(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
By Katrina Hamlin
HONG KONG, Sept 10 (Reuters Breakingviews) - S candinavian dreams are inspiring China’s electric-car bulls. Nio boss William Li says the country could one day resemble Norway, where electric vehicles dominate. The People’s Republic does share similarities. But the differences are striking too.
Pure electric cars achieved a record 94% of new registrations in Norway last month, closing on a target of 100% for next year. That's speedy progress: they accounted for roughly 50% as recently as 2020. By the end of this year, more than half of vehicles in the country could be electrified, according to calculations by Reuters and analysts.
Nio’s CEO reckons China is on a similar trajectory. Last Thursday, Li suggested that new energy vehicles might account for 80% of deliveries within three years, up from around 50% now. That helps justify plans to add a third factory, which could give the company annual capacity of 1 million units. Li's company sold less than 60,000 units in the second quarter.
The two countries have something in common. Both leveraged lavish incentives to drive EV sales. A variety of subsidies and perks like access to bus lanes have meant “it simply does not pay” to choose anything other than a purely battery-powered model, as the Norwegian Road Federation put it.
Their differences are also somewhat encouraging for Li: one especially striking contrast is that while Norwegians buy international marques, Chinese consumers prefer local brands, a boon for Nio and compatriots.
However, the comparison is not always flattering. China has wound down centralised government grants. Hybrids are now often a cheaper option, since their batteries are smaller. BYD
, for example, sold its plug-in hybrid Qin PLUS DM-I at some 80,000 yuan ($11,230.12) in early 2024, while its wholly electric Qin PLUS model went for about 110,000 yuan, according to Automobility. Plug-in hybrids made up more than two-fifths of all new-energy vehicle deliveries in the first 7 months of the year, per the consultancy.
Another key difference is that the world’s largest car market is in the midst of a price war, spurred by a mismatch between local demand and supply. While that accelerates EV penetration, it comes at a cost: Nio’s unit sales for the quarter to the end of June rose nearly 150%, but revenue increased by just 99% as prices fell.
The country may be on track for new energy vehicles, including hybrids, to touch 80% of sales in a matter of years. But not all roads lead to Oslo.
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CONTEXT NEWS
Chinese electric-car maker Nio’s net loss fell 16.7% year-on-year to 5 billion yuan ($694 million) in April to June, the company reported on Sept. 5. Unit sales rose 144% to 57,373 in the same period, while total revenue rose 98.9% to $2.4 billion.
The company’s New York-listed shares rose 14% to $4.85 on Sept. 5; its Hong Kong-listed stock did not trade on the morning of Sept. 6 as a typhoon closed markets in the city.
New energy vehicles, including hybrid models, accounted for 51% of China’s sales in July 2024, and made up 43% of sales in the first seven months of the year, according to data from consultancy Automobility.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: Chinese electric cars are grabbing more market share at home Graphic: Hybrid cars account for a growing proportion of China sales
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(Editing by Antony Currie and Ujjaini Dutta)
((For previous columns by the author, Reuters customers can click on katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))
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