China Sees Decline In Electric Vehicle Sales For Second Consecutive Month

China has reported a decline of 16 per cent in electric vehicle sales for the month of August. Last month the cumulative sales of all pure-electric, fuel-celled, and plugin hybrids vehicles stood at 85,000 units the China Association of Automobile Manufacturers, compared to 100,000+ vehicles sold during the same month in 2018. In addition to the decline in year-on-year (YoY) sales, China also registered month-on-month (MoM) drop of 4.7 per cent compared to the total EV sales in July 2019. This for the second straight month the EV sales have gone down in China, following the local government's decision scale back subsidies.

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China is currently the world's largest electric vehicle market, accounting for about half of the world's EV sales. The electric vehicle segment is a strategically important industry in China, which hopes to electrify 60 per cent of its total vehicle population by 2035. However, the automotive industry is still heavily reliant on the government, which is why China decided to gradually reduce the subsidies for NEVs since 2017, with an aim to make the EV segment self-sufficient. But, the poor performance of China's EV segment in the last two months is now putting pressure on the government to again come to the industry's aid with new relief measures.

In addition to EVs, China's regular passenger vehicle wholesales also fell by 7.7 per cent in August, seeing a sales slump for the 14th consecutive month, coming down to 1.65 million units. One of the main reasons for this is also the slowdown of the Chinese economy, which is further affected by the ongoing trade conflict with the US.

Source: Bloomberg