Global automakers are betting that electric vehicles will help chinas car market, the worlds biggest, rebound from a two-year downturn that has been intensified by the coronavirus pandemic.
The countrys annual motor show, which officially opened in beijing this weekend after being delayed from april, is the only big international industry event to take place since the health crisis began.
For international carmakers, chinas apparent success in effectively eradicating covid-19 within its borders is translating into much-needed sales with auto china 2020 a big opportunity to pitch new models directly to the nations drivers.
The confidence is back, said jochen goller, bmws head of china, at the event on saturday which was packed out with chinese journalists, many ignoring venue rules and removing face masks for selfies or to live stream commentary to fans.
Driven by wealthy young chinese buyers upgrading to high-end models, premium brands like bmw, audi and mercedes-benz have been among those benefiting from a recovery in sales.
Mr goller predicts single-digit growth for bmws sales in china this year despite a 31 per cent year-on-year fall in the first quarter.an important aspect of that will be ev sales, which he said in china have evolved from a niche into the mainstream. only now [are electric vehicles] arriving in the core segment.
A year-long downturn in sales of evs and hybrids in china sparked by the reduction of generous subsidies and worsened by coronavirus reversed in july. sales rose 45 per cent year-on-year in august, according to the china passenger car association.
The recovery in chinas car market this year has been remarkable, said makoto uchida, chief executive of japanese automaker nissan. the group, whose sales have fallen in important markets due to coronavirus, said it will release nine new electric and hybrid models in china led by its ariya electric sports utility vehicle before 2025.
When the pandemic hit in january, chinas broader car market looked set to extend a two year sales slump triggered by the withdrawal of certain tax incentives which reversed decades of uninterrupted growth.
But sales have started to pick up since april, buoyed by chinas success in stemming the spread of covid-19 and measures such as easing access to credit and buyer subsidies. the rebound has been especially pronounced in premium segments and suvs.
While evs only accounts for about 5 per cent of total car sales in china, according to zhang xiang, an automotive analyst at a government-affiliated think-tank, strict new emission standards are pushing brands to accelerate electrification.
The main motivation of mainstream car companies to launch electric cars is the pressure of government regulations, he said. beijing wants 25 per cent of all car sales to be electric by 2025.
But traditional automakers face fierce competition in china when it comes to evs. california-based teslas shanghai-made model 3 sedan is chinas top-selling ev, while local upstarts xpeng, nio, li auto and wm motors have capitalised on investor interest in the sector to lure billions of dollars in funding.
Wm a maker of tech-laden electric suvs pitched at mass market drivers said last week it had raised rmb10bn ($1.5bn) in a private fundraising, a record for a chinese ev start-up.
That signals to traditional automakers that they are in for a fight, but they arent going to just roll over either, said tu le, founder of consultancy sino auto insights, on chinese ev brands success in raising cash.
Mr le added that the launch of volkswagens id range of battery-powered vehicle, which the worlds largest car company teased in beijing this weekend, could signal a shot across the bows from traditional automakers. volkswagen is not going to be scared of heavy advertising and reduced margins to get sales up, he said.