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in recent years, with the continuous advancement of technology and the increasing awareness of environmental protection among consumers, smart electric vehicles have developed rapidly around the world, especially in the chinese market, where this trend is particularly evident.

the latest data from the china passenger car association shows that from january to august this year, the cumulative sales of new energy passenger vehicles in china reached 6.016 million units, a year-on-year increase of 34.9%. among them, the retail sales of new energy passenger vehicles in august were 1.027 million units, a year-on-year increase of 42.6%, and the penetration rate was 53.9%, an increase of 16.6 percentage points from the penetration rate of 37.3% in the same period last year. fu bingfeng, executive vice president and secretary general of the china association of automobile manufacturers, predicted that china's new energy vehicle sales are expected to reach 11.5 million units in 2024.

regarding the domestic auto market environment, henner lehne, vice president of s&p global automotive vehicle and powertrain group, said at the 2024 mobility intelligence dialogue (beijing) that china's new energy vehicle industry is in a leading position globally. he mentioned that in 2023, china's new energy vehicle (nev) sales increased by 30%, with a market share of 34% in china, and pure electric vehicle (bev) sales reached 5 million.

bev stocks are still in healthy shape

according to statistics from s&p global mobility, the global light vehicle market achieved moderate growth in the first half of 2024, with sales in the world's top ten markets increasing by 3% year-on-year. specifically, sales in the chinese market are expected to grow by 6%, the united states is expected to decline by 2%, and the german and japanese markets are expected to decline by 14% and 8%, respectively.

focusing on the chinese market, henner lehne said that in 2023, the domestic registered sales of new energy vehicles reached 7.6 million, making it the world's largest single market. with the growing demand for new energy products among chinese consumers, chinese brands are actively investing in new energy vehicle technologies and products, driving the increase in the number of new energy vehicle products on the market, exceeding any other overseas market. it is expected that by 2024, the penetration rate of new energy vehicles (nev) in china's passenger car market will reach 46%, while the market share of pure electric vehicles (bev) is expected to further increase to 16%.

the mainstream new energy vehicles on the market can be divided into pure electric vehicles (bev), plug-in hybrid electric vehicles (phev), extended-range hybrid electric vehicles (erev) and hydrogen fuel cell vehicles (fcev). the s&p global mobility report believes that in recent years, china's new energy vehicle market has shown a trend of being dominated by bevs, while the market share of phevs has been growing year by year.

in terms of sales volume, phev sales will increase significantly from 168,100 units in 2020 to 1,731,400 units in 2023. at the same time, the growth rate of the pure electric vehicle (bev) market will show signs of slowing down in 2024, with the growth rate expected to be only 13%, lower than phev's 64%.

the report said that this market dynamics may be influenced by a variety of factors. on the one hand, the rapid expansion of charging infrastructure, which increased by 54% in the first half of 2024 compared with the same period in 2023; on the other hand, the significant decline in battery cell prices, from rmb 1,000 per kwh in january 2023 to rmb 360 in august 2024, should theoretically help reduce the cost of bevs and stimulate market demand. however, despite the cost reduction, the market growth of bevs has not accelerated as expected.

in this regard, lin huaibin, china light vehicle sales forecast manager at s&p global automotive, said: "manufacturers are pushing phev sales regardless of cost, which puts bev prices at a disadvantage. in addition, bev is in a deep destocking stage, which has led to a slowdown in bev growth. however, compared with the high inventory of phev, the inventory of bev is currently in a relatively healthy state."

by 2030, nearly 30% of new cars worldwide will be equipped with l2+ and above advanced intelligent driving functions

in terms of technological development, autonomous driving technology is becoming a key factor in reshaping the automotive industry.

according to incomplete statistics from the daily economic news, since 2017, more than 100 policies have been updated on "intelligent driving technology", and relevant policies have been implemented in guangzhou, shenzhen, wuhan, beijing and other places. s&p global mobility predicts that by 2024, new cars with l2+ advanced assisted driving functions will account for 8% of the light vehicle market, and they will mainly be pure electric models.

in the technological development of the field of intelligent driving of automobiles, the industry mainly focuses on two technical routes: one is the traditional "perception-decision-control" model, which relies on multiple sensors such as lidar, radar and cameras; the other is end-to-end large model technology, which is gradually being adopted by more and more car companies such as nio, xpeng and ideal.

in the view of xia yiping, ceo of jiyue, end-to-end pure vision technology is the best choice at present, and more brands are expected to join in the future. despite this, there are also views that pure vision technology may not be as safe as lidar in certain driving environments. in this regard, xu yubin, general manager of the global intelligent driving industry of robosense, said: "in the past decade, whether in the autonomous driving market or in the robotics market, lidar has been a very critical and mature sensor."

lu daokuan, senior analyst at s&p global automotive, believes that the application of end-to-end autonomous driving technology requires large-scale software investment and computing power support. in the field of lidar, a key sensor for autonomous driving, with the rapid development of adas and robotaxi in the chinese market, chinese companies are expected to maintain their global leading position in the next decade.

according to s&p global automotive data, chinese companies’ lidar sales account for more than 80% of global sales. in 2024, chinese lidar companies are expected to account for more than 90% of the market. robosense, hesai technology and huawei, the three leading companies, currently account for more than 60% of global lidar sales.

looking ahead, lu daokuan predicts that the penetration rate of l2+ autonomous driving technology will continue to grow, covering not only pure electric models, but also hybrid and fuel models. with the reduction of costs and policy support, more affordable models will be equipped with these advanced driver assistance functions, especially driven by pure vision solutions. it is expected that by 2030, nearly 30% of new cars worldwide will be equipped with l2+ and above advanced intelligent driving functions.

profit margin challenges and policy changes become industry problems

according to the china passenger car association, the total global automobile sales in the first half of 2024 will be 43.9 million, of which new energy vehicle sales will be 7.39 million, accounting for about 16.8%, a year-on-year increase of 21%. however, as the global automotive industry transforms to electrification, automakers are facing a series of new challenges.

s&p global mobility believes that the main challenges facing manufacturers include difficulty in improving profit margins and reduced government support. for example, the eu plans to implement stricter euro 7 emission standards in july 2025, which may prompt consumers and companies to buy or sell high-co2 light vehicles before the end of the year, thus affecting market dynamics.

in addition, the relatively low profit margins of the entire automotive manufacturing industry have also attracted widespread attention in the industry. mercedes-benz chief financial officer harald wilhelm mentioned in february 2024 that electric vehicles generally have lower profit margins than traditional internal combustion engine vehicles. this trend is also reflected in china. according to data from the national bureau of statistics, in the first half of 2024, the overall profit of china's automotive manufacturing industry was 237.7 billion yuan, with a profit margin of only 4.98%, lower than the average profit margin of 6.4% of downstream industrial enterprises.

although china's auto industry has gained a favorable position in global competition in the early stages of electrification, the increasingly fierce competition in the domestic market and the constant price war have made the global auto industry face a situation of "increasing revenue but not increasing profits". the s&p report predicts that as the production and scale of electric vehicles increase, unit costs will decrease, which will help improve the profitability of automakers.

in the chinese market, policy adjustments also have a profound impact on the automotive industry. with the introduction of the next phase of fuel consumption standards (cafc), the chinese passenger car market will implement the sixth phase of cafc targets from 2026, requiring vehicles with a total vehicle mass of less than 1090kg to have a fuel consumption target of 2.57 liters per 100 kilometers; vehicles with a total vehicle mass between 1090kg and 2510kg to have a fuel consumption target of 3.3 liters per 100 kilometers; vehicles with a total vehicle mass greater than 2510kg to have a fuel consumption target of 4.7 liters per 100 kilometers, and to adopt the wltc/cltc test cycle. in addition, the electricity consumption of new energy vehicles will be included in the fuel consumption value, which will have an important impact on the nev market and drive the industry towards a more efficient and environmentally friendly direction.

overall, china is becoming a key innovation and growth center in the global automotive industry's transformation to electrification and intelligence. s&p global mobility analysis believes that despite the challenges of profit margins and policy adjustments, china's new energy vehicle market is growing strongly. with technological advances and improved cost-effectiveness, autonomous driving and electric vehicles will be more widely adopted. however, industry participants need to pay close attention to market dynamics to cope with increasingly fierce competition and a changing policy environment.

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