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TUV Rheinland Insight: China Replaces the US as the World's Largest Market for New Energy Vehicles

2016-09-26 15:39 4052

HONG KONG, Sept. 26, 2016 /PRNewswire/ -- With increasing public attention of new energy vehicles (NEVs), Tesla is the most dazzling vehicle manufacturer for its technology and development. Tesla has ambitious plans for the high-end market of NEVs, including joint investments of USD 1 billion with Panasonic in expanding production capacity of power batteries and the introduction of Model S and Model X vehicles. Meanwhile, mainstream manufacturers all announce their participation in the development of "NEVs in China". To compete against Tesla, BMW, and Audi, on September 7, the CEO of Benz China announced that at least six models of electric vehicles (EVs) would be introduced under the Daimler Plan during 2018 and 2024, and Denza would be introduced as a sub brand of NEVs.

TUV Rheinland Insight: China Replaces the US as the World's Largest Market for New Energy Vehicles
TUV Rheinland Insight: China Replaces the US as the World's Largest Market for New Energy Vehicles

 

According to the China Association of Automobile Manufacturers, domestic and foreign brands currently account for 96% and 4% of the local EVs market respectively, among which, BYD already accounts for 30%. As a business leader in the global market, it beat Tesla in production capacity in 2015, accounting for 11.2% of the global market share. The manufacturers of NEVs in China are currently redefining the market landscape for automobiles.

China's Global Sales of NEVs Rank First, Accounting for More than 30%

Currently, China has replaced the US as the world's largest market for NEVs. In 2015, China manufactured 379,000 NEVs, representing 400% growth year-on-year. For the period ranging from 2009 to 2015, China reported cumulative sales of 448,000 NEVs, accounting for more than 30% of global sales for NEVs. In 2015, however, the US only reported sales of 123,000 alternative fuel vehicles, and the cumulative sales were approximately 400,000 units. In terms of one-year and cumulative sales, China both ranks first in the global market.

To promote NEVs, China has established a comprehensive system of top-down promotion policies. In 2015, China ranked first in terms of production and sales of NEVs, largely driven by the policy system.

  • Directive Objectives
    As expressly stipulated under the Notice of State Council on Issuing the Development Plan for Energy-Saving and New Energy Automotive Industry (2012 to 2020), by 2020, the production capacity of pure EVs and plug-in hybrid vehicles will amount to 2 million units with cumulative sales exceeding 5 million units.
  • Policy-Specific Subsidies
    According to the Notice on Fiscal Support and Policy for Promotion and Application of New Energy Vehicles from 2016 to 2020 published by four ministries, the subsidy standards are established to promote and apply a variety of NEVs, and such subsidies will decrease by 20% every two years from 2017 to 2020.
  • Restrictions on Driving and Purchase
    According to the Implementation Opinions on Expedited Promotion and Application of New Energy Vehicles in the Transportation Industry published by the Ministry of Transportation, support from local governments shall be obtained to lift restrictions on driving and purchase of NEVs.
  • Infrastructure
    According to the Smart Application to the EV Charging Infrastructure (2015-2020) published by the National Development and Reform Commission, 12,000 additional centralized EV charging stations and 4.8 million decentralized EV charging stations will be built by 2020, which will satisfy the charging demands of 5 million EVs nationwide.

Increasing Consumer Awareness Drives the Market Development of NEVs

The enormous market potential and demands in China heat up the domestic market for NEVs. In 2015, sales of NEVs peaked, with the production capacities and sales representing a year-to-year growth of 384% and 343%, among which, electrical passenger vehicles accounted for 54% and 63% of the annual production capacity and sales, respectively. This meant NEVs successfully penetrated the private consumer market. According to research by iResearch, users demonstrate an increasing and apparent acceptance of NEVs due to favorable policies and improvement in both technology and ecofriendly awareness.

Life and Replacement Costs of Batteries as Primary Factors for Ownership of NEVs

Consumers initially knew little about NEVs, but currently show a significantly growing interest in purchasing such vehicles. This is a fairly prolonged process. However, due to emerging "special treatments" for NEVs, including vigorous support from national and local authorities, unrestrictive driving requirements, and a high rate of the license plate lottery system, as well as community-based charging stations and consumers' accurate position of vehicle requirements, consumers finally choose NEVs.

In addition to such factors as macroeconomic policies, consumers stress more importance to product quality of NEVs. According to some researches, the top three factors that consumers take into consideration when purchasing a NEV are: the battery life and replacement costs; driving mileage for one single charge; and configurations of a charging station.

TUV Rheinland's Insight

Governmental policies, market direction, and consumer demands in the China market provide great momentum to promote NEVs. Although NEVs currently have an insignificant market share as compared with traditional vehicles, the market share of 30% by 2020 is a very definite goal. As a growing market in 2012, NEVs, as we could clearly see, had some room for improvement, including battery performance, technological maturity, cost, safety performance (such as discharging and personal safety), and inadequate supporting equipment.

In the automobile industry, NEVs represent a comparatively new subject, so automobile manufacturers and the market are both constantly exploring possibilities. During such process, TUV Rheinland strongly suggests the safety of EVs should be improved in the following aspects:

  1. Research and development and production procedures shall be enhanced for improving product design and mass-production quality, while functional techniques of safety design shall be introduced to the product design. In addition to technical supports to customers in the abovementioned fields, TUV Rheinland's technical specialty team will evaluate research and development and production procedures of the manufacturers of EVs and identify weak links, before providing relevant personnel with training specific for competence enhancement. Over the course of research and development, our team will, subject to the electronics development standards and functional requirements of safety design for automobiles, assist enterprises in standardizing design procedures, testing the design safety of products, and ensuring production quality.
  2. Safety testing and evaluation over power batteries will be conducted in accordance with international standards. TUV Rheinland's automotive laboratory for electronic and power batteries may assist manufacturers in conducting product reliability and safety verification in accordance with stringent testing standards.
  3. Management of charging and installation specifications and safety service providers will be implemented. To address potential issues arising from non-standard installations of charging stations for EVs, TUV Rheinland will certify the qualifications of technicians competent in installing charging stations and the business license of installation providers. Our on-site inspections over charging station installations may ensure the charging safety of EVs to the greatest extent.
  4. Safety standard training will be offered to practitioners in the NEV business to ensure personal safety. By referencing German standards, TUV Rheinland also formulates a training program for research and development, testing, and production of EVs and electronic safety operating standards for maintenance workers, which will prevent working personnel from electrical shocks during daily work and minimize the operating risks of manufacturers of EVs.

Previous periods under review:

TUV Rheinland Insight: White Paper on China's Photovoltaic Modules and Components: First Sight into Four Highlights
TUV Rheinland Insight: Most Valued White Paper on Electric Power Tools in the Eyes of Connoisseurs

Contact:
Simon Hung
Section Manager | Marketing Greater China
Tel:  +852 2192 1948
Fax: +852 2192 1010
Email: Simon.Hung@tuv.com

Photo - http://photos.prnasia.com/prnh/20160926/8521606090-a
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Source: TUV Rheinland
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