Mobility

The Chinese electric mobility industry is flourishing thanks to broad customer acceptance and government support. [1] The electric segment is growing reliably, and in the first quarter of 2022, 1.07 million NEVs (new engine vehicles) were sold in China, 146.6% more than in the same period last year. [2] The government aims for 40% of all car sales to be battery-powered by 2030. [3] China is also targeting to lead the way in autonomous driving, with plans to commercialize robo-taxis and driverless trucks across the country by 2025. [4] Chinese auto company BYD plans to begin mass production of robo-electric cars as early as 2023. Tech conglomerates Alibaba or Tencent are offering capital as well as know-how, and a cluster of diverse local Chinese companies with complementary expertise (e.g., Xiaomi and FAW) are sharing the construction of the vehicles of the future. [5] Already 27 cities have approved designated routes for self-driving vehicles on which >70 companies operate with a fleet of around 600 self-driving cars, and Pony.ai and Baidu already operate self-driving cabs in Beijing. Shenzhen plans to open major roads to self-driving cars this year, and navigation, software, autonomous hardware components, traffic monitoring, and related secondary sectors will grow in tandem with the electric mobility sector. [6]

According to the latest forecast given by the China Association of Automobile Manufacturers (CAAM), China’s total auto sales are expected to reach 27.5 million units in 2022, of which 5 million NEVs are expected to be sold, increasing 47% year-on-year, with an estimated market share of 18%. [7] With the strong support of various national policies, China’s NEV market has maintained a high growth trend since the second half of 2020, and production and sales volumes continue to grow at an exponential rate. The global NEV market reached $10.2 billion in 2021, with China holding a 28% of the market share, South Korea taking a 20% of the market share, and Japan taking a 10.2% of the market share. [8] In 2021, China’s investment in the whole industry chain of NEV exceeded 740 billion RMB (around $109.6 billion), which was more than 50% of the investment scale of the whole automobile industry and accounted for 4% of the total investment in the manufacturing industry. Nearly 100 investment projects in China’s lithium-ion battery industry chain took place in the first half of 2021, with a total investment amount of more than 490 billion RMB (around $72.6 billion), including over 310 billion RMB (around $46 billion) and 180 billion RMB (around $26.6 billion) for batteries and its four major components, respectively. [9] More than 20 lithium-ion battery industry chain enterprises applied for listing in the first half of the year, with total financing of nearly 24 billion RMB (around $3.5 billion).

The market penetration rate further increased to 8.74% in January-May 2021, showing that China’s NEVs are developing rapidly, and the NEV industry is entering a new phase of accelerated development. With the high-profile announcement of Huawei and Xiaomi as the representative of the technology enterprises to “build a car,” that is, the technology firms officially entering the NEV market, the competitive pattern of China’s electric mobility industry that comprises traditional car enterprises, car-making new forces and technology enterprises gradually emerged [10]. It is worth noting that the investors should be wary of the increased risk of a “bubble” of NEVs. In a competitive environment, only companies with a comprehensive set of advantages in technology, capital, and cost are capable to survive.