China - Putting the Wind Up the Competition
Last year global EV sales reached about 14m accounting for 18% of all cars sold. In June 2024 EV sales in China accounted for 51% of car sales. This climbed to 53% in July and 54% in August. One reason for the continued success of EV sales in China is that an estimated 60% of EVs sold in China last year were cheaper than the equivalent ICE product. In Europe and the US, EVs cost 10-50% more than a similar ICE product.
Europe and America have reacted to cheap Chinese imports with tariffs, complaining about excessive government subsidies. They have a point. The Center for Strategic and International Studies estimates that subsidies, as a percentage of sales revenues, exceeded 20% in 2018, 2019 and 2020 (when they peaked at 25.4%). More interesting is that this number is now falling like a stone – 18.3% in 2021, 15.1% in 2022 and 11.4% in 2023. In dollar terms subsidies per vehicle have fallen from $12,300 per vehicle in 2020 to just $4,750 in 2023. This number is only going one way – down – as the Chinese automotive industry goes electric.
EV subsidies were, one assumes, available to foreign manufacturers and their joint ventures as well but – for one reason or another – they have been unable to produce the cars (EV or ICE) that the Chinese consumer desires. European manufacturers’ third quarter sales volumes, reported the other week, have collapsed. BMW -30% y-o-y, Porsche -19%, VW -15%, Mercedes -13%. German automakers share of the overall Chinese auto market has fallen from 25% in 2020 to 15% currently. Their share within the EV market is down to 10%.
Everywhere one looks in the ‘green’ industries, China continues to power ahead as we have noted in a number of recent dailies. In June, Siemens Energy AG told customers it plans to produce its biggest wind turbine, potentially toward the end of the decade, as the company seeks to maintain its lead in one of the fastest-growing energy sectors. The firm aims to roll out an offshore generator that can produce around 21mW.
Hang on! A few days ago, China’s Dongfang Electric Corp. surprised the offshore wind industry with an announcement that it has built a new turbine radically larger than anything previously available in the sector. Dongfang, on Saturday, rolled a 26mW turbine off the production line. That is 30% bigger than the previous record of 18mW and surpasses even the largest models announced but not yet constructed according to BloombergNEF data.
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