery pack sizes increasing over this period. As more cell-to-pack and cell-to-chassis battery designs and other advancements take place in the near future, efficiency gains should continue.

4) Plug-in hybrids (PHEVs) are taking off in the larger vehicle segments. While plug-in hybrid sales are slowing in Europe and never really took off in North America, they’re finding real traction in the larger vehicle segments in China. PHEVs hit 15% of sales in the large car segment and nearly 25% in the large SUV segment from January to August. Part of this is because high battery prices are making it difficult to fully electrify larger, heavier vehicles while keeping them cost competitive.

Chinese automakers also have provided much higher electric range on their PHEVs than most global brands, many of which treat PHEVs primarily as a compliance tool to meet emissions targets rather than designing them around consumer needs. Plug-in hybrids are also emerging as a popular choice in regions where public charging infrastructure is not as developed. The sales patterns in China show that the technology is certainly not dead yet and likely still has a role to play. The biggest challenge is ensuring they’re actually plugged in and charged.

5) EV sales are spreading beyond the biggest cities. Places like Shanghai and Beijing have had high EV adoption rates for several years now, due in part to city level policies that restrict the number of new license plates issued. EVs were exempt from some of these restrictions, making them a popular choice in China’s megacities. These cities also have clusters of local automakers and component suppliers, good charging infrastructure, and other incentives helping drive EV adoption. But the last two years have seen EV sales spreading quickly into smaller cities and towns, highlighting the fact that electrification isn’t just a big city phenomenon.

The Electric Car Takeaway In China

The real question is, when will Chinese electric car manufacturers start exporting their products to world markets? For now, there appears to be enough demand in China to keep all those factories humming, but at some point, those companies are going to want to expand sales to other countries.

Much will depend on the policies China puts in place with regard to the business practices its major manufacturers are expected to adhere to. Just this week, a Chinese national was arrested in Canada and charged with industrial espionage. That sort of stuff makes people nervous about doing business with Chinese interests. If anything keeps the Chinese from ruling the world of electric cars, it will be politics, not the quality of the vehicles.