July EV sales plunge as China cuts subsidies, but rebound is likely in Q4
Energize Weekly, September 11, 2019
After a sharp decline in electric vehicle (EV) sales in July – the first drop in 30 months – Bloomberg New Energy Finance (BNEF) cut its sales forecast for the year by 6 percent to 1.5 million vehicles.
EV sales in July were down nearly 7 percent compared with July 2018 and 51 percent from June, BNEF said. Growth is expected to rebound in the fourth quarter of 2019.
A number of factors played into the July numbers, including a slowdown in vehicle sales in China, discounts on internal combustion engine vehicles and cutback in EV subsidies.
July Chinese EV sales were down 12 percent to 1.8 million vehicles compared with June, and monthly production was down 5 percent, according to the China Association of Automobile Manufacturers. Year-on-year, sales were down 4 percent and production down 12 percent.
On June 26, the Chinese government scaled back its EV subsidies to push the industry to rely less on government aid. It cut in half the subsidy for electric-battery cars with a range of 250 miles or more to 25,000 yuan, about $3,700 for each vehicle.
The pending subsidy cut led to robust EV sales in June with 137,000 vehicles purchased, equal to 7.9 percent of all new car sales.
U.S. sales of EVs were down 10.8 percent year-on-year in July to 26,295 cars, according to Inside EVs, with the decline in part due to slower sales of the Tesla Model 3.
Still, BNEF said that the July drop in Chinese EV sales and stagnating sales for the remainder of the third quarter “are likely only a temporary blip for the world’s largest EV market.”
“Growth is expected to recover in the fourth quarter, buoyed by new models and consumers rushing to buy in order to lock in subsidies that could be cut in 2020,” BNEF said. “Government measures could also help. EV sales could gain later this year or next year if central or local governments launch new policy measures.”