Electrify Europe: China’s E-Mobility is Moving from the Introduction Phase to the Development Period Sarah Fairhurst Global EV outlook 2017 © OECD/IEA 2017 Two million and counting EV deployment This section reviews the latest developments in new registrations and the stock of EVs, looking primarily at electric cars and focusing on the developments that took place in 2016 as well as the trends since 2010. Stock and sales figures are assessed against policy support schemes and Page | 12 international, national or private commitments on EV deployment for the 2020, 2025 and 2030 time horizons (depending on national settings). EV deployment is also assessed against the ambition of the EV30@30 campaign. Electric cars Market evolution Registrations of electric cars hit a new record in 2016, with over 750 thousand sales worldwide. However, sales for 2016 showed a slowdown in the market growth rate compared with previous yWhyears t oChina? 40%, making 2016 the first year since 2010 that year-on-year electric car sales growth fell below 50%. Despite the decline, maintaining the 2016 rate of growth over the following years w•illChina still a lislo leadingw for m theee tworlding th ine sEVale saless and – stwithock aroundobject ivhalfes ooff thethe sales2DS f globallyor 2025 in. 2016 F•iguAndre 5 is• Egrowinglectric c afasterr sale thans, ma anyonerket sha elsere, and BEV and PHEV sales shares in selected countries, 2010-16 2016 BEV sales (%) 2016 PHEV sales (%) 350 35% s n 300 30% 2010 ) o i 6 t 1 a 0 r 250 25% t 2 2011 ( s ) i s e g r d 200 20% e a r n 2012 h a r s s a 150 15% t c u e o c i k h r 2013 r t t 100 10% a ( c e M l e 2014 50 5% w e N 0 0% 2015 s s s y y e a n n r m e d a c n n e a t i e o a n n p d w a h h d a a r a t e t l m r C J g 2016 S r o r F O w n e e i N S d h K e G t t d i e 2016 market share e n N t i U n U Sources: IEA analysis based on EVI country submissions, complemented by EAFO (2017a), IHS Polk (2016), MarkLines (2017), ACEA (2017a, 2017b) aWhat’snd EEA (2 driving017). this, and will it continue as subsidies are wound back? Key point: The two main electric car markets are China and the United States. Six countries reached EV market shares o1f mSource:ore tIEAha Globaln 1 %EV iOutlookn 20 201716: Norway, the Netherlands, Sweden, France, the United Kingdom and China. China was by far the largest electric car market in 2016, with 336 thousand new electric cars registered. Electric car sales in China were more than double the amount in the United States, where 2016 electric car registrations rebounded to 160 thousand units after a slight drop in the previous year (Figure 5). European countries accounted for 215 thousand electric car sales.11 Both globally and in the European Union, the electric car market is still concentrated in a limited number of countries. In Europe, most of the electric cars sold in 2016 were registered in just six countries: Norway, the United Kingdom, France, Germany, the Netherlands and Sweden. Globally, 95% of electric car sales are taking place in just ten countries: China, the United States, Japan, Canada and the six leading European countries. 11 In this case, European countries include all the countries geographically located in Europe that report data to the EVI and the EAFO (see Figure 4). What’s happening behind the headlines? 2 In short – a LOT of growth China Surpassed the U.S. in 2015 Total Sales Targets 6 Million Units 900 2015 000 Units 5 800 5 2020 NEV Production NEV Sales US NEV Sales 700 4 600 Surpass the U.S. 3 500 3 400 2 300 2 1.5 200 1 1 1 0.5 0.5 100 N/A N/A 0 0 2010 2011 2012 2013 2014 2015 2016 2017 China Germany US France Japan NEV Market Shares in the Chinese Auto Market Electric Vehicle in the Chinese NEV Market 45% 86% 40% Expecting higher market 40% 84% penetration of EVs 35% 82% 30% 80% 25% 78% 20% 76% 15% 15% 74% 10% 10% 8% 72% 5% 1.40% 2.30% 70% 0% 68% 2016 2017 2019 E 2020 E 2025 E 2030 E 2015 2016 2017 3 Source: TLG Analysis, EV Volumes, National Development and Reform Commission, People’s Daily, JRJ, Sohu, Auto China More than 20 million sales by 2030 with China leading the game Sales from 2016 to 2030 Shares of the Global Market in 2030 25 Million units 20 Japan, 3% Others, 15 12% China, US, 39% 10 20% Europe 5 , 26% 0 2016 2017 2020 2025 2030 China Europe US Japan Others In this presentation we are going to take a deeper dive into the Chinese EV market, from our viewpoint right next door in HK (And yes, it helps to have staff who can read the Chinese policies in their native language!) 4 Source: TLG Analysis, BNEF, EVVolumes But why??? • Drivers of EV in China are not the same as Europe • Most Chinese consumers show little interest in global environmental issues - they want a car • Chinese Government cares about air pollution – Sox, nox and particulates • But importantly, they also care a about oil security and EV policy is one part of the strategy to tackle reliance on imported oil products – Vehicles in China consume 1/3 of the crude oil – Increasing dependency on foreign oil Dependency on foreign oil ratio (increasing) 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% No. 1 crude oil importer 20.0% Dependency 10.0% surpassed the U.S. 0.0% 5 Note: Dependency on foreign oil ratio is the percentage of crude oil import out of total consumption Source: CNPC But when you think about China… it’s a bit like assuming “Europe” is one country: Different regions are moving at very different speeds Charging Facilities by Province in 2017 Most Sales are Concentrated by the Major Producers Qinghai Heilongjiang Guizhou Hainan Second-tier markets will Guanxi be the main growth of Gansu Jiangxi the future Changchun Yunnan Beijing • FAW Group Liaoning • Beijing Hyundai Hubei • BMW (China) Henan • BAIC Motor Shanxi • BJEV Sichuan • Tesla Motors Chongqing Shanxi Shandong Fujian • BYD • Rongcheng huatai Shanxi Jiangsu Hubei • BJEV Tianjin Hubei Anhui• BAIC Motor Shanghai Zhejiang • Dongfeng • Chery • SAIC Motor Hebei Chongqing • JAC Motors Anhui Public Pole Personal Pole • Chang’an Zhejiang Shandong Hunan • Haoqing Jiangsu • Haima • Geely Shanghai • Jiangnan Guangdong Guangzhou Beijing • Guangzhou Automobile Group 0 5000 10000 15000 20000 25000 30000 35000 • BAIC Group • BYD First-tier market invest much more in the public infrastructures 6 Source: TLG Analysis, EVCIPA, OFweek Government support still plays a significant role, and it varies by location Electric Vehicle (EV) Vs. Plug-in Hybrid Electric Vehicle • In many cities you must compete for a (PHEV) Market Shares by Sales in Top Ten Cities license plate to get a car 70000 EV • In Beijing, the available quota for a 60000 Car License Plate Quota in Place PHEV 50000 conventional car is 843 people per No Plate Restriction EV plate. For an EV, it’s 3.5. 40000 PHEV 30000 20000 • This drives popularity of Electric 10000 Vehicles (EVs): 0 – EVs generally receive more subsidies than plug-in hybrid electric vehicles (PHEVs) – In Beijing, only EVs receive subsidies The majority of the top ten cities (by NEV – In Shanghai, PHEVs are more popular sales) have vehicle license plate quotas since small PHEVs receive extra subsidies The industry projects that EVs will continue the dominancy as technologies advance; however, with heavy government support, it’s yet too early to tell if the market actually prefers Electric Vehicles (EVs) 7 Source: OFweek Chinese NEV buyers have a strong preference for smaller cars A00 A0 • A00: Wheelbase 2-2.2m • Engine Capacity <1.0 L • A0: Wheelbase 2.3-2.45m • Engine Capacity 1-1.6L • A: Wheelbase 2.45-2.65m • Engine Capacity 1.6-2.0L • B: Wheelbase 2.6-2.75m • Engine Capacity 1.8-2.4L • C: Wheelbase 2.7-2.8m • Engine Capacity 2-3.0L • D: Wheelbase 2.8m+ • Engine Capacity >3.0L C D 8 Image source: Vladimir Kramin/123rf.com, lex Varlakov/123rf.com, rawpixel/123rf.com And these differences in car preference are unlikely to change because changes in subsidy regimes are also supporting a drive to small cars Global Market Shares in 2017 Electric Vehicle Market Shares in China 100% C C 100% B B 90% 90% A 80% 70% 80% A A0 60% Look at the blues! 70% 50% 60% 40% 50% A0 30% 20% 40% 10% 30% A00 0% US Japan Norway Germany UK France Europe Asia Total China 20% A00 10% A00 A0 A B C Others A0 A B C D 0% 2015 2016 Electric Vehicles Plug-in Hybrid Electric Vehicles 9 Source: TLG Analysis, D1EV, CPCA But with reducing subsidies we see more personal purchases that are less policy-driven and more market-reflective Company Vs. Personal Purchase by Sales in Top Ten Cities 70000 Company 60000 Car License Plate Quota in Place Personal 50000 Company No Plate Restriction 40000 Personal 30000 20000 10000 0 Beijing Shanghai Shenzhen Tianjin Hangzhou Hefei Guangzhou Chongqing Qingdao Changsha The growth of personal purchases shows the general public is accepting the concept of NEVs 10 Source: OFweek A consensus market projection sees the growth continuing beyond subsidies, but with more innovation and increasingly cost competitive products Projection of NEV Passenger Vehicles 2018-2030 2000 60% NEV Passenger Vehicle Sales NEV Market Share of PassenverPassenger CehiclesVehicles 50% 1500 40% Introduction Period Development Period 1000 (below 10% market share) 30% 20% 500 10% 0 0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2017-2020 2021-2030 2030 • Policy-driven • More innovative products coming only • Planned NEV market share: • 2020 passenger vehicle • Decreasing cost--competitive with 40% annual sales target :1.8 conventional vehicles by 2021-2022, • Battery cost: 30% of current million echoing the full phase out of fiscal cost – Industry projection: highly subsidies by 2021, e.g.