Chinese Companies With Little Experience In Manufacturing Automobiles Make A Foray Into The Electric Vehicles Market
Chinese companies that are inexperienced and having no history of manufacturing automobiles are entering into the electrical vehicles (EVs) market. Some of the prominent examples include telecoms company Huawei, one of the major drone-makers DJI, and real estate company Evergrande. These newcomers mainly aim to capitalize on the increasing opportunities in the commercial electrical vehicles market, which is forecast to increase at a healthy rate, according to The Business Research Company’s recent report.
As per data on the Global Market Model, the global electric commercial vehicles market size is expected grow from $60.11 billion in 2020 to $63.71 billion in 2021 at a compound annual growth rate (CAGR) of 6%. The growth in the commercial electric vehicle market is mainly due to the companies resuming their operations and adapting to the new normal while recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The EVC market is expected to reach $121.01 billion in 2025 at a CAGR of 17%.
China continues to be one of the important markets for electric vehicles. According to research firm Canalys, 1.3 million EVs were sold in the country last year – accounting for nearly 40% of the global number. This is mainly driven by the Chinese government’s anti-pollution drive, under which it aims to have every other new car sold to be an EV by 2035. To cash in on the growing opportunities in the Chinese market, the new entrants are partnering with automobile companies to gain market entry. For example, Huawei has partnered with automobile company BAIC Group to launch its new luxury EV. Similarly, popular Chinese search engine Baidu has teamed up with automobile company Geely – which owns Volvo among other brands – for mass-production of “intelligent” EVs.
On the other hand, some new entrants are planning to do things in-house. For instance, real estate company Evergrande is setting up its own EV factories with the aim to compete with industry heavyweights including Mercedes-Benz, BMW, Audi, and Tesla. Similarly, Chinese multinational electronics company Xiaomi has planned to invest $10 billion over ten years in its new EV business.[i]
The global electric commercial vehicles market report by TBRC is segmented by propulsion type into BEV, PHEV, and FCEV, by vehicle type into electric bus, electric truck, electric pick-up truck, and electric van, by battery type into lithium-iron-phosphate (LFP), lithium-nickel-manganese-cobalt oxide (NMC), and others, and by technology into battery electric commercial vehicles, plug-in hybrids, hybrids, and fuel cell electric commercial vehicles.
EV market trends thus include mergers and acquisitions for increased capabilities. In August 2019, Dana Inc., a USA-based company specialized in manufacturing components and systems for hybrid and electric vehicles such as commercial vehicles, acquired Nordrsea Motors Inc. for an undisclosed amount. Nordrsea Motors Inc. is a Canada-based company that specializes in developing, manufacturing and commercialising electric drivetrains for commercial vehicles. The acquisition is expected to help Dana Inc. to enhance its electrification capabilities by integrating its full range of inverters, motors, thermal management products, chargers and gearboxes with Nordresa's battery technology, integration expertise, and electrical powertrain controls to provide electrical powertrain systems.
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Passenger Electric Vehicles Global Market Report 2020
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[i] https://www.economist.com/business/2021/04/22/huawei-and-other-non-carmakers-invade-auto-shanghai