LONDON, March 26, 2020 /PRNewswire/ -- The global outbreak of coronavirus Covid-19 has killed more than 15,000 people and has put millions into isolation. Notwithstanding the human cost, the effect on markets has been pronounced.
The pandemic has hit the Chinese EV sector hard, and CRU believes that weak sales will last at least until early Q2 2020. Nonetheless, we continue to forecast Chinese EV sales growth in 2020 over 2019's total.
EV sales in China dropped 75.2% y/y in February, with a decline of 79.1% for the whole Chinese auto industry. This was a far steeper fall than many expected but in line with our warnings in our previous analysis.
CRU expects the Chinese EV market will remain becalmed until at least April. This is based on our market calls, analysis of the epidemic timeline and the review of the necessary measures the Chinese government has taken to fight Covid-19. Despite the steady decline of case numbers in China, many consumers continue to be wary of visiting dealerships. However, it is worth noting that the subdued sales in January had little to do with the virus outbreak as it was not until January 23 that the government announced the lockdown of Wuhan city and the Chinese New Year holidays followed the next day.
Despite the disruptions to Q1 2020, we expect EV sales to grow slightly this year for the following reasons.
- Supportive government policies are expected to be implemented. President Xi mentioned the need for incentives targeting the automotive industry during the meeting of the Chinese Politburo Standing Committee, the highest decision-making body in China, on 3 February. The Ministry of Commerce and several local governments have also announced positive policies, with more likely to come this year. There is debate among decision makers about whether EV subsidy policies should remain at current levels or fall as was previously scheduled.
- Pent-up demand for electric vehicles is likely to emerge later this year once the Covid-19 outbreak has passed. Much of the sales lost in Q1 can be made up for later in the year. Automotive sales in January and February are typically low anyway and combined they generally account for less than one eighth of sales.
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