The draft version of the much anticipated New Energy Vehicle Industry Development Plan (2021-2035), which provides a roadmap for China’s NEV and intelligent connected vehicle (ICV) development over the next 15 years, was released by the Ministry of Industry and Information Technology (MIIT) on December 3 (see China sets 25 percent NEV and 30 percent ICV share targets for 2025 in new 15-year plan).
The public has until December 9 to submit comments and suggestions to the MIIT on the Plan, with the final version likely to be released by yearend, replacing the Energy-Saving and New Energy Vehicle Industry Development Plan (2012-2020) when it officially goes into effect in 2021.
The Plan is both ambitious and conservative in that it raised the NEV share target for 2025 from 20 to 25 percent, but specified no targets for 2030 (previously 40 percent) and 2035, in essence making it feel more like a five-year plan.
Here are my thoughts:
1) There are four key numbers really to keep in mind for 2025: 25 percent NEV share, 30 percent ICV share, fleet electricity consumption of 12 kWh/100 km (BEV) and fleet fuel-consumption target of 2 L/100 km (PHEV);
2) Focus on efficiency rather on range (500 km and above are becoming the norm);
3) BEVs will be the main road and FCEVs the side road (China sticking to a BEV-led technology route);
4) The government is confident and determined on the 2025 targets but is taking a “wait and see” attitude when it gets closer to 2025 to decide on further targets (it’s not entirely out of the question that the 25 percent target could even change);
5) If we consider a shrinking overall market, the proportion of NEVs is actually rising. The 7.5 million NEVs estimated in 2025 assumes a total market of 30 million, but it could very well hover around 25 million or below, meaning that NEV share could increase despite an overall shrinking market;
6) As consumers get more educated about NEVs and with “sticks” coming and total cost of ownership for NEVs nears that of ICEVs, I won’t be surprised if there is another round of “gush” in the 2021 frame even though subsidies will be long gone by then;
7) Other than the 2025 targets, the other content in the Plan is quite fluffy;
8) At the World New Energy Vehicle Conference (WNEVC) held in early July in Bo’ao, Hainan Province, a consensus was reached among participants that China would increase its share of NEVs in new vehicle sales to 50 percent by 2035. Share wise, the path for NEVs over the next 15 years might be: 5 percent this year, 25 percent in 2025 and 50 percent in 2035;
9) Consolidation in the NEV game is likely to pick up pace once the subsidies are terminated. It will be a game of survival of the fittest;
10) Golden rule: never say never. China always surprises.