China and Europe – the two drivers of electric vehicle growth

On my visit to the recent Shanghai motor show, it was hard to avoid evidence of the astonishing growth in demand for electric vehicles in the world’s largest auto market.

In addition to new offerings from the established global players – including the Renault City K-ZE– there was a litany of launches from EV start-ups including Nio, XPeng, Weltmeister, Singulato, Byton, Aiways, Bordrin Motor, Leap Motors and many others.

And it’s not hard to see why. Helped by some strong encouragement by the Chinese government, new registrations of battery EVs are up 185% in the first three months of 2019. Even allowing for the fact that some of these purchases were stimulated by the prospect of future subsidy changes, the strength of underlying demand is undeniable. Last year, sales of new energy vehicles grew by 79% to more than 1.1 million, or 4.2% of the light vehicle sector, and in March battery electric vehicles accounted for 5% of the total market. Growth at this level provides a tremendous opportunity for EV manufacturers.

Globally, the other engine of EV growth is Europe, where EV registrations were up 84% in the first quarter. This is outstripping even the US, and certainly regions such as Japan and South Korea.

As the EV segment becomes an increasingly important segment of the market, we are starting to see substantial differences in the ways these new cars are being driven in different regions.

European drivers tend to drive further and faster, partly reflecting cultural differences. Many European drivers are happy to make long journeys – during holiday periods, for example – whereas the Chinese are more inclined to take the train or the plane in a country where the distances can be far greater. This is another reason why the Chinese market has taken off so quickly, since the capabilities of the current generation of EVs are already compatible with an estimated 85% of driving needs.

In Europe, because of perceived limitations on the range of EVs, they tend to be viewed as city cars, or as second cars used in addition to the family’s main vehicle. The true picture is more nuanced than that, as we can tell from the experience we have from selling more than 200,000 electric cars in the European market.

For example, just over half of the Renault ZOEs we sell are to customers in rural areas. With a charging point at home, many customers find that ZOE is well-suited to their driving needs, and is more convenient than having to drive 20km or 30km through the countryside to the nearest petrol station.

And although EVs are often bought as a second car, many quickly become the family’s most used vehicle because the running costs are so low and its 300km real life range is more than enough for most daily journeys. A daily 100km commute in an electric vehicle will cost a third as much as the petrol needed for a similarly sized B segment car powered by an internal combustion engine.

In China, the way EVs are currently used is a better fit for the “city car” stereotype, partly reflecting local market peculiarities. Car ownership in the largest cities is severely restricted, requiring purchasers to enter a lottery system. Choosing an EV dramatically increases your chances of being successful, from one in 1,000 – at best! - to perhaps one in 10.

Many EVs are sold in smaller and less densely populated cities, in so-called tiers 4, 5 and 6. Here smaller EVs are often replacing unregistered micro EV cars, scooters and other two-wheeled transport, partly driven by safety considerations.

The design of EVs also differs between Europe and China.

The technology-hungry Chinese consumer has encouraged manufacturers to experiment with multiple screens to offer entertainment and information to passengers. Byton’s SUV, with a dashboard screen more than a metre wide, is one of the more striking examples.

Balancing the needs of safe driving against technological possibilities and consumer demand is a challenge that will be faced worldwide as the auto industry moves towards the era of autonomous vehicles. But we are still some years away from the mobile entertainment pods that some commentators predict.

Whatever the differences on points of detail, Chinese and European consumers are fully agreed on the bigger issue: EVs are fun and relaxing to drive, with no noise or vibration, and are a cleaner and better choice for the environment. No wonder the EV segment is growing at such an unprecedented pace.

Stay plugged, more to come!