Thursday, July 18, 2019

China June 2019

Resultado de imagem para baic eu-series
"All hail the new leader!" - Says the EU-Series

Subsidy cuts shake the ranking  

After a slow May, with just 2% growth, June saw the Chinese plugin market return to full charge, registering some 147,000 registrations, up 72% YoY (BEVs grew faster still, at +97%), and because the mainstream market is falling (-8%), June’s PEV share reached a record 8.5%, pulling the PEV market share to 6.3%, frankly above the 2018 result (4.2%), and on target to reach my forecast of 8%  for 2019.

At this pace, some months of the second half of the year could reach 10% or more. And that’s when things get (even more) interesting…

BUT. Starting in June, 26, NEV subsidies were cut off completely for vehicles with less than 250 kms electric range, while those with higher range saw their subsidies halved, which made some smaller range models to peak in June, so from now on, certain low end models should see their registrations dry up, and the question will be if the market will see its growth being affected by it.

To be continued…  

Back to the present days, China is without doubt the most fascinating and fast evolving plugin market on Earth, with several seismic changes happening at the same time, it’s not only the Tesla Model 3 making waves, it’s also foreign brands scaling up plugin production to meet the 2019 quotas, it’s the local startups trying to hit relevant volumes in order to survive, all while the local big players race between each other to see who gets to launch more models and ramp up their production faster.

This month was filled with surprises, with BAIC, Changan and Tesla shining, allowing the Californian brand (3% share) to come closer to the foreign leader, Volkswagen, with 4% (-1%), both ahead of BMW (2%).

In June, the most important surprises in the models ranking came in #2, with the sedan Changan Eado EV scoring a record 7,340 units, while in #4 we have the Tesla Model 3, with an estimated 6,500 units.

Here’s June Top 5 Best Selling models individual performance:

 Resultado de imagem para baic eu-series
#1 – BAIC EU-Series: The electric sedan scored a record 17,916 units last month, reaching the #15 spot in the overall ranking, confirming to be the brand’s right bet for the year, and while Beijing Auto has managed better results in the past (20,648 units with the small EC-Series, in October ’18), the EU-Series sedan is a larger (and pricier) proposal, meaning more revenue and profit for the maker. The design and specs (215 hp, 416 kms / 260 mi NEDC, US $32,500) allows it to remain a popular choice, but with appealing electric sedans landing every month, BAIC will have to keep a close eye on the ever-expanding competition, if it wants to keep leading the pack.

 Resultado de imagem para white changan eado EV
#2 – Changan Eado EV: “Chan-who?!?!” – you’d be forgiven for not knowing about this brand, as they have been performing under the radar in the NEV market most of the time, but after Geely, they are the largest Chinese automotive brand, so it was surprising they hadn’t been more active regarding EVs, but it seems they have finally awaken to the current market disruption and performed their best month ever in June, with the Eado EV sedan scoring a record 7,340 units. Playing in the heart of the Chinese plugin market (Model 3-sized sedan, $30,000-ish price, 430 kms / 269 mi NEDC range), the Lexus-inspired model doesn’t profit from a powerful motor (only 136 hp), compared to the 200-plus hp of the BYD and BAIC models, but Changan hopes to profit from the strong name recognition (the Eado is its best-selling model) to win a large customer base.

 Resultado de imagem para byd yuan ev 500
#3 – BYD Yuan EV: The brand Baby Crossover seems to be stuck at 6,000-something monthly results, which would be something to praise in almost any other automaker, but we are talking of BYD here…With the brand now prioritizing BEVs, battery demand is increasing even faster than before, so higher priced models (Tang, Song, Qin, etc) are getting ahead of the Yuan, hence the rather disappointing 6,566 units of June. With unrivalled specs (58 kWh battery, 410 kms/255 mi NEDC range, 163 hp motor), and price (25,000 USD), this is was the year strongest candidate for the Best Seller title, up until now.

Resultado de imagem para white tesla model 3
#4 – Tesla Model 3: The poster-child for electric mobility has landed in China and despite some pretty respectable numbers, somehow it has failed to live up to the expectations of some of the most enthusiastic Tesla fans, that expected the sports sedan to take over the market, like it did elsewhere. Still, the Tesla sedan is making its own disruptive path, with the estimated 6,500 units of June, representing the best score ever for a foreign model in China, allowing it to reach the 4th spot in June. At this point, the Tesla nameplate is far from the domination held in North America or Europe, but it seems to be the only foreigner with the potential to run at the same pace of the local Best Sellers. It’s like LeBron James, undisputed king in the Eastern Conference, but when on the Western Conference…It’s a different ball game. 

Resultado de imagem para 2019 Chery eQ 
#5 – Chery eQ: One of the pioneering EV brands, Chery had won China’s Best Selling EV title three times in a row (2011, ’12, ’13), and the automaker regained relevance with the small eQ EV, having registered 4,965 units last month, its best result in 2019, allowing it to collect another Top 5 position. But the increased competition (JAC iEV E-Series, BYD e1…), and the end of the subsidies (it has less than 250 kms range), should create difficulties in the nameplate career. Let’s wait for the next episodes, to see if it confirms.

Resultado de imagem para xpeng g3
Xpeng G3: A smaller shade of Tesla..

2019 ranking

The market is dynamic as ever, this time helped by the subsidy derived pull forward of low range EVs, with plenty of stuff to talk about.

We’ll start with the most important position change, with the BAIC EU-Series displacing the BYD Yuan EV from the leadership, a first for the Beijing Auto sedan, ending at the same time a 5 month spell of the BYD nameplate in the leadership, that in turn had interrupted a 16 month lead of the BAIC EC-Series.

Speaking of BAIC’s small EV, after a fall into the abyss in 2019, in June the hatchback returned to a half decent performance, with 4,744 units, allowing it to return to the Top 20, in #19, but the question now is: Was this a pull forward move, in order to profit on the incentives, or is this a sustained surge?

The other new face in the ranking is the #20 Dongfeng Fensheng E70 EV, another electric sedan in this Top 20, that registered 3,525 units last month, a new monthly record for a Dongfeng nameplate.

But the Climbers of the Month were the Changan Eado EV, Tesla Model 3 and BYD Qin EV, with all these models jumping 5 (five) positions in the ranking, the Eado EV went up to #11, thanks to 7,340 units, a new high score for any Changan model, while the Tesla Model 3 jumped to #13, just one position below the current Best Selling foreigner, the VW Passat PHEV, while the BYD sedan is now #15, thanks to 3,016 units, a new personal best for the nameplate, allowing it to be just 414 units behind its PHEV sibling, the Qin PHEV.

When the BEV version of the Qin surpasses its PHEV relative (next month?), it will be a small, but significant sign of the current BEV trend (full electrics had 84% of registrations in June, against 80% YTD)

The SAIC Baojun E-Series came back from the dead to score 4,556 units, its best result since June, which is no surprise, considering this will be another model that will lose any kind of subsidy, from this moment on.

The Xpeng G3 EV, from the startup Xiaopeng, is now #17, thanks to 2,237 units, surpassing once again the other local startups, Weltmeister (1,902 units) and Nio (1,340), although this last one is keeping the best-selling full-size SUV title, with its #23 ES8 SUV, all while its smaller (and cheaper) SUV sibling, the ES6, landed this month (413 sales), so expect Nio to recover the Best Selling Startup title soon, thanks to the ES6 production ramp up.

Talking about production ramp ups, the much hyped GAC Aion S sedan went up to 2,016 units in only its second month on the market, already surpassing its nemesis, the Geely Geometry A, that scored 1,743 units in its 3rd month.

But the hottest newcomer is the JAC iEVS4 EV, a compact crossover that had Volkswagen’s helping hand in the development stage, which registered 3,156 units in only its 3rd month on the market. Will we see it soon in the Top 20?

Looking at the manufacturers ranking, BYD (22%) is leading comfortably, thanks to the success of its lineup (there’s 3 BYD’s on the Top 4 spots, and 5 in the Top 15), while below it, BAIC (10%, up 2%) has surpassed SAIC (8%, -1%) thus recovering the 2nd spot, while Geely (6%) is looking to profit in the coming months from the current model launch fever, so that it can finally race for a podium position.


  1. So after months of languishing, the Model 3 is *suddenly* seeing the expected deliveries rush? Any idea what's up with that?...

    I wonder whether this might be confirming my suspicion that people were delaying orders until the pricing and specs of the locally made versions were revealed?...

    I also wonder whether that might just be the beginning of an even larger deliveries wave? Tesla said they are entering Q3 with a larger order backlog than Q2, and I guess that might be part of it. (Though I'm sure a large part is also made up by European RHD and SR+ orders, which were opened in Q2, but didn't see much deliveries yet...)

    1. I think you are spot on.

      Regarding reservations for Q3, i believe RHD markets and Europe SR versions will make the majority, although i wouldn't rule out a significant number of Model 3 Performance orders in China.

  2. The subsidy cuts are actually even more drastic than that, since the central government ordered local incentives also to be discontinued at the same time -- so in many provinces and cities that results in total incentives for long-range (>400 km) EVs being cut by 2/3.

    (Haven't seen numbers for shorter range ones: but I guess it's similar; maybe even worse?...)

  3. I wonder how much the ZEV mandate is affecting local incumbents such as Changan, GAC, Dongfeng etc. that only have seen sporadic appearances in the top 20 in the past... Might actually make more of a difference than the foreign brands mostly still scrambling to bring any relevant EVs to the market?

    1. I guess that could be a good explanation for Changan, as they move a large amount of metal off their dealerships, so the minimum number of NEVs needed will be higher than other smaller competitors.

  4. Jose,

    More than a third of the of the total number of BAIC EU-Series deliveries (during the first half of 2019) were delivered in June 2019.

    That's pretty extraordinary.

    Perhaps BAIC has finally been able to increase the production capacity of the BAIC EU-Series?

    Perhaps the supply of battery packs finally has increased substantially?

    What do you think about that?


  5. It's either more batteries or pull forward production, due to the subsidies cut.

    My bet is choice #1, but we will find out in the next couple of months.

  6. Jose,

    It's getting more and more likely that for the first time ever at least one Plug-In model (BAIC EU-Series) crosses the milestone of 100,000 sales in China in 2019.


    1. I wouldn't put too much hope into that. The BAIC EC series looked like it could achieve that both in 2017 and in 2018, with some breakout months scoring well above 10,000 units -- but never able to keep it up consistently... Right now it looks like the EU series might be following in its footsteps.

      Frankly, the Yuan EV looked like a more solid candidate this year, with somewhat more consistent scores -- though the current trajectory doesn't make it too likely either...

    2. No not Yuan. S2 is going to get more than 50% of İTS sales. Just Like e5 and Qin.

    3. And let's not forget about the subsidy cut...Who knows what's going to happen in July.

  7. The subsidy cut is bad, especially putting things at 250 km NEDC. Stateside, a 100 mile range on a PHEV allows you to do exurb commutes safely on electric alone. The improvement in BEV performance has not leaked back to the PHEV community, with the Tang being stuck at around 50 miles of real range.

    1. Chinese PHEV subsidies used to have separate conditions -- though I haven't heard anything about how that changed in the latest round of subsidy cuts...

      Also, AFAIK the BYD PHEVs with a 100 km NEDC range are actually above any other (mass-produced) PHEV sold anywhere in the world? (Unless you count the BMW i3 REx I guess...)

    2. I believe PHEVs lot any kind of subsidy. The only interest they now have is for OEMs, as they count for the NEV quota.

    3. I think part of the point of the subsidy cut is to encourage Chinese EV-makers to go overseas. But the pragmatic problem becomes that EV sales depend in large part on infrastructure; a lot of Tangs, for instance, were basically used as gas cars only because apartment buildings wouldn't install chargers.

      When you think overseas infrastructure, you have both developed countries (Europe, the United States, Japan) which can quickly develop EV infrastructure and developing countries, wherein having substantial back-up range on gasoline is important. And in many developing countries, rural use means that you want the 100 mile range to avoid gasoline use in your trips to the nearest town.

      The lack of a 48kw Tang that can do 100 miles is a big disappointment.

    4. Including such a large battery *and* a combustion engine, would make the vehicle incredibly heavy and expensive. Once you get in that range, just stick with a large battery for some 300 km, and be done with it.

      Just to illustrate, while the REx option was pretty popular on the original BMW i3 with only 22 kWh battery providing for just 130 km EPA range, it became more niche with the 33 kWh battery offering 183 km, and disappeared entirely with the 42 kWh one yielding 246 km.

      Also, while I haven't checked the exact numbers, I'm pretty sure EV charging infrastructure in large parts of China nowadays is at least on par with most "developed" nations. Indeed over the past decade or two, China has been better at all kinds of infrastructure projects than all of the "developed" world...

    5. It's not a question of China, which can clearly provide the subsidies and infrastructure required for EVs. It's a question of the rest of the world; i.e, if a Mongolian decided to buy a battery vehicle, would it make more sense for her or him to buy PHEV or EV given the infrastructure deployment? What about an Ethiopian?

      160km / gas is fairly good for developing markets where long distance trips take place, while short-distance trips can be powered by the home charger.

    6. Didn't know Mongolia or Ethiopia have *any* meaningful sales of new cars...

      This discussion was clearly about China, though.

    7. China's objective is to have a vehicle export industry a la Germany, the United States, and Japan. Unfortunately, China has quality issues that make it very hard to catch up and become an exporting power.

      Traditionally, the Chinese / Maoist strategy is to tap underserved markets that are ignored by the Majors and try to increase volumes and quality where the big boys don't really care. It's a traditional disruptive innovation strategy (find a niche market then expand it) and it works.

      In Mongolia's case, Mongolia sees total vehicle sales of around 2k vehicles every year, and Ulaanbataar has horrendous air pollution, caused partially by tradition coal furnaces (coal was in use by the Chinese before the 1200s and likely ended up being exported to Mongolia between then and now), and also by horrendous vehicle traffic.

      Ethiopia actually sees less cars being sold, but that's more a product of poverty. Mongolia is an upper low-income country with around 7000-8000 GDP per capita, while Ethiopia is closer to 2000 GDP per capita.

  8. Jose,

    After a few months from now customers in the UK and in The Netherlands will be allowed to place an order for the GM ZS EV.

    Is the MG ZS EV also already available on the market in China?
    Or will it be made available on the market in China in the near future?
    Or is it not meant to be made available for the market in China at all?

    Do you know anything about that?


    1. It has been on sale in China for some 4 months, with numbers in the high hundreds.

      So, not a blockbuster so far. Let's see what happens moving forward, if numbers ramp up, or not.

  9. AnonymousJuly 20, 2019

    On the second quarter, BAIC Motor managed to reduce the distance to the leader BYD Auto while Great Wall Motors overtook Geely Auto.

    From the posted data, Q22019 standings are:

    1st BYD Auto with 115483 registrations
    2nd BAIC Motor with 57735 registrations
    3rd SAIC Motor with 39329 registrations
    4th Great Wall Motors with 27013 registrations
    5th Geely Auto with 23715 registrations

  10. Hi Jose,

    Do you have an overview on which manufacturer is doing how well on the NEV quota ytd in 2019? Feels like some big guys still have a lot of catch up to do for the second have of the year.

    You think there is a big sales push to come towards end of the year of the large ICE guys underrepresented on NEV so far, like VW, Geely (you mentioned), Toyota, Chevrolet, Buick, Wuling, etc? Or are they going to pay up fines?

    Many thanks!

    1. AIUI the credits can be traded -- so the laggards will just be buying up extra credits from Tesla, BYD, Nio, etc.

  11. VW and Toyota have a lot of PHEVs sold right now, so it's not too bad, but they are still below the quota;

    Honda has a few "badge engineered" plugins, but they are not enough they will need to buy many more in H2;

    Nissan is safe, as the Sylphy EV gets lots of credits and sales;

    Geely and Changan are ramping up PEV production, so they will be safe;

    GM and Hyundai-Kia need to launch models/ramp up production, if they want to avoid fines.

    1. Does Baojun count for GM's quota?

    2. Good question. I am not sure, but from what i see in the local media, Baojun is considered part of SAIC, not GM.

    3. Isn't it a typical 50:50 joint venture?...

      GM includes it in their own claimed count of global EV sales. I have no clue though whether the Chinese ZEV mandate rules see it that way too...

  12. BYD 6 month Total: 140600 plus 5 000 bus truck. There are models not in top 20.

  13. Jose,

    "Nissan is safe, as the Sylphy EV gets lots of credits and sales"

    But clearly not enough sales to enter the list of the top 20.

    Perhaps they are just outside the top 20?


    1. Around #30. So, still thousands of sales.

    2. José, if this info is true (, so, by your Model 3 deliveries number in China, the number of Tesla S and X delivered should be around 8.000 for 2019 H1. Do you confirme?