China’s NEV Market Is Forecast to Surpass 1.5 Million Units in 2021

In 2019, factory shipments of new-energy vehicles (NEVs) in China fell below the previous year's level for the first time due to the reduction of NEV subsidies. In 2020, factory shipments from January to June fell sharply, going down 39.0% year-on-year due to the impact of the new coronavirus. However, starting from July shipments exceeded the level of the same period of the previous year. As a result, the NEV market is projected to decline by only around 5% year-on-year in 2020. The Chinese government launched a series of important policies in 2020 to continue to support the development of the NEV market. In April, the central government decided to extend the country’s NEV subsidy policy, which was scheduled to end in 2020, until 2022 in order to mitigate the effects of the new coronavirus. In June, a revised draft of CAFC and NEV credit management policy was announced. It sets NEV credit ratios from 2021 to 2023 at 14%, 16% and 18% respectively, and tightens conditions for NEV credit acquisition. The revised proposal is expected to induce an increase in production volume and quality improvement of NEV products. Since manufacturers are required to meet new conditions specified by the policy, the impact on the NEV market is expected to be substantial. In November, the “NEV Industry Development Plan (2021-2035)” was announced. The plan aims to raise NEV sales ratio in the new automobile market to 20% in 2025. Propped up by these policies and plans mentioned above, the NEV market is forecast to reach a record high of over 1.5 million units in 2021.