China continues to do all it can to boost sales of what it calls new energy vehicles (NEVs) despite a decline in total car sales in May.
While sales of conventionally-powered vehicles fell for the first time in 14 months last month – a sign of waning demand from buyers and a tightening of lending, sales of new energy vehicles (NEVs) have again increased thanks to government subsidies.
Figures released Friday showed sales of NEV new energy vehicles – including battery-electric vehicles, plug-in gasoline-electric hybrids and hydrogen fuel cell vehicles – jumped 160% in May to 217,000. units for the month compared to depressed May 2020. .
How China is decisively increasing NEV sales pokes fun at the lack of similar policies in economies like Australia, despite clear signs of consumer demand, with imports of hybrids reaching record levels as high as present in 2021.
The May surge saw the China Passenger Car Association increase its estimate of NEV sales in China for the second time in two months.
The latest estimate is now sales of 2.4 million units this year. The association’s estimate was 2 million units at the start of 2021, and was raised to 2.2 million in April.
If the latest forecasts are met, sales should almost double in a year.
China produced 1.366 million NEVs in 2020, up 7.5% from 2019, with sales up 10.9% to 1.367 million. Sales would have been much higher except for the lockdowns at the start of the year which reduced all vehicle sales.
Given the monthly sales growth, NEV’s production and sales could easily reach 2.6 million by the end of this year.
Tesla ranked first in May, with wholesale revenue reaching 33,463 units, up 29% from April. It was followed by BYD (Warren Buffett’s Berkshire Hathaway owns a significant stake in BYD), at 32,131 units, and SAIC-GM-Wuling, at 27,757 units.
The China Passenger Car Association said exports of electric and plug-in hybrid cars surged in May. Of the 33,463 Tesla vehicles sold last month, about a third were shipped overseas. In the same month, SAIC Motor exported 2,430 and BYD, 223.
Strong sales growth from NEV masked the 3.1% year-on-year drop to 2.13 million units in May, amid a global shortage of computer chips and soaring commodity prices for the industry. steel, copper, lead and zinc.
Passenger car sales fell 1.7% from a year earlier to 1.7 million in May.
In the first five months of the year, total auto sales jumped 36.6% from the previous year to 10.88 million units, passenger cars up 38.1% to 8.44 million.
But NEV’s sales jumped 224.2%.
The China Association of Automobile Manufacturers expects the country’s overall car sales to grow 6.5% this year, which means there will be more months of slower growth, all the more so that the basis of comparison changes over the next six months and includes months when sales rose sharply in 2020..
Chinese manufacturers of NEV, such as Nio Inc, Xpeng Inc and BYD, are increasing their manufacturing capacity in China, encouraged by the government’s promotion of greener vehicles to reduce pollution.
Tomorrow will see the release of May data from China on production, retail sales and investment – especially real estate spending. Falling car sales will weigh on production data.
Meanwhile, China’s new bank lending unexpectedly increased in May from weak credit growth in April, but broader credit growth has continued to slow as the central bank tries to contain increasing debt.
The increase in lending has been small – Chinese banks granted 1.5 trillion yuan ($ 234.76 billion) in new yuan loans in May, up from 1.47 trillion yuan in April and market forecast around of 1.41 trillion yuan, according to the country’s central bank, the People’s Bank of China (PBOC).
The figure was also higher than the 1.48 trillion yuan issued in the same month a year earlier, when policymakers implemented unprecedented measures to deal with the shock of the coronavirus crisis.
May’s performance saw growth in outstanding yuan loans slow to 12.2% year-on-year, the slowest since February 2020, and from 12.3% in April. Excluding this period in early 2020 when the pandemic was at its peak, loans in May experienced the slowest growth since 2002.
Home loans are also limited.