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Passenger vehicles to take predominant role in NEV market growth

New energy vehicle sales in October reached 44,000 units, including 31,000 new energy passenger vehicles, according to data from China Association of Automobile Manufacturers (CAAM). In sharp contrast, statistics from the Ministry of Industry and Information Technology (MIIT) show that only 6,684 electric buses were produced, a 43 percent year-on-year drop. The majority of electric bus markers reported significant drop in production. Higer Bus, for example, produced a mere 49 units.

The driving force of the NEV market is gradually shifting to PVs.

But the change was not unexpected.

By the end of 2015, the central government had allotted ¥33 billion ($5.08 billion) to subsidize NEV purchase since 2009. NEV sales surged to some 440,000 units. But many companies were later found to have cheated on these subsidies.

In September, five Chinese bus makers and their illegal behaviors involving subsidy fraud were made public. Among them, Higer received the harshest punishment, having ordered to refund ¥500 million in subsidies awarded back to the Ministry of Finance and pay a fine of ¥260 million. Suzhou Gemsea Coach Manufacturing Co., Ltd., the first company being revealed for its cheating behavior, had to withdraw its ¥260 million in subsidies awarded and had its production license revoked.

These punishments are the nation’s latest efforts to crack down on subsidy fraud.

The cheating scandal shocked the industry, especially on bus manufacturing, which received the most subsidies.

The revised NEV subsidy policy, expected to be released before yearend, would definitely get tougher on requirements. But before that, automakers have to live without subsidies, and cash flow may become a headache now since subsidies usually take a large proportion of their daily operation capital requirements and profit earning.

For new energy bus markers, this means a tough time ahead. The thriving PV market seems to be less affected. A lot of industry players are competing in the field with capitals flooding in.

But the selection of new energy PV models remains scarce on the market. Industry experts expect a massive inflow of new models coming in the next several years. In the third recommended model list released by MIIT this April, of all 309 models, there were only 7 PV models.

By the end of 2015, 37 major auto OEMs, whose output volume accounted for more than 98 percent of annual total auto production volume, had a combined capacity of 31.22 million units. Their PV production capacity reached 25.75 million, with only 81 percent of it being used.   

Along with the bright future of new energy passenger vehicles, there is production overcapacity and cutthroat competition in the future.

Thus, roles may change on who will lead the NEV sector, which itself is going through a transition phase.

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