Growth of the Renewable Energy Vehicle Industry in China

The Chinese renewable energy vehicle industry has experienced significant growth in recent years, as evidenced by the launch of numerous new models on the Chinese market by industry leaders. Forecasts suggest that by 2024, China could account for 60% of global sales of renewable energy vehicles. Furthermore, it is estimated that Chinese exports of these vehicles could reach 5.5 million units, marking a remarkable achievement for the country. Renewable energy vehicles are thus becoming a major pillar of Chinese exports in this field, representing a trend that is set to continue and intensify in the years ahead.

Rise of the Automotive Sector in China : Domination of Electric Cars

China's key technologies and production levels in crucial areas such as batteries, motors and on-board electronics are at the top of the rankings. Electric vehicles account for a significant share of vehicle sales in China, and over the years the country has been able to develop the infrastructure required for their development. China has developed rapidly to become the global center of the automotive supply chain. In 2024, the development of the green-energy vehicle industry will continue to drive investment and funding in infrastructure, R&D, smart manufacturing and other areas. Industry players in China believe that, in the short to medium term, hybrid models will ensure the transition and make up for the shortcomings of today's purely electric vehicles, notably reduced range and underdeveloped infrastructure in some regions. In the medium/long term, pure electric vehicles will account for the majority of new car sales, thanks to government incentives, improved reliability and increased range. By 2024, the market for renewable energy vehicles will be growing rapidly, with an even split between hydropower and 100% electric vehicles.

The year 2023 saw the arrival of numerous electric and hybrid vehicle models on the Chinese market. As a result, Chinese brands have become even more dominant in their home markets. The director of operations for one of these major brands stated that in the renewable energy vehicle sector, the penetration rate of Chinese brands had exceeded 80%, while the previously strong joint venture brands (Foreign+Chinese) were now below 10%. This new dominance was made possible by a strong commitment to the development of this sector, constant innovation and the promotion of these vehicles, and the market is set to grow significantly by 2024.

The internationalization of Chinese brands, a new market and growth driver.

China is one of the leaders in the renewable energy vehicle sector, with significant R&D spending, high production volumes and strong sales across the country. But this leadership is also characterized by major international ambitions, as China has been striving for some years to establish its major companies in the sector internationally. The example of the giant BYD is representative of these efforts. In 2023 as a whole, BYD exported 242,800 new cars, an increase of 334.2% on the previous year. Moreover, to secure its operations and deepen its presence abroad, the giant BYD has also announced that it will build a new production base for new-energy vehicles in Szeged, Hungary. According to a report by Zhongtai Securities (an economic research group), BYD's overseas plants will enable the company to grow in foreign markets and thus increase its sales volume. The Chinese research center predicts that BYD's sales of renewable energy vehicles will reach 3.8 million units by 2024, with export sales expected to reach 500,000 units.

BYD is a representative of the Chinese automotive sector, which in recent years has been trying to internationalize and establish a strong presence on all continents. Many manufacturers of renewable energy vehicles, such as NIO, Leapmotor, Nezha and Gaohe, are following the same trend and have presented similar internationalization plans for 2024. Other traditional automotive groups such as SAIC, GAC and Geely are following suit and promoting international expansion. Some of these manufacturers are currently preparing to set up operations in Europe and elsewhere in the world. Statistics from the China Association of Automobile Manufacturers reveal that total Chinese car exports were less than one million units in 2017. In 2023, this figure is expected to cross the 5 million unit threshold for the first time. What's more, according to the Chinese Automobile Association's projections, China's total automobile export volume is set to reach 5.5 million units in 2024. Estimates from Zhongtai Securities (an economic research group) show that Chinese exports in 2024 will be significantly higher than in the previous year. The internationalization of Chinese automakers will continue, and this will be accompanied by a shift from the "produced in China and sold worldwide" model to the "manufactured internationally and sold internationally" model. The profit generated by international activities will be greater than the profit generated at home. This is yet another reason to support Chinese manufacturers in their internationalization strategies.

The Director of Dongfeng Motor's Strategic Development Research Center said that by 2030, Chinese automobile sales abroad are expected to reach 12 million units. Of these, 6 million units should be produced in China and exported, and 6 million units produced and sold abroad. The strong growth of the renewable energy car sector in China by 2024 must not, however, conceal the reality of strong competition, particularly on price. Indeed, with so many players in this market, competition and price wars are looming. The smaller players will come under increasing pressure over the years, forcing them to be all the more vigilant in their strategic choices. This pressure will certainly reorganize the sector in the medium to short term.