Technological gains are to boost demand for new energy vehicles globally, predicts report

China's exports of new energy vehicles will grow fast in coming years as they are on track to gain popularity in major car markets, said the Ministry of Commerce.

"Their exports stand a good chance of continuing the momentum and will become a new force that contributes to the steady growth of China's auto trade," said the ministry in a report on high-quality automotive trade released last week.

Statistics from the China Association of Automobile Manufacturers show that exports of China's new energy vehicles in the first half of 2019 grew 99.3 percent year-on-year.

The report said electric buses from BYD accounted for 20 percent of the market in Europe and more than 60 percent in the United Kingdom in 2018. Those from Chinese brands were the most popular in South Korea.

The situation will further improve as major markets are championing new energy vehicles and China is a leading player in the segment, said the report.

China started to finance the new energy vehicle segment since 2009. It overtook the United States as the largest market for such vehicles in 2015.

It has sharpened its competitive edge over the past decade, with its models being close to or passing internationally advanced levels of battery performance and driving ranges.

Developed economies including the United States and the European Union have announced incentives to spur the growth of the segment. Many Asian countries, especially those in the ASEAN, are encouraging carmakers to roll out more new energy vehicles.

Thailand does not charge tariffs on electric vehicles from China. Meanwhile, Malaysia plans for new energy vehicles to account for 85 percent of vehicles produced in the country in 2020.

"All these have created favorable conditions for Chinese carmakers including SAIC, Geely and Changan to make better forays into the ASEAN markets," the report said.

A total of 197 electric SUVs from GAC Motor are on route to Israel and are expected to hit the market in February, said the Guangzhou-based carmaker.

GAC said dealers in Kuwait, Jordan and Paraguay hope to introduce its electric vehicles. It will soon explore the European electric car market as well.

Besides Chinese carmakers, international brands are starting to make China a base for exports. It encompasses new energy and gasoline vehicles as the country has made efforts to further open up its automotive industry, including removing the cap on international players in joint ventures.

German carmaker BMW has made it clear that its plant in Shenyang, Liaoning province, will become the sole site of production for its electric iX3 SUV globally.

It has also partnered with Chinese carmaker Great Wall Motors to co-develop and produce electric MINI vehicles for Chinese and overseas markets.

Daimler has a similar plan. It joined hands with China's Geely, its largest shareholder and owner of Volvo, to produce electric smart-branded cars. They are expected to hit the global market around 2022.

Tesla's China plant, which started production in October, was designed to produce cars for neighboring regions as well.

GM and Volvo started to export their China-made gasoline vehicles years ago and Volkswagen has plans to sell China-made vehicles to Southeast Asia.

The ministry also expects exports of used vehicles to grow further, saying there is huge demand for affordable and reliable vehicles in developing countries.

Despite the gap with Germany, Japan and the US, China overtook South Korea in terms of the sector's overall competitiveness. And the 250 million vehicles on Chinese streets mean great potential for exports.

China kicked off its official program to export used vehicles in May 2019. The landmark program first began in nine cities, including Beijing, Jining and Qingdao in Shandong, as well as Guangdong province.

The ministry said the potential for used vehicle exports from China is "huge", saying that in most developed markets exports account for roughly 10 percent of used vehicle sales.

In countries like the United States, used vehicle sales are usually twice the number of new car sales.

In China, however, sales of secondhand cars totaled 13.82 million in 2018, less than half of new vehicle deliveries, according to statistics from the China Automobile Dealers Association.

"In three to five years, exports of used vehicles from China could reach hundreds of thousands," said the ministry.