Topics in this section: - China hybrid electric cars to take charge as credits spark sales - Hybrids lead China electric-vehicle sales surge - Traditional engines far are from dead - Fossil-Fuel, battery EV 2030-35 pricing parity - More choices won't necessarily boost sales
These analyses are by Bloomberg Intelligence analysts Kevin P Tynan and Michael Dean, and contributing analysts Steve Man and Kevin Kim.
Until battery-only models become more price competitive, which might not happen until 2035, hybrids will continue to dominate passenger-vehicle sales in China. New-energy vehicle sales in the nation are entering a new growth phase with the start of a government credit-trading program.
Hybrids lead China electric-vehicle sales surge
China's new-energy vehicle (NEV) sales growth is likely to accelerate -- from a low base -- to account for 10% of passenger vehicle sales this year vs. 5.5% in 2018, based on our scenario analysis. With the launch of the country's NEV credit program, we expect a surge in gasoline-electric hybrid vehicle sales that will outpace battery-only vehicle sales. While automakers can earn more credits by producing and selling all-battery models, car buyers are likely to avoid them due to concerns about affordability, driving range and a scarcity of convenient charging points.
We expect gasoline-hybrid vehicle sales in China to rise by a quarter this year after soaring 86% in 2018, due to a slow down in overall passenger vehicle sales there. All-battery vehicles could double this year following a 59% climb.
Traditional engines far are from dead
The internal combustion engine will remain the dominant passenger-vehicle powertrain over the next 20 years, in our view. Gasoline or diesel plug-in hybrid vehicles have lower charging times and eliminate anxiety for owners over how far they can travel on one charge. Until new battery technology boosts storage capacity and driving range -- and cuts charging times -- hybrids will be the preferred choice of car buyers and manufacturers. Unless Chinese car owners have home-based chargers, battery-only vehicles will remain a cumbersome option.
We expect hybrid vehicle sales to account for about half of all passenger vehicle sales in 2040 in China, and for battery-only models to grow to about 40%.
Fossil-fuel, battery EV 2030-35 pricing parity
China's push to lift sales of electric-powered vehicles with a carrot-and-stick approach will likely lead to a phase-out of internal combustion engine-only vehicles in 2030-35, based on our scenario analysis. We expect the average price of battery-only vehicles in China to achieve parity with traditional internal-combustion vehicles at about the same time, eliminating a consumer drawback for battery-powered models. Sales of hybrid vehicles, including plug-ins, will peak at 52% of passenger vehicles.
More choices won't necessarily boost sales
Adding more all-battery passenger-electric vehicles to the China lineup is unlikely to lead to rapid consumer adoption until impediments are addressed. Some still have short ranges -- fewer than 200 miles on a single charge -- and convenient charging points are in short supply. China has granted sales licenses to 119 all-battery models, 15 plug-in hybrids and seven fuel-cell vehicles, including two-wheelers. Within the passenger-vehicle segment, 17 hybrids and 17 all-battery models have been approved for sale.
BloombergNEF estimates there were 189 battery-powered and 63 plug-in hybrid models available for sale in China at the end of 3Q.
