Mar 12, 2021 (China Knowledge) - The pace of electrification on China’s road will accelerate in the next few years. According to a forecast by UBS, three out of five new cars will be powered by batteries in 2030.
UBS forecast China to sell around 6.6 mln of new electric cars in 2025, accounting for 25% of all new cars, and then rising exponentially to around 18 mln or 60% by 2030.
These figures look realistic as it is aligned with the goal set by the Chinese government to become the world’s largest electric automaker. The China Ministry of Industry and Information Technology has unveiled a blueprint for the country’s EV development, targeting 50% of such new cars on the country’s road to be NEV by 2035. This is again cemented during the 14th Five-Year Plan with anticipation to become the world’s largest electric vehicle automaker.
Currently in China Tesla is the leader in the premium EV segment while the three homegrown start-ups – NIO, Xpeng and Li Auto are ramping up new models and technology to compete.
This makes batteries the focus as cost in the short term to keep up with the everchanging landscape in the automotive industry. However, the cost of batteries will definitely reduce, and automaker will be able to achieve a decent margin, pushing them to manufacture electric vehicles.
NIO, one of the Chinese start-ups of NEV has recently reported a positive gross margin after making losses for years. NIO attributed it to the decreased in design and development cost as it is primitive for tech companies to layout huge capital for R&D towards the start of the product life cycle and gradually make these R&D costs back, as profit surfaces towards the end cycle. Analysts are highly positive of NIO to continue making positive profits in the coming years.
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