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2 June 2022

China accelerates in EVs, while US keeps its foot on the brake

Sales of electric plug in passenger vehicles in China were one of two forecast figures that were slightly out on our Zero Emissions vehicle numbers issued last November, with China selling more plug in vehicles, with a sudden dash to the line in December, and the US selling slightly less.

We were at pains to point out that our forecast of 1.63 billion passenger cars globally by 2050, was a conservative one, and there would like be some accelerations possible along the way.

If we take a look at the April figures for China, it shows that passenger car sales of plug-ins were up again, to 280,000 for the month, making up 29% of the total new passenger cars registered in April in China – some 965,000. Cumulatively for the year to date passenger EVs are on 1.2 million, which is 18.1% of the total 6.51 million sold so far this year. The Rethink forecast looks certain to be beaten in China once again, because although we have forecast that 18.5% would ship as plug in EVs this year, it is likely we will see an acceleration in the second half of the year, as we did in 2021 to well over 21%.

Total car sales are way off for the year due to further lockdowns in places like Shanghai. In 2021 we were expecting just 13.5% of passenger car sales to be EVs, but while it was tracking that for much of the year, massive late year sales took it way past that to 16.3% of total sales, 2.8% more than we forecast, with 3.2 million plug in cars selling throughout 2021 in China taking its national installed based to 7.8 million and the world’s close to 16.3 million.

A similar lift in sales this year would leave EV sales on 21.3% of a likely 20 million car registrations, around 4.4 million for the year and leave a 12.1 million total Chinese EV passenger car fleet.

A freely available battery supply chain, the continued support of the Chinese government with generous EV subsidies, and a competitive local transport economy, all means it is only a matter of time before these car firms break out of China and begin to make progress in Europe and the rest of the world at volume.

Already this year the China Association of Automobile Manufacturers show China has exported 551,000 passenger cars year to date, with 127,000 of them being plug-in vehicles – total exports are sure to be a record.

The most popular EVs sold in China continue to include the short-range “shopping” car the Wuling Hongguang Mini EV, but right behind that is the BYD Song Pro Plus and a host of other BYD cars, many of which would stand up to broad comparison with a Tesla class vehicle – perhaps not on quality, but certainly on function.

However this week Chinese pure EV firm Nio was said to be considering sites in the US for its next car factory – and this would help it avoid a 25% import tariff on completed cars sold into the US. Nio has not confirmed the rumor, but the story leaked when local newspapers read adverts for overseas USA-based staff.

When we look at our forecast for US EV sales, we had expected that by now President Biden would have implemented an across the board EV subsidy, but by limiting it to unionized labor, and by regional subsidies offering a variety of support and not supporting pure EV plays, and because his policies have been held up by political opponents, 2021 has more or less missed out on its targets – hitting only 608,000 EV sales, against a forecast of over 1 million, and this year is unlikely to get through the 1 million barrier either (now on track for 945,000). This has put the US about 1.7 million EVs behind where it should have been by the end of 2022, a figure we will need to adjust in the next version of this forecast.

The US Biden-Harris administration EV Charging Action Plan has attempted to bypass Tesla, and may well end up making the EV revolution in the US a damp squib, leaving the country behind in a critical industry. And China perhaps sees this clearly and is on the hunt to displace the US in the end

The US government kept underlining that it was all about union jobs, and not about technology leadership, and given that Tesla is not unionized, because it already pays better than all union agreements – Joe Biden may have shot himself in the foot and the real sales numbers reflect that – but then again spending will soon start from the Bipartisan Infrastructure Law via the Department of Energy (DOE) and Department of Transportation (DOT) and their new Joint Office of Energy and Transportation, and this may well put US EV sales back on track.

French numbers released annually by the CCFA show 2021 EV numbers reached 23.8% (303,168) of the 1.66 million passenger cars sold in France last year, marginally below our forecast, but in percentage terms roughly in line, in a market where passenger car sales are going backwards and in Germany 21% of all passenger cars sold were plug in EVs, precisely as predicted, as was the rest of Europe.