Market news China: Analysis of China's new energy vehicle industry in 2019

Editor: Theresa Knell

Several new energy industrial chain enterprises disclosed the 2018 performance forecast. New energy bus, electric motor and control and other related enterprises' profits declined significantly. Analysts pointed out that electric motor and control, anode materials, electrolyte and other links of overcapacity or product homogenization phenomenon will furtherly intensify the future competition. According to the analysis report, the new energy vehicle industry is experiencing a critical climbing period from slow to fast and from quantity to quality. After the withdrawal of subsidies in 2020, it will gradually guide the new energy vehicle industry into orderly market competition.

New Energy Vehicle
New Energy Vehicle

According to the data in Analysis Report of China's New Energy Vehicle Industry Market Forecast and Investment Strategic published by Qianzhan Industry Research Institute, China's new energy vehicle output and sales in the whole year of 2018 were 1.27 million and 1.256 million, with a year-on-year growth of 59.9 % and 61.7 % respectively. Among them, the output and sales of battery electric vehicles reached 986,000 and 984,000 with a year-on-year growth of 47.9 % and 50.8 % respectively, the output and sales of plug-in hybrid electric vehicles reached 283,000 and 271,000 with a year-on-year growth of 122 % and 118 % respectively and the output and sales of fuel cell vehicles have reached 1,527.


Market competition intensification

The new energy vehicle industry chain includes vehicle, three-power (battery, motor and electric control), battery materials, upstream resources, lithium electric equipment and charging facilities. From current situation, electric motor control, anode material, electrolyte and other links have overcapacity or homogenization phenomenon, the future competition will be further intensified.

The report points out that the new energy vehicle motor and control market is in growth, manufacturers are expected to increase revenue, but the overall profit margin is not optimistic. Factors such as product homogeneity, overcapacity and weak bargaining power in the industrial chain lead to obvious profit decline for motor and electronic control manufacturers. The scale of investment in the construction of graphitization capacity for anode materials will keep producing which will cause overcapacity of the industry and lead to low price and profits reduction. The elimination and merger of lithium electric equipment enterprises will continue. Due to the great difference in customer structure among different lithium electric equipment suppliers in the early stage of industry development, small equipment suppliers are at a disadvantage in customer structure and the concentration of lithium electric equipment will be increased. With serious homogeneity of charging piles, the manufacturers will face fierce competition in the absence of technological innovation in recent years.

Subsidies continue to decline

After nearly a decade of development, the domestic new energy vehicle industry has reached 100 billion output values. In 2017, the vehicles output and sales reached 800,000 with a year-on-year growth of more than 50 %, and until to November 2018, the number has broken through one million.

According to the report, it is expected that the output and sales of domestic new energy vehicles will reach 1.1 million, 1.6 million and 2.1 million respectively from 2018 to 2020 and the installed capacity of power batteries will reach 50GWh, 79GWh and 110GWh respectively. The price of power battery decreases and the range of electric vehicle increase will drive the increase of electric quantity of single vehicle.

In addition, the gradual withdrawal of subsidies will guide the new energy vehicle industry into orderly market competition, and subsidies for new energy vehicles will continue to decline in 2019 and 2020. It is expected that the high-endurance and high-energy density models will receive stronger support.

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