In my previous post, I asked the question: will China NEV sales hit 3 million units in 2021?
My assessment then was that it’s definitely not out of the question based on blowout August sales data reported by China Association of Automobile Manufacturers (CAAM). I also said that “September should be another blowout month, hitting 300,000 units again, if not more.”
Well guess what, CAAM numbers for September came out yesterday, and it was another record: more than 350,000 units were sold in a single month for the first time ever.
Unlike overall auto sales, which were off nearly 20% year-on-year, September turned out to be “Golden” for NEVs. I therefore can safely and confidently say that sales will surpass 3 million units for 2021. My personal forecast is 3.2 million units, up from the 2.8 million units I predicted earlier in the year (it was 2.5 million a little before that). In other words, China will sell nearly 2 million more NEVs than it did last year (1.37 million units in 2020).
The way NEV sales have been “gushing,” you can hardly overestimate them because they seem to always turn out higher than expected, at least for the entire third quarter.
Let’s take a moment to recap some of the key sales and registration numbers released by CAAM as well as China Passenger CarAssociation (CPCA) and the Ministry of Public Security (MPS) on October 12, and dissect the significance of these numbers.
China sold 357,000 NEVs (including both PHEVs & BEVs) in September, up 148.4% year-on-year, bringing total year-to-date NEV sales to 2.157 million units, up 185.3%, according to CAAM. NEVs accounted for 17.27% and 11.58% of auto sales in September (2.07 million) and the first nine months of the year (18.62 million), respectively.
In Q3, nearly 950,000 NEVs were sold, up 40% from Q2 and nearly triple the NEVs sold in Q3 2020 (341,000 units). The quarterly run rate of NEV sales has exceeded 1 million units and Q4 sales are on their way to well over 1 million units based on current trajectory, barring any surprises in supply chain disruptions caused by the ongoing chip shortage, which is expected to ease in Q4.
Worth noting is that China exported 195,000 NEVs in the first nine months of the year, up 420.9% year-on-year and accounting for more than 14% of total vehicle export volume during the period (1.36 million). Most of the exported NEVs were of passenger vehicle variety, led by companies like Tesla and SAIC Motor (MG brand in particular), totaling 186,000 units, or over 95% of total NEV export.
China’s new energy passenger vehicle (NEPV) wholesale volume (including exports) reached 355,000 units in September, up 184.4%, while January-September wholesale rose 218.9% to 2.023 million units, according to CPCA. Retail sales of NEPVs, which exclude exports, reached 334,000 units in September, up 202.1%, bringing year-to-date retail sales to 1.818 millionunits, up 203.1%. NEPV retail sales accounted for 21.1% of PV retail sales in September, and 12.6% in the first nine months of the year.
Worth noting is that NEPV penetration rates of Chinese independent and luxury brands were even higher, reaching 36.1% and 29.2% respectively, according to CPCA. BYD, for example, is almost selling NEVs entirely: the 70,022 NEVs it sold (itself a record for NEV sales from a single brand in one month) accounted for almost 90% of overall sales (79,032 units). But the same cannot be said for mainstream foreign brands, which only reached 3.5% of their total sales, about one-sixth of PV sector-wide average. The only exception, is of course Tesla, which hit a domestic retail sales record of 52,153 vehicles, according to CPCA. That does not include the 3,853 vehicles exported out of Giga Shanghai. And if we include GM in the mix, then it has the benefit ofbeing actually the third biggest NEV seller in China through its JV: SAIC-GM-Wuling, which sold 37,151 NEVs under the Wuling and Baojun brands, according to CPCA.
China’s NEV registrations (which is a better picture of domestic sales) in Q3 reached 767,000 units, up 466,000 units, or 154.75%, from Q3 2020, according to MPS. Total NEV registration in the first nine months reached 1.87 million units, up 1.2 million units, or 178.49%. As of the end of September, China had 6.78 million NEVs on the roads, roughly 2.28% of total vehicles in use. BEVs, at 5.52 million units, accounted for the majority (81.53%) of those NEVs.
So no matter how you slice and dice it, there is no denying that China’s secular shift toward NEVs is picking up even more momentum, just as overall auto sales (including PV and CV sales) are hitting the breaks: in September, auto sales were down 19.6% to 2.07 million units, PV sales weredown 16.5% to 1.75 million units and CV sales were down a third to 317,000 units. Chinese smart EV startups NIO and Xpeng Motors both hit that psychological milestone of delivering over 10,000 vehicles in a single month in, Volkswagen’s ID. series deliveries finally climbed over the 10,000-unit threshold, much later than expected. BYD joined the 70K club and Tesla joined the 50K club. Many records were broken.
The big caveat in these numbers, however, is that CAAM numbers represent volume pushed out by OEMs to dealers (thus include dealer inventory) and include exports. Based on the numbers presented by CAAM (2.16million) and MPS (1.87 million), there is roughly a 290,000-unit discrepancy in terms of January-September sales. CAAM number say 195,000 units were exported, so we can infer that the remaining roughly 90,000 units were sitting at dealer lots as of the end of September.
Nonetheless, if we simply treat CAAM numbers as vehicles shipped out of factories and into China and the rest of the world, then it’s nothing short of miraculous what China has been able to accomplish so far this year despite the supply chain disruptions led by the global chip shortage, with NEV sales hitting fresh records every month since May.
Here’s what I expect to happen for the remainder of the year and 2021 as a whole:
Monthly NEV sales will average at least 350,000 units for the three remainder months of 2021, possibly hitting 400,000 units in one of those months, pushing quarterly sales to well over 1 million units for the first time ever;
NEVs will account for over 12% of auto sales in 2021 (China’s goal is 20% by 2025, a target I expect to be raised at the end of this year or early next to 25% or more);
NEPVs will account for over 20% of PV sales in 2021 (BYD is dangerously close to selling exclusively NEVs);
And of course, my forecast of 3.2 million units in NEV sales for 2021.
Somehow, I think even that might be conservative the way things are shaping up. If it doesn’t get there, blame supply, not demand.
