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Electric cars in China

With quotas looming, China's 'new energy' car sales take off

Startups and foreign brands battle for slice of nascent green vehicle market

Chinese startup NIO began shipping the ES8 electric sports utility vehicle in June.

BEIJING -- Sales of electric and plug-in hybrid vehicles more than doubled in the first half of this year in China, compared with the same period a year ago, a trade group reported recently.

With the government set to impose sales quotas for "new energy" cars starting next year, the market is welcoming newcomers and competition is intensifying. U.S. automaker Tesla, which specializes in electric cars, has decided to make cars in China, for example.

According to the China Association of Automobile Manufacturers, sales of new energy cars reached 412,000 vehicles in January to June, more than doubling on the year. For passenger cars alone, sales rose 130% to about 350,000 cars, the China Passenger Car Association said.

BYD sold 70,000 cars, or 20% of the total. Its unit sales also doubled during the period. BYD, a leading manufacturer of batteries for electric cars, was an early player in China's electric car business.

China's No. 2 electric car company, Beijing  Automotive Group also doubled its unit sales to 60,000.

A unit of Shanghai Automotive Industry Corp., better known as SAIC Motor, jumped into third place, overtaking rivals. Its sales rose to 44,000 cars, up 230% from a year earlier. SAIC rolled out a number of stylish, affordable models selling for 130,000 to 190,000 yuan ($18,900 to $27,600) after rebates.

Chery Automobile and JAC Motors, also known as Anhui Jianghuai Automobile Group, gained market share as well. Chery attracted buyers with its home-chargeable compact models that sell for about 70,000 yuan after rebates. Multipurpose SUVs with price tags of around 100,000 yuan were also popular. JAC, meanwhile, enjoyed strong sales of models going for up to 50,000 yuan.

Partnerships between Chinese and foreign automakers have also begun selling new energy vehicles. SAIC-GM-Wuling Automobile, a compact-car joint venture between General Motors of the U.S. and the Shanghai-based automaker, sold more than 10,000 cars through June, the largest number among the partnerships.

Workers assemble Baojun E100 electric cars at a SAIC-GM plant in the southern Chinese city of Liuzhou.   © Reuters

BMW Brilliance Automotive, a partnership between Germany's BMW and Brilliance China Automotive Holdings, came in second among the joint ventures, selling a little more than 6,000 new energy cars. In July, when Chinese Premier Li Keqiang visited Germany, the partners agreed to raise BMW's stake from 50% at present. The change is expected to accelerate technology sharing between the partners.

Another partnership between GM and SAIC for standard-size models, as well as the joint venture between Volkswagen and  China FAW Group, also began shipping new energy cars. Green cars from other global automakers, including Toyota Motor and Nissan Motor from Japan, and South Korean's Hyundai Motor, are about to enter the new-energy car market.

The Chinese government is moving forward with its green car drive and will require that 10% of the vehicles manufacturers produce and sell in the country be new-energy vehicles in 2019, rising to 12% in 2020. Under the regulations, automakers will not be able to sell more conventional cars unless they sell certain volumes of new-energy vehicles. The government estimates that 35 million new autos will be sold in China in 2025. It hopes a fifth of those will be new-energy vehicles.

Both domestic and foreign electric-vehicle startups are hoping to tap into the world's largest auto market. Tesla, which reportedly sold 15,000 vehicles in China last year, plans to build a wholly owned plant in Shanghai.

Chinese startup NIO began deliveries of the ES8, an electric sport utility vehicle in late June. Chinese internet giant Tencent Holdings has an equity stake in NIO. The ES8's price starts at 380,000 yuan after rebates and is catching on with young motorists.

Two other Chinese startups, Weltmeister and Xiaopeng Motors, hope to start shipping cars in September and by the end of the year, respectively. Chinese internet search giant Baidu has an equity stake in Weltmeister, while e-commerce giant Alibaba Group owns part of Xpeng. Two more, Byton and Singulato, Motors,  plan to ship cars in 2019 or later. These startups intend to use information technology to develop safer, more user-friendly vehicles.

Chinese automakers, which dominate the new-energy vehicle market at the moment, are bracing for competition from the new entrants. BYD, for example, is trying to increase revenue by selling automotive batteries to other companies, while BAIC has agreed with Canadian auto component maker Magna International to set up a joint venture to produce electric vehicles. Chinese ride-sharing company Didi Chuxing has also announced plans to create an electric car, focusing on lowering production costs.

As the electric car era gets rolling in China, the competition between foreign and domestic manufacturers, and between traditional carmakers and startups, is certain to heat up.

 

 

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