Alternative energy vehicles’ high growth make NDRC warn of overcapacity risk

China’s auto sales volume data in the first half of year was released yesterday. Chen Shihua, Assistant General Secretary points out that, China’s auto production and sales volumes are showing a steady growth trend, with the growth higher than last year and alternative energy vehicles and SUVs taking the lead. Reporters interview some senior managers of auto companies and learn that, most experts expect the auto production and sales volume will keep a 6% to 8% growth, and alternative energy vehicles will have a higher sales volume in the second half of year.
According to statistics data, auto production and sales volume are 12.89m and 12.83m units in the first half of 2016, increasing 6.5% and 8.1% respectively, up 3.9 and 6.7 percentage points than the same period of last year. Passenger vehicles have a higher growth rate than the average industry.
Alternative energy vehicles have the highest growth rate. China produces and sells 177,000 and 170,000 units’ alternative energy vehicles in the first half of year, increasing 125% and 126.9% respectively. BEVs’ production and sales volume are 134,000 and 126,000 units, increasing 160.8% and 64.2% respectively. PHEVs complete production and sales volumes of 43,000 and 44,000 units respectively, increasing 57.1% and 64.2% respectively. It’s estimated that alternative energy vehicles will have a higher sales volume in the second half of year and the annual target of 700,000 units stay unchanged.
Although alternative energy vehicles are enjoying a high growth, NDRC officials are beginning to warn overcapacity risks. Statistic data shows that more than 30 alternative energy vehicles projects are under construction across the nation, with a total investment capital of RMB 100b and capacity of 3m units, much higher than 2m units’ capacity in national 2020 plan. Research from China Auto Technology Institute also shows that although China is the biggest global alternative energy consuming market, it has a low production volume and efficiency. 
More than 100 auto companies produced more than 700 models in the previous five months, with an average production volume of about 150 units.
Some experts believe that, although China has a larger market scale, our technologies are lagging behind the foreign counterparts. Power cells are key technology of alternative energy vehicles, but few companies possess global competitiveness and innovative power, with a low capacity utilization rate and unstable product quality and performances.


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