several years, the electric vehicle market in China has appeared to be a potential El Dorado for global manufacturers. For reasons of urban pollution and public environmental policies, as well as for reasons of energy security and industrial strategies, China has been developing an impressive and continuous proactive policy in favor of electric mobility since the 1990s. However, the market for “real” electric cars still fails to take off. Incentive policies follow one another and amplify without triggering the expected wave of consumers in a cramped market, where Chinese manufacturers are fighting with Western manufacturers who are trying to sell their offers of electric vehicles, including the most sophisticated.
Alongside this car market for “official” electric vehicles (EVs), in provincial towns, there is an impressive development of a market for “illegal” vehicles, micro-electric vehicles (MVEs), which occupy the intermediate space between electric scooters and conventional cars. These electric vehicles do not meet the standards required of “real” electric cars; their performance and cost place them significantly on the margins of the official market. But, unlike conventional EVs, these MVEs have been able to find their customers all the more in local mobility use in provincial towns as the majority of them do not require a driving license, which opens up the market to elderly customers who would not have access to conventional automobile mobility and for whom two-wheelers are becoming problematic. This MVE market is today exclusively occupied by Chinese suppliers, the gap between the characteristics of the two types of offers being insurmountable for global manufacturers.
This situation of duality of the electric car market between a cramped official EV market and a large MVE market authorized locally, but not officially compliant, will it continue? Can we envisage that a dynamic of the regulation of Chinese electric mobility is upsetting this situation, encouraging, on the one hand, MVE suppliers to improve their offer and creating, on the other, below the requirements of the official market today, a new niche of cheaper electric vehicles better suited to a potentially huge customer base? How can global manufacturers integrate such dynamics into their strategies targeting markets that remain the most attractive in terms of growth?
The dual market of electric mobility in China
The EV market in China is divided into two parts, the formal market and the informal market (see Figure 1 below). Most of the sales on the official market present a typology in 4 segments. Mid-range plug-in hybrids are experiencing strong growth, as they invest in regulatory opportunities: they take advantage of subsidies granted to EVs, while allowing use close to thermal mobility. 100% electric EVs are divided into 3 segments: premiums monopolized by imported Tesla’s, the mid-range is taken over by the majority of Chinese (BYD, BAIC and SAIC) and foreign manufacturers, and, finally, the bottom of the segment is dominated by Chinese manufacturers (Chery, Geely and Zotye). The market for informal MVEs, which is almost 10 times larger than that for “official” EVs, is made up of a multitude of manufacturers (illegal, in the eyes of the central government) who produce vehicles ranging from three -electric wheels to genuine low-cost electric automobiles.
An official market forged by institutional initiatives
The official EV market in China is made up of official domestic car manufacturers – recognized by the central government and holding a manufacturer’s license – and foreign manufacturers who have formed a joint venture with their counterparts. Local. It has been shaped by institutional and political forces through EV technology, industry and market development programs. Official EVs are eligible for purchase aids and tax incentives provided by central government and many local governments. In the main cities, the registration of these vehicles is free and almost immediate. Conversely, future buyers of thermal vehicles must wait several years and pay to obtain their registration up to the equivalent of 10,000 euros, in Shanghai or Beijing. But, above all, 100% electric EVs and rechargeable hybrid vehicles can circulate freely in these cities, while in Beijing, alternating traffic has been decreed for thermal vehicles.
