A Glimpse into China's Electric Car Market

China's?electric car market has emerged as a critical player in the global automotive industry, showcasing remarkable growth and setting trends for the future. With electric vehicle (EV) sales surging and a substantial market share, China?has positioned itself as a leader in the transition toward sustainable transportation. Furthermore, the country's relentless pursuit of technological advancements has propelled the development of high-capacity power batteries, which will play a crucial role in shaping the future of the EV industry worldwide. As the electric revolution gains momentum, its impact extends far beyond China's borders, with Latin America emerging as a new territory for EV adoption, presenting significant opportunities and challenges in this transformative shift toward electric mobility. How is the electric car market in China?

A Glimpse into China's Electric Car Market

In 2022, the sales of electric vehicles, including plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs), reached a significant milestone, accounting for 10% of total car sales in the global market. While Europe's share of electric vehicles stood at 11%, China outpaced both regions with electric vehicle sales making up 19% of the domestic market. According to the China Association of Automobile Manufacturers (CAAM), China accounted for approximately two-thirds of global BEV sales in 2022.

To comprehend the current state of the global EV industry, it is crucial to consider that in 2020, there was minimal growth in overall new car registrations. The COVID-19 pandemic and subsequent economic impact had a negative effect on the global automobile market.

However, 2020 turned out to be unexpectedly positive, witnessing a 43% growth in global EV sales compared to 2019. Furthermore, the electric car industry achieved a record-breaking global market share of 4.6% in 2020.

The momentum continued in 2021, with electric vehicle sales doubling from the previous year to reach a record-breaking 6.75 million units. The number of EVs sold in a single week in 2021 surpassed the total sales of the entire year in 2012. Electric vehicles must play a central role in achieving the ambitious goal of zero emissions by 2050, and the industry is actively striving toward this target.

Electric Car Market: Impressive Growth and Export Success

By the end of 2020, China had already achieved a remarkable 6.3% market share for EVs, of which 5.1% were BEVs. The following year, in 2021, this share further increased to 15%, with BEVs accounting for 12%. Despite the anticipated slowdown, China has now reached an impressive 30% market share for EVs, with BEVs making up 22% of the market. In 2022, more than 5.2 million new plug-in electric passenger cars were registered in China, nearly doubling the figures from the previous year and surpassing the total sales of 2021.

Within China, hybrid electric vehicles (HEVs) accounted for 1.40 million units (8% of the total in 2022), while BEVs accounted for 3.85 million units (22% of the total in 2022). The combined total of both types reached 5.25 million units, constituting 30% of the EV market in 2022. Additionally, Chinese automakers exported 3.398 million vehicles in 2022, a 55% increase compared to 2021, out of which 1.12 million units were EVs.

Data from China's automotive industry authority revealed that automobile exports from China surpassed 300,000 units for the first time, with the total exports in 2022 surpassing Germany and ranking second only to Japan, the world's largest automobile exporter, with 3.7 million units exported in 2022.

Ralf Brandstatter, the head of Volkswagen China, expressed his belief that EVs will continue to rapidly expand, possibly leading to a permanent decline in the sales of conventional vehicles as plug-in vehicles gain more market share in China. He mentioned that in the previous year, one out of every four vehicles sold by Volkswagen in China was an EV, and this year, it is expected to be one out of every three. Brandstatter predicts that the inflection point will be reached between 2025 and 2030. Although Volkswagen lags behind China's domestic electric vehicle manufacturers such as BYD in terms of electric vehicle sales in China, the company remains optimistic about the future of China's electric vehicle market. The best-selling models in China include the BYD Song (VEB+VEPH), Wuling Mini EV, BYD Han (VEB+VEPH), Tesla Model Y, and BYD Dolphin.

Expanding Electric Vehicle Infrastructure

A decade ago, China had fewer than 30,000 public charging stations. Today, the country is witnessing rapid growth, with hundreds of thousands of new charging stations being built annually. China's electric vehicle charging alliance reported that as of 2022, the country had built a total of 1.8 million public chargers, with 650,000 added in that year alone. In Guangdong province, there are 383,000 public chargers, more than twice the number of chargers across the entire United States.

Furthermore, China installed 2.6 million private home chargers in 2022. However, it is the extensive network of public charging stations that truly revolutionizes the electric vehicle experience for China's urban dwellers, as over 900 million people reside in urban areas where owning a single-family home or having a personal parking space is not common. Thus, installing a home charger is not feasible for many individuals.

China's charging infrastructure also excels in terms of charging speed. Conventional vehicles can refuel their gas tanks in as little as five minutes. For electric cars to gain popularity, it is essential to minimize charging time. In China's public charging fleet, 40% of the stations are "fast chargers," surpassing the proportion found in other countries. On average, these fast chargers allow drivers to resume their journeys after just 20 minutes, instead of requiring overnight charging at slower stations.

Electric Cars and Batteries

China's installed capacity of power batteries experienced steady growth in 2022, primarily driven by the boom in the new energy vehicle (NEV) market. The installed capacity of power batteries for NEVs reached 294.6 gigawatt-hours in 2022, representing a 90.7% increase compared to the previous year. Lithium-ion batteries accounted for 183.8 gigawatt-hours of the installed capacity, reflecting a significant surge of 130.2% compared to 2021 and comprising 62.4% of the total capacity.

The electric vehicle battery market is projected to grow from $17 billion in 2019 to $95 billion by 2028. As of 2022, China's CATL emerged as a leading provider of battery upgrades for companies like Tesla, BMW, and Volkswagen. CATL's market share expanded from 32% in 2021 to 34% in 2022.

Korean company LG Energy Solution holds a 14% share of the battery market and recently agreed to reimburse GM $1.9 billion to cover the recall of 143,000 Chevy Bolt vehicles due to fire hazards caused by faulty batteries. Meanwhile, Chinese company BYD, with a 12% market share, surpassed Panasonic's 10% share by doubling its market presence last year. BYD, backed by Warren Buffett, is also the world's third-largest automaker.

China's electric car market has emerged as a global force, shaping the transition towards sustainable transportation. With impressive growth and technological advancements, the country is driving the future of the automotive industry, impacting the world with its commitment to drive greener mobility.

About the Autor

José Renato Peneluppí Jr is a lawyer who has been living in China since 2010. He specializes in Chinese Public Administration and is associated with the Center for China and Globalization (CCG).