China’s plan to fully electrify public vehicles to give NEV sector US$118 billion boost

beijingwalker · Feb 10, 2023

China’s plan to fully electrify public vehicles to give NEV sector US$118 billion boost

Beijing’s push to fully electrify its public-sector vehicles is expected to create more than 800 billion yuan (US$118 billion) in market value for China’s new energy vehicles (NEVs) industry by 2025, an analyst said.

Friday, 10 Feb 2023

Last week, China’s Ministry of Industry and Information Technology and seven other government agencies announced a pilot programme aimed at increasing NEV use as city buses, taxis and sanitation, postal and logistics services vehicles.

The programme, which runs from this year until 2025, has set a few ambitious targets, including increasing the NEV use rate to 80 per cent in public-sector vehicles by 2025, from the current 10 per cent or so. It also aims to increase the number of charging facilities – it will strive to set up one new charging pile for each new public-sector NEV deployed.

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“Currently, the overall use rate of new energy commercial vehicles in China is less than 9 per cent, with new energy trucks only accounting for 7 per cent,” Barney Yao, an analyst at Hong Kong-based brokerage Haitong International, said in a report published on Tuesday.

“The NEV industry has entered a new stage of large scale and rapid development,” Yao said. “With the easing of the Covid-19 pandemic and improvements in NEV technologies, the use intensity and scope of NEVs will be greatly improved.”

The pilot programme is significant because, while China delivered 6.88 million NEVs in 2022, up 93.4 per cent from the previous year, according to data from the China Association of Automobile Manufacturers (CAAM) released last month, in the commercial vehicle sector, which includes most public-sector vehicles, NEV use and charging infrastructure were lagging far behind.

NEVs accounted for 25.6 per cent of China’s total automobile sales last year, with battery-run EVs accounting for more than 5.36 million units and plug-in hybrid EVs accounting for 1.52 million units, according to CAAM. In the commercial-vehicle sector, however, NEV use stood at only 10.2 per cent in 2022, according to Lyu Juan, analyst at Beijing-based brokerage China Securities.

The government agencies have called for local governments to submit their proposals and join the pilot programme. The programme aims to add 2.02 million public-sector NEVs in the next three years. In major cities such as Beijing and Shanghai, it aims to add at least 100,000 public-sector NEVs by 2025, according to the ministry.

It’s estimated that China only added over 1.4 million public-sector NEVs in 2022, and less than 0.78 million new public-sector NEV charging piles, according to China Securities.

The pilot programme is expected to add 2.04 million units of NEVs and the same amount of charging facilities in mainland China over the next three years, said Haitong’s Yao, adding that this would expand the NEV market size by between 612 billion yuan and 816 billion yuan, and the NEV charging market by 71.1 billion yuan.

China’s public charging infrastructure still faces problems such as insufficient and unbalanced deployment, as well as low quality, which means that it has failed to match the demand created by NEV growth, Yao said.

“Improving the NEV charging infrastructure is of great significance to the healthy and sustainable development of the entire industry,” he added.