Automakers face a dilemma in China’s huge, but crowded market: Regulators are pushing them to sell electric cars, but buyers want a gas-guzzling sport utility vehicle (SUV).
The industry is rattled by Beijing’s proposal to require that electric cars make up 8 percent of every brand’s production as soon as next year.
Consumers are steering the other way: First-quarter SUV sales soared 21 percent from a year earlier to 2.4 million, while electric vehicle purchases sank 4.4 percent to just 55,929.
Photo: Reuters
“It’s tough for someone with an EV [electric vehicle] to come and take away market share from SUVs,” China Market Research Group’s Ben Cavender said.
The Shanghai Auto Show, which opens to the public on Friday, is to showcase work on electric vehicles meant to appeal to Chinese drivers who are wary of the unfamiliar technology’s reliability and cost.
The pressure for electrification in China is an added headache for automakers at a time when sales growth is slowing and competition is heating up in a market they are counting on to drive global revenue.
Sales growth fell to 1.7 percent last month from the previous year’s 15 percent. SUVs made up 40 percent of sales, while sedan purchases fell 4.9 percent.
At the Shanghai show, the industry’s biggest marketing event this year, almost every global and Chinese brand plans to display at least an electric concept car, if not a model ready for sale, alongside their latest SUVs and sedans.
General Motors Co’s Buick unit announced plans last month for Chinese sales of its Velite 5 gasoline-electric hybrid sedan. Buick also sells a hybrid LaCrosse in China.
This month, Ford Motor Co said it would sell an all-electric SUV and a plug-in hybrid Mondeo Energi sedan in China.
Ford’s joint venture with state-owned Changan Automobile Co (重慶長安汽車) is to manufacture the Mondeo.
Ford said by 2025 it plans offer electric versions of 70 percent of its models sold in China.
“We are prioritizing our electrification efforts on China to reflect its importance as a global electrified vehicle market,” Ford chief executive Mark Fields said in a statement.
NextEV (蔚來汽車), a Shanghai-based start-up, says it plans to display 11 vehicles in Shanghai from its all-electric NIO brand. They include the two-door EP9, a contender for the title of fastest electric car, with what the manufacturer says is a top speed of 310kph.
Volkswagen AG plans to announce its electric vehicle plans for China and unveil an electric concept car. Honda Motor Co is to display its new NeuV, a futuristic concept car the company has suggested might get an electric drive train.
Government planners see electric vehicles as a sector where China can lead and a Cabinet technology development plan issued in 2013 calls for two of the top global brands in 2025 to be Chinese.
Industry insiders say manufacturers have warned Beijing those targets are too ambitious. Reports say regulators might have agreed to lower or delay them in an updated plan due out this year, but there has been no official confirmation.
China’s stand-out EV success so far is BYD Auto Co (比亞迪汽車). It sells all-electric vehicles to taxi and bus fleets in China and abroad, and gasoline-electric hybrid SUVs and sedans to Chinese consumers.
BYD Auto says last year’s sales rose 70 percent year-on-year to 100,183 vehicles. That would make it the biggest electric brand for a second year, with Tesla Inc in second place with 76,230 vehicles sold.
Other Chinese brands offer plug-in electrics, but most sold only a few hundred vehicles last year. That is partly because their vehicles cost up to 350,000 yuan (US$50,000), or two to three times the price of equivalent gasoline models.
Even Great Wall Motors Co (長城汽車), which became China’s most profitable auto brand by making almost nothing but SUVs, has unveiled an electric compact sedan, the C30 EV, which looks almost comically small next to its hulking other vehicles. It has yet to say when sales are to start.
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