New energy vehicles (NEVs) are gong to take ever more market share in China, predicts William Li, CEO of Chinese EV pure play Nio. And that is going to make for even worse news for the squeezed ICE sales of non-Chinese OEMs.
“In terms of the penetration rate of the new energy vehicle, it has already surpassed 50pc. And I think that it will continue to increase and at an even faster manner,” says Li.
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His view is informed by the experience of the Norwegian market. “We can take Norway as a reference,” he continues.
“It actually grew at 50pc penetration rate at first, and then it has quickly increased to 80pc and 90pc. So similarly for China, I believe that, in two to three years, the penetration rate of new energy vehicles among new vehicle sales will surpass 80pc.”
And that is bad news for firms still clinging to ICE sales in China. “If we look at ICE cars in China, actually they have entered into an unsustainable cycle or a vicious cycle because many ICE brands have to cut their prices to keep their market share — be it premium brands or mass market brands, be it brands from China or from other countries,” Li says.
“But as they cut prices, it also hurts the profit and interest of their dealers, hurts the image of the brand, as well as the residual value of their products. With that, it is even more difficult for them to keep a very strong market share in their segment. So the decline of their market share is even faster than it should be.”
Non-Chinese firms will be among those feeling the pressure, Li forecasts. “We have already witnessed the significant decline of the market shares of the [South] Korean brands like Hyundai, Kia, [and] Ford and General Motors.
“[In] recent years, Japanese brands like Toyota, Honda and Nissan are also entering the same space. So, in general, we believe that the ICE cars from these joint venture brands will face quite difficulties in the future competition,” Li continues.
And it is NEV makers that will reap the benefits of these ICE travails. “When they lose some market share, they normally lose... to other new energy vehicle brands, including brands from China and Europe,” Li concludes.
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