No end of the internal combustion engine in China
dual strategy
Berylls expert Alexander Timmer
© press-inform – the press office
China relies on electromobility. However, even in China, the desire for affordable automobiles can only be realized with the internal combustion engine, which will remain the backbone of mobility in the world’s largest market for some time to come.
This is how times are changing: In 2008, “climate neutral” took second place behind “herd premium” in the vote for the nonsense word of the year, and in 2019 climate hysteria won this prize. Today, climate neutrality is considered a noble good. In almost every announcement made by car manufacturers, climate neutrality is the top priority. Many Western industrial nations want to achieve this by 2050. But China, to which many are looking as a promising lead market, is not in such a hurry. According to the Berylls study, it won’t be there until 2060.
After all, the government has set the goal that by 2030 at least 40 percent of all new registrations will be New Energy Vehicles (NEV), i.e. electrified vehicles. According to the experts from the management consultancy Berylls, this requirement assumes that by 2030 half of the registrations will be purely electric vehicles or plug-in hybrids. So is the end of the internal combustion engine sealed in China as well? Not at all. Because vehicles with internal combustion engines are also growing in China by an average of three percent a year, even if the proportion of all new registrations will decrease.
So cars with diesel and petrol engines will form the backbone of Chinese mobility by 2030 and just under a third of the vehicle stock in the market will be BEVs or PHEVs. In contrast, around 71 percent use an internal combustion engine as the main drive unit, which is the case for mild hybrids. In absolute figures, according to Berylls calculations, there will be around 300 million cars with a combustion engine at that point in time. It cannot be assumed that this trend will be reversed abruptly. Because one reason for the sustained demand is the need for affordable mobility among the ever-increasing number of Chinese drivers. A phenomenon that should not be exclusive to China. In view of these trends, the decision of German car manufacturers to continue to rely on classic drives in the Middle Kingdom is understandable. Mercedes uses the capacities of the shareholder Geely to have internal combustion engines manufactured in China. After the end of combustion engines in 2033, Audi also wants to continue to offer models with a classic drive train in the world’s largest car market.
It is fitting that the Chinese government is currently making a radical change of course from promoting to demanding when it comes to buying electric cars. The subsidies for buying an electric vehicle will end completely at the end of 2022, after they had already been reduced. However, the last word has not yet been spoken here. When it comes to the implementation of the envisaged goals, a turnaround is also conceivable. This shows, however, that even China cannot or does not want to afford the subsidy programs in the long term, and on the other hand that the breakthrough of electromobility also depends heavily on the price of the automobile.
The Chinese government also wants to hold car manufacturers accountable and has introduced the dual credit policy at the same time as reducing subsidies. The dual credit policy provides quotas for NEV production over the next three years, for example 16 percent this year. If a manufacturer does not achieve the required quota, penalties are due or points have to be bought from other OEMs. Electromobility is a target technology for the Chinese government. The fact that Beijing is going through a tough selection process that supports those local carmakers that are globally competitive also fits into this strategy. From China for the world is still the motto.
By the end of the decade, more than 100 gigafactories with a total capacity of more than 2,000 gigawatt hours (GWH) are expected to satisfy the domestic and global hunger for energy storage. In addition to CATL, among others Geely, LG Chem and CALB will be active, but also local producers. The government in Beijing has also recognized that all efforts to help electromobility make a breakthrough will come to nothing if the charging infrastructure does not keep pace with the growth in BEVs. According to Berylls, around 6,180,000 public charging stations will be set up in China by 2030, currently there are 807,000. For comparison: In Germany, the number of charging stations increased from 45,000 to 720,000 and in the USA from 110,000 to 500,000 in the same period. The US figure in particular shows that in the two largest car markets, the internal combustion engine is far from being a thing of the past.