With subsidies declining, how will new energy vehicles develop after a short-term decline?

While we were still talking about "Although the national automobile market has seen a decline in sales, the new energy vehicle market has seen a high growth against the trend, and new energy vehicles are increasingly becoming the engine driving the automobile market", a set of data from the China Passenger Car Association poured cold water on us, and the impact of the subsidy reduction is gradually emerging.

According to the national passenger car production and sales data for July 2019 released by the China Passenger Car Association, the national passenger car market retailed 1.485 million vehicles in July, down 5.0% year-on-year and 16% month-on-month. From January to July this year, the retail sales of narrow passenger cars fell by 8.8%. From January to July, the wholesale sales of new energy passenger cars reached 645,000 units, a year-on-year growth rate of 53.7%.

Due to the sharp increase in sales costs caused by the subsidy reduction at the end of June, it is difficult for all links of production and sales to quickly respond to such cost changes. In July, the wholesale sales of new energy passenger vehicles were 68,800 units, a year-on-year decrease of 4.2% and a month-on-month decrease of 48%. In July, the wholesale sales growth rate of pure electric passenger vehicles increased by 9% year-on-year and decreased by 54% month-on-month; in July, the sales of plug-in hybrid models decreased by 27% year-on-year and 16% month-on-month.

In July, new energy vehicles saw negative growth for the first time, which also affected the installed capacity of power batteries. According to the analysis data of the Power Battery Application Branch Research Department, the installed capacity of power batteries for new energy vehicles in my country was about 4.7GWh in July 2019, which increased by 40.5% year-on-year, but decreased by 29% month-on-month. Among them, the installed capacity of new energy passenger vehicles was about 2.2GWh, a month-on-month decrease of 54%.

It is worth mentioning that in the United States, another major market for new energy vehicles in the world, sales of new energy vehicles in July 2019 were 26,400, a year-on-year decrease of 11%, which is also the first negative growth in recent years. It is understood that this is because Tesla's sales performance in the US market is not good, and the sales of new energy vehicles in the United States have experienced the first negative growth in recent years.

Data shows that all three Tesla models currently on sale have declined. In July this year, Tesla delivered about 15,650 electric vehicles in the US market, a year-on-year decrease of 6.7%, of which Model 3 delivered 13,450, a year-on-year decrease of 6%; Model X delivered 1,225, a year-on-year decrease of 8%; Model S delivered 975, a year-on-year decrease of 19%.

Regarding the performance of the U.S. market, Cui Dongshu, secretary-general of the China Passenger Car Association, believes that the first negative growth in July shows that the U.S. new energy market is facing severe growth pressure, and it is inevitable for Tesla, a domestic American car company, to break into the Chinese market.

Although the sales volume of new energy vehicles in China declined in July, it is still the world's largest market after all. The overall growth of new energy vehicles in China is still much stronger than that in the United States and other new energy vehicle markets.

Cui Dongshu said that 2019 is the real decline period of China's new energy vehicle subsidy policy, especially in July, when the new energy vehicle subsidies were fully and substantially reduced. After the local subsidies were withdrawn, there was no supporting policy for the use link. The market-oriented transformation of new energy vehicles will face the possibility of a hard landing. Cui Dongshu believes that the private demand for new energy vehicles in the Chinese market is also in a temporary decline. At this time, it is necessary to effectively improve the comprehensive cost advantage of new energy vehicles. Local governments should increase subsidies for the use link costs of new energy vehicles after the subsidies are cancelled.

"China's new energy vehicle market will rebound in mid-to-late August, and sales in the plug-in hybrid market will increase to a certain extent." Cui Dongshu made this judgment. He believes that as old new energy vehicles are cleared out of the market, the performance of new electric vehicles has generally been enhanced, and it is expected that after a short-term decline, it will gradually grow.