China Daily. EV sales explosion
http://www.chinadaily.com.cn/cndy/2016-07/18/content_26124981.htm
Experts warn NEV sector could overheat amid salessurge
By Li Fusheng ( China Daily )Updated: 2016-07-18 09:30:30
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Experts are warning of overcapacity in China's new-energy vehicle sector as NEV salescontinue to keep rapid pace in the country.
The NEV segment, including purely electric cars, plug-in hybrids and fuel cell cars, is thefastest-growing sector in the Chinese auto market.
Statistics from the China Association of Automobile Manufacturers show that 170,000 NEVswere sold in the first half of the year, a 127 percent surge from the same period last year.
The organization forecast that government financial stimuli would further boost growth in thesector in the second half of the year, predicting that total sales for the year would reach700,000 units, more than doubling last year's figure.
Despite the surging growth, industry insiders are urging automakers and local governments toexercise caution due to emerging signs of overcapacity.
"Due to rapid expansion in the new-energy sector, we have seen the problem of blindinvestment, which must be addressed in order to prevent risks," said Wu Wei, an official at theNational Development and Reform Commission, as he released the commission's report atCAAM's press conference on July 11.
The report said that although some regional automakers are technologically backward, theycontinue with ambitious programs to build NEV or battery plants, resulting in a market floodedwith inferior quality products.
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A visitor checks a new-energy car at the Beijing auto showin May. Zhang Haiyan / For China Daily
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There are already more than 200companies in the country's NEV sector,which covers passenger cars, busesand special utility vehicles, according tothe report.
Wang Cheng, a senior expert at theChina Automotive Technology &Research Center, said more than 30car-making projects were underconstruction nationwide in 2015, with acombined capacity of 3 million units peryear, 1 million more than China'splanned capacity for the end of 2020.
Dong Yang, executive vice-president ofCAAM, called on automakers toprioritize their NEV strategies and adjust them to meet market demand, if necessary.
"If in the past some automakers saw their (NEV) strategies as merely responses togovernment calls to develop the sector, they should now see them as their core competitiveedge; if other automakers implemented such strategies to get government subsidies, theyshould now focus on ways to compete effectively in the market once subsidies are stopped,"Dong wrote in his blog.
Subsiding subsidies
China promulgated plans in 2009 to stimulate the sector and set a goal in 2012 to have 5million NEVs on its roads by the end of 2020.
To meet this target, both central and regional governments started offering subsides in 2010to makers of new-energy cars and buyers, but there are framework plans to stop thesubsidies in 2020.
"It is almost certain that China will have a million unit-level (electric car) market around2020...and by then electric car technologies will become a vital part of major automakers'competitive edge," wrote Dong.
Vice-Premier Ma Kai said on July 6 that the central government will severely punishautomakers who illegally claim subsidies, according to Caixin magazine.
The State Council has concluded an investigation-based report into illegal subsidy claimsfollowing media coverage earlier this year that some automakers obtained subsidies byproducing substandard cars and selling them to their subsidiaries.
Ma said any automakers found guilty of illegally claiming subsidies would, depending on theexact circumstances, be forced to pay back the amount claimed, fined, and even have theircar-making qualifications rescinded. To date, no company names have been released.
The State Council's report shows that the central government gave 28.4 billion yuan ($4.25billion) in subsidies, with regional governments offering more than 20 billion yuan to the sectorfrom 2013 to 2015.
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(China Daily 07/18/2016 page18)
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