New Energy Vehicle* production is surging in Guangdong, which is already the country’s largest market for electric cars. In Q1, sales jumped 252.1%, by far the fastest in the country. Leading the charge were Guangzhou Auto (+71% YoY) and Shenzhen-based BYD (+147%).
Guangdong is the country’s biggest producer and consumer of NEVs. There are more than 250,000 on provincial roads, which is around one-eighths of the country’s total. Add in the number of Teslas in Hong Kong – it is the largest per-capita market for Tesla worldwide – and the Greater Bay Area’s dominance in electric vehicles becomes clearer.
Despite falling car sales overall, and despite the headlines about carnage in the startup sector for electric cars, the NEV market is accelerating quickly: around 1.7 million are expected to be sold nationwide this year.
Shanghai will likely catch up in terms of production once Tesla’s Gigafactory there starts pushing out Model 3s, but the Greater Bay Area is expected to remain in the lead on sales. Moreover, looking ahead, production capacity is accelerating fastest here.
Three factors are driving this growth in the GBA. One, industrial policy adjusted quickest here once the central government made it a national priority. This enabled traditional manufacturers such as Guangzhou Auto to undertake major upgrades of production capacity while their startup compatriots were still raising money and learning how to make cars. Total production capacity of NEVs in Guangdong under construction has already exceeded 2 million units annually, including 400,000 for the new energy line of Guangzhou Auto and 400,000 for its Japanese joint venture, GAC Toyota. These should be completed by 2022.
Two, electric vehicles fit into the national game plan for stimulating consumption, and Guangdong has been quick to launch supportive policies such as increasing the quotas for new licenses.
Three, two of the world’s most efficient multinational car companies have been attracted here by favorable policies and deeper consumer markets. They are Toyota, which has invested RMB11 billion into its existing partnership with Guangzhou Auto to produce NEVs, and Mercedes-Benz, which is partnered with BYD.
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