Slashed Chinese subsidies kill EV sales globally

The world’s electric vehicle sales have shrunk for the first time in modern history after the Chinese government lowered subsidies on the plug-in vehicles.

Adding fuel to critics (including BMW’s development director, Klaus Fröhlich) who insist EVs don’t work without subsidies, all it took was for China to scale back its support of EV buyers and the market tumbled.

Sales researcher Sanford C Bernstein found that EV and plug-in hybrid sales grew 35 per cent for the first seven months of the year, but fell flat in July, dropping 14 per cent.

About 128,000 plug-in passenger cars were sold in July, with significant drops in both China and North America.

Europe, the last major market to embrace electrification, was the only small bright spot, rising slightly in the run up to the higher-intensity electrification that is effectively mandated next year.

It’s been widely known that EV and plug-in vehicle sales are directly related to the size of government assistance customers receive, and China has shown this starkly.

In the midst of its first sales slump since it became the world’s biggest car market, China saw overall sales fall 5.3 per cent in July for its 13th consecutive sales decline, and EVs fell right along with everything else.

The Chinese government wound back its subsidies for individual EV buyers on June 26 in the hopes of encouraging car-makers to pivot towards hydrogen fuel-cell cars.

While China is the world’s biggest EV market, plug-in models still make up low single-digit percentages of the car market there, but it’s a critical few percent.

It’s this EV market, plus next year’s looming European EU7 emissions regulations, that drive car-makers to innovate and commit to producing expensively-developed electric cars.

While Bernstein predicts plug-in sales will rise by between 23 and 48 per cent across the full 2019 year to somewhere between 2.4 and 2.9 million cars, July brings the burgeoning EV market its biggest reality check.

Tesla was the strongest EV maker, with about 20,000 sales in July, followed by the Warren Buffett-backed Chinese maker BYD, with 16,000 sales. BMW followed with about 9000, then China’s BAIC with 8000 and the rest of the world’s car-makers with another 75,000.