Our Global Autos, Technology and Industrials research analysts have a positive sector view on China EV & battery, and in this report, they look into various structural factors that justify these views. They feel New Electric Vehicles (NEV) sales momentum will accelerate in 2H despite more stringent policies; and prefer EV Original Equipment Manufacturers (OEMs).
See summaries of our analysts’ sector outlooks below.
Continued strong growth in passenger vehicles (PV), while commercial vehicles (CV) should take a breather
Tougher rules, shrinking subsidies and the re-authentication of the subsidy catalogue have led to dismal 1Q New Energy Vehicle (NEV) sales of only 56k units. Despite these, demand in the PV market has not vanished, according to our analysts, but has been pushed forward into 2H, as local subsidy policies continue to roll out, along with new model line-ups and an increasing number of model authentications. The CV market is likely to take a breather this year, in view of more stringent policies requiring higher battery efficiency.
New regulations/entrants to reshape industry dynamics in longer term
The analysts look into the details of the local/central government subsidy policies as well as the zero-emission-vehicle (ZEV) scheme potentially to be adopted in FY18F. Besides any regulatory push, competition should heat up with the entry of 12 new players with different backgrounds. However, market leadership is unlikely to be reshuffled in the near term, until aggregate capacity of over 600,000 units per annum get released between FY19-20F.
EV battery/material: consolidation and technology migration are in sight
Except for ternary batteries, China’s battery sector should remain oversupplied. Together with the tightening subsidy policy, near-term pricing pressure on batteries is likely. Industry consolidation is imminent, according to our analysts, and capital barriers in R&D and capex are heightening, benefitting players with favorable production scale and higher energy density products.
EV battery equipment: growth normalizing with key trend emerging
We forecast total EV battery equipment market size to normalize, driven by capacity expansion and upgrade demand. Leading suppliers will continue to expand their market shares in both the electrode manufacturing and cell assembly process by offering more integrated automation systems.
Read the full report here for:
NEV shipment/ battery forecast in the PV and CV market for FY17-19F
Analysis of the revised policy and the Zero-Emission-Vehicle scheme
A deeper look into the 12 new domestic NEV entrants
Overview of the battery cell/ material and equipment supply chain