The COVID-19 has hit the Chinese EV sector hard; CRU, a provider of business intelligence on the global metals, mining and fertilizer industries, believes that weak sales will last at least until early Q2 2020. Nonetheless, it continues to forecast Chinese EV sales growth in 2020 over 2019’s total.
EV sales in China dropped 75.2% y/y in February, with a decline of 79.1% for the whole Chinese auto industry.
CRU expects the Chinese EV market will remain becalmed until at least April. Despite the steady decline of case numbers in China, many consumers continue to be wary of visiting dealerships.
Despite the disruptions to Q1 2020, CRU expect EV sales to grow slightly this year for the following reasons:
Supportive government policies. President Xi mentioned the need for incentives targeting the automotive industry during the meeting of the Chinese Politburo Standing Committee in February. The Ministry of Commerce and several local governments have also announced positive policies, with more likely to come this year. There is debate among decision makers about whether EV subsidy policies should remain at current levels or fall as was previously scheduled.
Pent-up demand. Demand for electric vehicles is likely to emerge later this year once the COVID-19 outbreak has passed. Much of the sales lost in Q1 can be made up for later in the year. Automotive sales in January and February are typically low anyway and combined they generally account for less than one eighth of sales.
Major new EV models will be released in H2 2020. Moreover, Tesla will continue to ramp up production at its Shanghai factory through the year. Despite the supply chain issues surrounding the Autopilot system in Model 3 deliveries in China, CRU still believes the vehicle will be highly popular with Chinese consumers and the sales could go beyond 100,000 in China this year.
CRU’s base case view is that COVID-19 will have only a relatively short-term impact on the Chinese EV sector, and that total sales in China can grow slightly this year.