China Issues Optimistic Forecast for New Energy Vehicle Sales in 2017

China continues ratcheting up its plug-in vehicle sales forecasts, with 800,000 projected in 2017 sales.

That would make for a 58-percent increase from 2016 sales of “new energy vehicles” as it’s called under Chinese government policies. It includes all plug-in passenger and commercial vehicles, such as medium- and heavy-duty trucks and buses.

Xu Yanhua, a vice secretary for the government-backed China Association of Automobile Manufacturers (CAAM), told Economic Information Daily that plug-in passenger vehicles would increasingly drive the market for NEVs. These passenger vehicles are expected to account for more than 70 percent of demand in 2017, Xu said.

“In 2017, demand for long-range pure electric car will rise further, charging facilities will continue to maintain rapid growth momentum, and following an expansion in scale, manufacturing costs will also be further reduced,” Xu said.

Last year, a Chinese government official said that these subsides will be gradually reduced and ended after 2020. The government had confirmed that subsidies will be reduced by 20 percent this year.

Aggressive government incentives started years ago to curb urban air pollution and to support domestic automakers to lead globally in EV technology. New energy vehicle sales did skyrocket beginning in 2015, and the government and automakers are hopeful the segment will soon be driven by market demand.

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Last year, there were about 507,000 battery electric and plug-in hybrid vehicles sold, growing by more than 50 percent over 2015. That was well below the industry forecast of 700,000 new energy vehicles being sold. CAAM believed that was caused by uncertainty over government policy support for plug-in vehicles.

Chinese automaker BYD has seen strong results, with three of the top 10 plug-in vehicles sold globally last year.

Market analysts have seen China’s boom in NEV sales driven primarily by generous subsidies. It may take several years for plug-in electrified vehicles to be able to fend for themselves, they say, with now through 2020 being critical in the industry’s development.

Concerns have also been expressed over the government’s crackdown last year on falsified reporting of passenger and commercial PEV production by vehicle manufacturers used to gain more subsidies.

Reuters