Can EVs kill off petrol cars in China?

{"text":[[{"start":9.8,"text":"After conquering China’s rich megacities, electric-vehicle makers are shifting focus to the country’s less affluent heartland in a bid to kill off internal combustion engines in the world’s biggest car market."}],[{"start":21.8,"text":"EVs account for half of all vehicle sales in China and already outsell petrol cars in most of the so-called first- and second-tier cities, which include megalopolises such as Beijing, Guangzhou, Shanghai and Shenzhen."}],[{"start":36.45,"text":"But in lower-tier cities, which account for about 80 per cent of the country’s urban centres, fewer than 40 per cent of cars are electric."}],[{"start":44.300000000000004,"text":"“This is where the next phase of electrification needs to come from,” said Chris Liu, a Shanghai-based EV analyst with Omdia."}],[{"start":51.75000000000001,"text":"The industry’s push into China’s heartland poses a challenge to legacy carmakers that still depend on sales of petrol models. They have largely resisted the kind of radical overhaul that many experts in China argue is needed to survive in the EV age."}],[{"start":65.65,"text":"Germany’s Volkswagen and BMW, Japan’s Toyota and Honda, and US group General Motors still rank among the top 15 carmakers by sales in China, largely from producing cars with internal combustion engines. Their share of the EV segment is negligible."}],[{"start":83.55000000000001,"text":"Omdia estimated EV sales in lower-tier cities would hit the “tipping point” of 50 per cent of total sales by late 2027. This could drastically increase the stock of petrol cars available for export, adding to the flood of Chinese-made vehicles already in global markets."}],[{"start":null,"text":"

"}],[{"start":101.75000000000001,"text":"Some analysts have forecast 20 per cent of cars sold in China will be fuel-powered by 2030. Ying Damin, manager of a car yard for Geely’s luxury EV subsidiary Zeekr in Taizhou, a third-tier city of 2.2mn, said this could be even lower in cities like his, given how quickly EV sales were advancing."}],[{"start":122.15,"text":"He added that while Chinese consumers “in the fuel-car era” were proud to own foreign-branded vehicles, they now associated the EV wave with homegrown technology. “Chinese people are proud of our brands,” said Ying."}],[{"start":null,"text":""}],[{"start":136.75,"text":"The gap in EV sales between higher- and lower-tier cities had been driven mainly by lack of affordability and low access to chargers, said Omdia’s Liu. "}],[{"start":145.85,"text":"That was starting to shift, he said, as Chinese EV leaders BYD and Geely push more competitively priced models — especially plug-in hybrids — alongside greater government support for charging infrastructure."}],[{"start":158.9,"text":"At the national level, where slowing economic growth has led to higher scrutiny of state infrastructure investments, support for electrification remains strong. Late last year China’s central government launched an ambitious three-year plan to bolster charging infrastructure. "}],[{"start":174.35,"text":"The government aims to have 28mn public charging facilities installed by the end of next year, up from 21mn at the beginning of this year. This would be enough to power about 80mn EVs (there are already more than 50mn on China’s roads)."}],[{"start":190.95,"text":"The plan targets underserved areas such as rural communities, as well as expressway service stations and public parking lots. State media estimated the three-year investment period would drive about $28bn in spending on equipment and construction."}],[{"start":206.6,"text":"Chinese companies are also pouring billions of dollars into research aimed at improving EV range and charging speed. CATL, the world’s biggest battery maker, on Tuesday unveiled cells that power a car for 1,500km on a single charge."}],[{"start":222.5,"text":"As battery technology and access to charging infrastructure improves, analysts expect consumers in lower-tier cities — who number in the hundreds of millions — will favour EVs."}],[{"start":233.6,"text":"Yuqian Ding, lead China automotive analyst for HSBC, said consumers might be influenced by “whatever is popular in tier-one and tier-two cities” for trends, but they would favour lower-cost Chinese brands that could still offer a sophisticated smart-driving experience."}],[{"start":249.75,"text":"According to data from Shanghai-based consultancy Automobility, 27.8mn cars were sold in China last year. EVs, including plug-in hybrids, and petrol cars each accounted for 13.9mn. Five years earlier, petrol cars accounted for 23.9mn versus just 1.3mn EVs."}],[{"start":269.95,"text":"Fuel price increases since the US-Israeli attacks on Iran in late February have sparked a new wave of interest. When “oil prices rose sharply, especially in March across China, fuel car sales dropped a lot, while electric car growth jumped”, said Ying, the Zeekr sales manager."}],[{"start":null,"text":""}],[{"start":288.05,"text":"Standing out in a crowded market has become more difficult. A new model is released in China every two days — the Beijing motor show this week will showcase more than 1,400 new vehicles — while vicious price wars have hammered profits across the industry."}],[{"start":304.55,"text":"Still, Ying remains upbeat that wealthy business owners in lower-tier cities can underpin demand for higher-end EVs. “There are many businessmen, private companies and many wealthy customers who can buy new things,” he said."}],[{"start":318.45,"text":"Despite those trends, some carmakers that invested heavily in local internal combustion engine production are hesitant to turn their backs on fuel-powered cars."}],[{"start":328.3,"text":"While Volkswagen plans to roll out more than 30 EV models in China by 2030, Robert Cisek, who leads its Chinese brands, said the petrol age “will last a lot longer than we think”."}],[{"start":340.45,"text":"First- and second-tier cities would go “fully electric” quickly, but the situation was different in lower-tier cities, he said, adding that the Chinese government was “quite mindful” of the existing manufacturing capacity for petrol cars and would want to “cash that out”."}],[{"start":356.2,"text":"While the Middle East conflict had pushed more customers towards EVs, “there might be another event a few years from now that pushes back in the other direction”, Cisek said."}],[{"start":365.95,"text":"The key for VW was being positioned in China with vehicles across the energy spectrum, from pure battery EVs to fuel-powered cars, all with the latest smart-driving technology developed inside China, he said. "}],[{"start":379.09999999999997,"text":"“Regardless of whichever direction the market is shifting, we have everything.”"}],[{"start":383.59999999999997,"text":"Additional reporting by Wang Xueqiao in Taizhou"}],[{"start":393.94999999999993,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1776853310_2710.mp3"}