SUV Sales Soar, EV Sales Slump In China

SUV sales are soaring in America, but they are going strong in other parts of the world as well. On the other hand, sales of electrified cars in China are disappointing. That’s largely because they are all sedans, a vehicle style that Chinese customers are turning away from. China is pushing hard to make electric cars mainstream. In China’s crowded cities, it is impossible to register a car without first proving there is a space available to park it. Then and only then does the registration process begin.

EVs have first priority. People who buy conventional cars have to enter a lottery to get a registration, a process that can take up to 5 years. Imagine buying a  conventional car today, then making payments and paying taxes and insurance on it until 2022 before you could drive it. Despite generous cash subsidies to encourage people to buy so called “new energy” vehicles, SUV sales in China have surged 21% to 2.4 million units in the first quarter of 2017 while EV sales have increased a barely noticeable 4% to 55,929 during the same period.

“It’s tough for someone with an EV to come and take away market share from SUVs,” said Ben Cavender of China Market Research Group. Chinese drivers say they are wary of the unfamiliar technology’s reliability and cost. In other words, they are just like American consumers who are skeptical of electric and plug-in hybrid cars. The Sierra Club says US manufacturers and dealers have done a poor job of explaining the technology and the benefits of driving on electrons rather than molecules.

The new car market in China is the largest in the world, but has shown signs of slowing down lately. Sales were up 15% in 2016 but are only projected to grow by 1.7% this year based on the numbers from the first quarter. In total, SUV sales now account for 40% of the market while sedans sales slipped 5% from the same quarter last year.

At the Shanghai show, the industry’s biggest marketing event in China each year, every global and Chinese brand plans to display at least one electric concept car alongside its latest SUVs and sedans. GM will have the Buick Velite — a restyled Chevy Volt — on its stand. Buick also sells a hybrid LaCrosse in China, a car that is largely based on the Chevrolet Malibu Hybrid.

Volkswagen will announce its electric vehicle plans for China and unveil an electric concept car. Honda will showcase its NeuV, a futuristic concept car the company hints might get an electric drivetrain. BYD sells all electric vehicles to taxi and bus fleets in China and abroad and hybrid SUVs and sedans to Chinese consumers. Last year, BYD sales in China totaled 100,183 vehicles, helped in large part by the popularity of its Tang plug-in hybrid SUV. Tesla was second in the China market with 76,230 vehicles sold.

It’s hard to understand why the SUV craze and the plug-in hybrid/electric car push haven’t merged yet. Somehow, almost all the world’s manufacturers have been caught flat footed by the extraordinary demand for SUVs. With the exception of the BYD Tang, there are precious few SUVs with electric motors available anywhere, although several like the Jaguar I-Pace are coming in a few years. Maybe when shoppers have a choice of affordable electric SUVs, the switchover to electric cars will finally begin. Maybe.

Source: Yahoo Finance