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ICE IS MELTING — China Edition
Plugin vehicles are all the rage in the Chinese auto market. Even with Covid-related lockdowns happening in some major cities, plugins scored 458,000 registrations, up 118% year over year (YoY), and the second best monthly result ever.
This pulls the year-to-date (YTD) tally to over 1.1 million units, and it means that Q1 ended in China with an amazing 130% growth rate YoY, with 78% of the plugin models being BEVs.
Share-wise, with March showing another great performance, plugin vehicles hit 26% market share! Full electrics (BEVs) alone accounted for 21% of the country’s auto sales! This pulled the 2022 share to 21% (16% BEV). And to think that a year ago we were celebrating the first two-digit share month (11% in March, 10% YTD).
If electrification continues at this pace, this market will be BEV-based by 2025! Imagine that: the largest automotive market in the world being BEV-based in three years time!
Another measure of the importance of this market is the fact that China alone represented over half of global plugin registrations last month.
Looking at March best sellers, we should first celebrate the fact that we had 4 plugin models in the overall top 10, as the Wuling Mini EV (1st position), Tesla Model Y (2nd), BYD Song (5th — BEV+PHEV), and Tesla Model 3 (7th) all made the overall top 10! The BYD Qin Plus (11th — BEV+PHEV) was close to joining the fun too. Will April see 5 plugins in the overall top 10?
For the record, the remaining 6 fossil-fueled models in the top 10 were: Nissan Sylphy (#3), Toyota Camry (#4), VW Lavida (#6), Toyota Corolla (#8), Honda CR-V (#9), and Changan CS75 (#10). Looking by body style, those were three compact and one midsize sedans as well as one compact crossover and another midsize crossover.
Here were last month’s top 5:
#1 — Wuling HongGuang Mini EV
With 47,563 registrations last month, the tiny four-seater won another overall best seller title, its third, but its quarterly average (33,454/month) represented only a 13% increase over Q1 2021. It seems the new, direct competition, like the Chery QQ Ice Cream, has started to make a dent on the little EV’s growth. Still, with this kind of scale, it is natural that the joint venture is turning a profit on its star EV (a small one, admittedly). Perhaps this is why they are preparing the expansion of the little EV to overseas markets, like Indonesia and India. (And then, the world?) The overseas model is said to be slightly longer, have a 26 kWh battery, have a more powerful electric motor, include updated features, and … a convertible version might be exported, too. The Wuling EV has become a trendsetter and a disruptive force in urban mobility. The added bonus is that the people buying it (mostly females under 35 years old) are usually a hard-to-capture audience. The model and its success mark a new chapter in EV mobility.
#2 — Tesla Model Y
Tesla’s most recent addition to the lineup got 39,339 registrations, fewer than 1,000 units from its record score of December, which allowed it to be 2nd in the overall market last month. That’s an amazing feat especially since it managed to beat the remaining SUV competition by a large distance. The second best selling SUV (Honda CR-V) was only 9th in the overall market. It also beat its Model 3 sibling, something that should be highlighted in a market that is still a sedan-friendly market. Looking at the quarterly average, which is the most correct way to look at Tesla’s performances, the Model Y had 24,763 registrations/month last quarter, not enough to beat the Q4 2021 average (25,500 units/month), but a far cry from the 5,474 unit/month average of a year ago, when the model was still in ramp-up mode. Expect the Model Y to be a strong competitor for the overall monthly title in June, when it might have enough registrations to remove the Wuling Mini EV from the leadership position.
#3 — Tesla Model 3
Tesla’s bread and butter model got 25,736 registrations, which allowed it to land in 7th in the overall ranking. Looking at the quarterly average, which is the most correct way to look at Tesla’s performances, the Model 3 had a 11,110 registrations/month last quarter, which is not only significantly down from the Q1 ’21 average of 17,620 units/month, but also below the Q4 2021 average of 13,001 units/month. Does this mean that the Model 3 is already on a downward trend in China? Hard to say, but one thing is for certain, much of the success of the Model Y is made at the expense of the Model 3.
#4 — BYD Song Pro/Plus PHEV
BYD is looking to replicate the Model Y’s success with its own midsized SUVz. Its rise and rise is proof of that, having scored yet another record result (22,381 registrations). Besides the record performance of the PHEV version, the BEV version had 4,348 registrations, leading to a total of 26,729 registrations, which allowed it to rise to #5 in the overall market. With the BYD midsizer scoring a 23,000 units/month average in Q1, the Song is already close to the Model Y’s average (24,763 units/month), while staying significantly above the Q4 ’21 average of 18,261 units/month. And the ramp-up continues….
#5 — BYD Qin Plus PHEV
Like Tesla’s Model 3, the BYD Qin has been the bread and butter model for the Chinese automaker for a long time. The PHEV version reached 14,260 registrations in March, a somewhat underwhelming performance compared with the 18,449 registrations of January. Combined with the BEV version, which had 8,692 registrations, the Qin Plus had 22,952 registrations, placing it in 11th in the overall market. With the midsize sedan scoring a Q1 ’22 monthly average of 23,665 units, it doubled the sales of the Tesla Model 3 in Q1 (23,665 vs 11,110), but it did stay below its Q4’21 average of 26,115 units/month. Why this drop, especially considering that its SUV sibling (the BYD Song) is still growing? I believe it’s the future internal competition — the BYD Seal for the BEV version and the Destroyer for the PHEV version. These two new midsize sedans, set to land soon, are part of the new Ocean generation of BYD plugins. (Marine animal names were given to the BEVs using the 3.0 dedicated e-platform — Dolphin, Seal, etc. — and military vessel names were provided for the PHEVs — Destroyer, Frigate, etc. Besides competitive specs, the main selling point of BYD’s Ocean lineup is the price, with the base version of the attractive Seal set to start at $35,000 USD. That’s significantly lower than the base version of the made-in-China Tesla Model 3 ($44,000 USD)!
Looking at the rest of the best seller table, there were a few models with record scores, like the #6
Wuling Mini EV clone Chery QQ Ice Cream hitting 11,687 units in only its 5th month on the market, which means that its swift production ramp-up continues. So, expect a top 5 position for the sweet little Chery soon.
With an even steeper production ramp-up, we have the BYD Yuan Plus. In only its 3rd month on the market, it has already reached five-digit scores (10,025 units), with the compact crossover set to become BYD’s star player soon (and VW ID.4 Terminator — it should be no coincidence that the German model has disappeared from the top 20). It thus completes BYD’s lineup of sales champs in every category (Han/Tang in the full size category; Qin/Song as midsize Tesla *****ers; Yuan in the compact category; and Dolphin in subcompacts).
But enough about BYD — Changan’s on a roll as well. Not only was it the best selling Chinese automaker in the overall market last month, ending the month in 4th, but it was ahead of #5 BYD and #6 Geely, and only behind the global giants Volkswagen, Toyota, and Honda. It also celebrated a record score of its small Benni EV (10,709 units), allowing it to be 8th in the plugin table.
A mention also goes out to the record scores of GAC’s Aion Y and Hozon’s Neta V. The Aion Y had 9,501 registrations, pulling it to #12 (is this the start of the return of the MPV? I sincerely hope so, and let’s hope SUVs get their “1979” moment soon, just like Disco had back then…). Hozon’s Neta V registered 8,122 units, a new record for the startup’s small crossover.
Outside the top 20, we have Leap Motor, another Chinese startup, shining. It has not one but two models reaching record scores. Its small bread and butter model T03 had a record 5,300 registrations, but its shiny new C11 SUV got 3,750 registrations, an impressive feat for the 536 hp (and 90 kWh battery-equipped) midsize model. The handsome 7-seater is set to join the top 20 soon.
Still on the theme of midsize SUVs coming from Chinese startups, AITO’s M5 model scored 3,045 registrations in March, in only its 4th month on the market. We should follow this model’s career closely — with tech giant Huawei among its founders, we should not dismiss it as just another Chinese startup.
In fact, with tech rival Apple still weighing its involvement in the EV scene, the Silicon Valley company could look at Huawei’s strategy here:
- Pick up a cooperation agreement with a mildly successful EV startup, in this case Seres. That helps them avoid strategic resistance that a more successful EV startup would have and helps get the production and development knowledge of how to make a car;
- Use an existing model of the startup partner and develop it with the tech giant’s unique skills, in order to create a heavily evolved and feature-rich new model;
- Create a new brand for the joint venture, which in this case is called AITO, which stands for “Adding Intelligence to Auto” (simple, yet clever, eh?), and market it as a tech product;
- Sell it online, at the brand’s new stores (AITO’s new stores in this case), and also make it available via the traditional sales routes (Seres’ and Huawei’s own stores);
- Have a factory with sizable production capacity to comply with theoretical demand peaks, preferably an under-utilized one, like the one of Seres, which has a capacity of 300,000 units per year.
So, if Apple was to use the same strategy as Huawei, I guess Lucid would be an interesting partner to work with. It is only mildly successful, has a decent basis (Lucid Air) for Apple to develop its own thing on, and has under-used production facilities. … Rivian could also be a candidate, but I don’t see Apple developing a product based on the current Rivian vehicles.
(Having said that, I have no idea what Apple is going to do next, so don’t take my words as any kind of guidance.)
Looking at the 2022 ranking, the Tesla Model Y surpassed the BYD Song PHEV and is the new silver medalist, beating both BYD midsizers, even when they have their BEV versions added to the PHEV versions (Song — 70,000 units; Qin Plus — 71,000).
Below the podium, the Tesla Model 3 surged to 5th, switching positions with the Model Y’s standing a year ago (in March 2021, the Model 3 was 2nd and the Model Y was 5th). At that time, the BYD Han EV was 3rd and neither the Qin or Song featured in the top 20…
The second half of the table also had significant changes, with the XPeng P7 climbing two positions, to #15, and the GAC Aion Y jumping to #16, surpassing its Aion S sibling and becoming the maker new best seller in the table.
We have a new face in the table, with the new BYD Yuan Plus replacing the previous-generation BYD Yuan Pro, which is now #19, dropping the VW ID.4 to last place out of the top 20. The German crossover is in danger of dropping from the table. Demand problems or production constraints?
BYD Tops Automaker List
Looking at the auto brand ranking, there’s no major news. BYD (25.3%) is stable in the leadership position. The Shenzhen automaker is looking to win its 9th automaker title this year, while the SGMW joint venture (10.2%) is stable in second place.
Tesla (9.6%, up 3.2 percentage points) has distanced itself from the competition and can now focus on trying to steal the silver medal from SGMW.
Chery (4.7%, up 0.1 point) stayed in 4th, while we once again have a new face in the 5th spot, with GAC (4.0%) climbing to that position. GAC’s climb is thanks to the Aion Y’s success. GAC thus kicked Geely out of the top 5.
Looking at OEMs/automotive groups/alliances, BYD is comfortably leading, while SAIC (13.7%) remains steady in the runner-up spot. Tesla is firm in the last place of the podium.
Off the podium, Chery surpassed Geely–Volvo (4.5%) and is now in 4th place. Volkswagen Group (3.7%, down 0.6 points) had a horrible month, losing one position to now #6 GAC.
It will be interesting to look at Geely–Volvo’s and Volkswagen Group’s behavior. Prior to the EV revolution, they were the #1 domestic and #1 foreign automakers in China. Having seen their thrones now being threatened by BYD and Tesla, respectively, it’ll be interesting to see how they respond.
These are consequences of the disruption vortex that the Chinese automotive market entered a year ago, with a number of historical changes happening. For example, we have the rise to prominence of domestic automakers. The market share of domestic automakers rose from 40% in March 2021 to 49% in March 2022.
And expect this share to continue rising as the market completes its electrification process — so much so, that I wouldn’t be surprised if in a BEV-based Chinese automotive market, the only relevant foreign automaker by 2025 was Tesla.
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