China may have already overtaken U.S. in electric-vehicle sales
China may have already overtaken the U.S. in sales of electric cars, although whether that rapid pace is sustainable is another story.
That’s from analysts at Barclays, who said in a note clients Wednesday that annual sales of electric vehicles in China may grow by about 44% a year until 2020, and are expected to have reached 220,000 units in 2015. That would contrast with less than 120,000 electric cars sold in the U.S. also last year.
That speedy growth scenario would knock China’s annual oil demand by around 1%, the analysts said.
Just last week, General Motors Co. GM, +0.36% introduced at the Las Vegas’ Consumer Electronics Show its new Chevrolet Bolt EV, arriving at dealerships in late 2016 with a price tag of $30,000.
Ford Motor Co. F, -0.82% has announced plans for new electric cars, including an electric version of its Focus sedan. Also at the Las Vegas show, Faraday Future Inc., a company with close ties with a Chinese web television company, introduced a new electric “concept” car. The company has said it will build a new factory outside Las Vegas.
China is focusing on pure electric vehicles rather than hybrids, and prioritizing buses and public-utility vehicles as a means to combat pollution and traffic congestion, the Barclays analysts said. The country has also enacted policies encouraging infrastructure development, such as a push to add more charging stations.
China waives sales tax and the annual license tax for EVs, and local benefits are common, particularly in major cities concerned about congestion and smog. For example: In Beijing, electric-car buyers do not have participate in the monthly license lottery.
Barclays estimated that with subsidies and tax benefits, the cost of buying an EV in China is similar to that of a internal-combustion engine car.
EV sales in China have grown rapidly since 2014, and the Barclays analysts said they expect “a continued acceleration in sales to lift China above the U.S. as the world’s largest EV market in 2015.” There’s increasing optimism that EVs “are finally taking off in China,” they said.
The Chinese government has set a target to lift EV sales to 1.5 million vehicles, or 5% market share, by 2020, from 75,000 in 2014.
That acceleration is still at early stages and is based on strong government support, so questions remain as to whether China can keep that pace. Constraints in battery supplies and a slower-than-expected infrastructure buildup are some of the pitfalls.
Even in a world were expectations meet reality, the potential effect of China’s EV penetration on the country’s oil demand might be modest in the next five years, the Barclays analysts said.