By on December 9, 2016

BYD_Line-up_2015

The recent Guangzhou Auto Show in China was a reflection of everything stereotypical about the Chinese car market: Chinese OEM clones of European vehicles, North American and European legacy platforms resurrected into new China-only models, wacky supercars from unknown Chinese OEMs, stretched European executive sedans, and weird electric vehicles.

The only major North American press headline from the show was bold: “Five New Electric Cars from China, World’s Largest EV Market.” I never saw China as a leader in electric vehicles. However, green car publications like CleanTechnica have stated China is the world’s largest EV market for almost two years now.

What’s the real story behind China’s EV market? There’s both truth and lies in these headlines.

2016-tesla-model-s-update

Truth: China is the Largest Electric-Car Market in the World

China had over 20 million new-car registrations last — more than any other country in the world. (The United States had 17 million.) The Chinese market has a disproportionately high percentage of electric vehicles and is the world’s largest EV market with over 225,000 sold from Jan-Sept 2016. Keep in mind that this number includes both plug-in hybrid electric vehicles (PHEV, BMW i3) and battery electric vehicles (BEV, Tesla Model S). Even when just counting battery EVs, the 147,000 electric vehicles sold to date still handily outpaces the United States and Europe.

byd tang

Lie: The World’s Best-Selling Electric Car Maker is BYD

Green Car Reports claims Chinese EV automaker BYD “sold more highway-capable electric cars and plug-in hybrids than any other company in the world” last year. BYD has consistently dominated the plug-in car market in China, selling 75,000 so far in 2016. But did you know BYD’s two most popular EV sales were a 550 horsepower SUV and a 300 hp sedan? The BYD Tang and BYD Qin are both powerful plug-in electric vehicles that use electric motors to supplement gasoline engines.

BYD does make pure electric cars, but it relies almost solely on PHEV sales to take the EV sales leader crown. Based on the numbers, the “plug-in” feature of BYD hybrids seem to exist solely to boost overall EV sales and gain more subsidies.

Similarly, if Toyota made every Prius a PHEV, it would easily dominate the EV market by the same measure. The reality is, when only battery electric cars are counted, Tesla is the clear manufacturer winner, followed by Nissan.

Truth: Incentives and Subsidies drive the Chinese EV Market

Surprise, surprise — BYD received $435 million in government subsidies over the last five years. While this pales in comparison to the $4.9 billion Tesla received, what’s not insignificant are the incentives Chinese consumers receive to buy electric cars. EV consumers are given free car registrations in Shanghai, which are worth around $12,000 USD. While exact subsidies for each EV are unclear, the recent subsidy for the BYD e5 was estimated to be $16,000 USD. This lowered the price of the e5 to around $20,000 USD, which is very inexpensive for a Nissan Leaf-sized EV with over 200 hp and 190 miles of range.

zd_zhidou_d2_7

Lie: All Chinese EVs are comparable to EVs sold in North America

The most popular electric car segment in China is known as the A-Segment (mini-EVs). These city cars make up over 25 percent of battery-only EV sales. While extremely popular, most of these cars are not highway capable and have poorer crash and safety standards than a comparable North American or European electric car. Most media sites include these city cars in their overall calculation of total electric vehicles sold.

For example, one of the best-selling vehicles in the class — the Zhidou D2 — has a top speed of 80 km/h (50 mph) and a range of 120 km (75 miles). This tiny two-seater is about the same size as the original Smart Car. In comparison, the compact-size Nissan Leaf has seating for five, a range of 170 km (107 miles) and a top speed of 150 km/h (93 mph).

With over 14 cities with over 5 million people, China has a greater need for tiny city cars. However, the mini-EV numbers really should be separated from highway-capable EVs to give a more fair comparison.

What’s the verdict?

It’s undeniable that China has a huge EV market, a product of excessive government incentives and lax government regulations. However, the North American and European markets are much more advanced with more stringent environmental, crash, and safety standards. Also, the size of the China’s EV market is inflated with city cars that aren’t comparable to world-class EVs. Therefore, it’s hard to compare the Chinese EV market with North American or European markets because of these significant differences.

Regardless, no OEM can ignore the fact that their EVs are purchased more often in China than anywhere else in the world. While Tesla and Nissan have the best-selling BEVs, BAIC and BYD are hot on their heels developing competitive, world-class EVs. Once the government subsidies stop, it will be interesting to watch how market forces shape not just China’s EV market, but the EV market worldwide.

[Numbers Source:  ev-volumes.com]

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13 Comments on “The Truth About China’s Electric Vehicle Market...”


  • avatar
    LTDwedge

    As first poster here, I can only say “I’m shocked”.

  • avatar
    OldManPants

    Excellent article! Please be TTAC’s China Desk.

  • avatar
    heavy handle

    Re: “this pales in comparison to the $4.9 billion Tesla received”

    Did you even bother to skim the linked article? It’s not just about Tesla, it’s also about SpaceX and Solar City. It adds-up the maximum future value of any incentives and credits, whether direct or indirect, collected by Tesla or another company, or end-users, and grants and loans.

    You make it sound like somebody dumped-off 5 billion dollar bills, but it’s mostly stuff like state governments and utilities giving tax credits for solar panels to end-users. Those are available to any company (and the Big 3 certainly haven’t been shy about asking for government handouts).

    This is not about the morality of governments ‘picking winners’ (something we should see much more of in the near future), it’s about writing stuff that is factually incorrect, based on your own source.

    Long story short: if the author can’t parse a newspaper article, why should we believe anything he writes?

    • 0 avatar
      ScarecrowRepair

      Hate to be the one to break it to you, bud, but money is fungible. Whether the subsidy goes to the manufacturer (who uses it to reduce the product price) or to the customer (who uses it to reduce the product price), the end results is the same — the government gives my taxes to somebody else.

      It is unfair to include Solar City subsidies, but SpaceX “subsidies”, near as I can tell, are no such thing. They are contracts to launch satellites and cargo ships, and SpaceX charges less than the legacy companies, which is a strange definition of subsidy.

      You don’t say a thing about the Chinese figures. Do you know how comparable they are? To complain about only one side is about as useful as the DNC cherry picking which Florida counties they wanted to recount.

      • 0 avatar
        heavy handle

        My only point was that the author of this article linked an LA Times article as a source, and the linked article did not say what he claimed. At all.

        I don’t care if the issue is reading comprehension, editing, intent, whatever. It means that this article is suspect. I can only assume that his other sources, especially those not linked, contradict what is written here.

        It’s a shame that the linked article is about Musk, because he is contentious. The link is irrelevant, what matters is that it explicitly contradicts what is claimed here.

    • 0 avatar
      SCE to AUX

      That LA Times article has been cited here before. It’s a useful tool for TTAC to use to repeatedly claim Tesla is receiving government money.

      Tax breaks are not checks written to the recipient – they are reduction of payment. Lots of people around here don’t get that.

      • 0 avatar
        ScarecrowRepair

        Reduction of payment, reduction of price, what’s the practical difference? Only scoundrels insist one is not the other.

        • 0 avatar
          SCE to AUX

          The difference is substantial.

          The article clearly says Tesla ‘received’ $4.9 billion. But there was no flow of government money into Tesla’s bank account.

          Instead, Tesla enjoys some tax relief from Nevada, and its customers receive a tax *reduction* for buying an EV. There is no exchange of money, so where is the cost to you?

  • avatar
    seth1065

    I say this was a interesting article that makes TTAC a site I come to everyday, it does a pretty good job shedding some light on a segment that most do not know about.

  • avatar
    leomon

    For me Plug in Hybrids dont cut it. Having an engine eases range anxiety but adds complexity and increases maintenance costs. Not to mention increased weight and loss of extra storage space. Either go full electric or go home hehe in my opinion

  • avatar
    SunnyvaleCA

    Should we call them electric vehicles or coal-fired vehicles?

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