China’s NEVs to displace more motor vehicles by 2030

China's new energy vehicle (NEV) sales may make up over 70pc of market share by 2030 to dominate the domestic market, according to latest forecasts by Chinese automakers.

This will likely contribute to an erosion of motor fuel demand. Demand for oil products is already expected to rise slower than for petrochemicals, according to China's state-controlled Sinopec.

"By 2030, the proportion of NEVs in the Chinese market is expected to reach 70pc. Chinese brands have surpassed [other brands] on a technical level," Wang Chuanfu, chief executive of Chinese NEV producer BYD, said at an industry conference in southwest China's Chongqing city.

The Chinese government has set a target for NEVs, which include battery-powered and hybrid electric vehicles (EVs), to make up 20pc of new car sales by 2025.

The potential for NEVs to replace combustion engines has increased with falling renewable power costs like for solar and the driving range of NEVs used for taxi services in China now reaching up to 600km compared with 300km previously as battery technology improves, BYD said.

The weighted average driving range for a new battery EV was about 350km in 2020, up from 200km in 2015, according to the IEA's Global EV Outlook 2021 report.

Li Bin, chief executive of Chinese NEV manufacturer Nio, predicted at the conference that smart electric cars could account for 90pc of market share in China by 2030.

China has extended subsidies for NEVs to 2022, providing support for sales. China's NEV output rose to 967,000 units during January-May, up by 224pc on the year, with sales also rising by 224pc to 950,000 units , according to data from the China Automotive Manufacturers Association. The latter represents a market share of 9pc.

Europe and China are overtaking the US in terms of electric car sales, according to a report this month by Washington-based think-tank Pew Research Center. The fastest growth in EV sales has been in Europe with a compound annual growth rate of 60pc from 2016-20, compared with increases of 36pc in China and 17pc in the US, the report said.

About 3mn new electric cars were registered globally in 2020, according to the IEA. Europe led with 1.4mn new registrations for the first time, followed by China with 1.2mn registrations, while the US registered 295,000 new electric cars.

But China continues to dominate the electric bus market, registering 78,000 new vehicles in 2020, up by 9pc on the year to achieve a sales share of 27pc. Local policies to curb air pollution are the driving force, the IEA said.

Sinopec has a more conservative forecast for NEV penetration. The market share for NEVs could reach 50pc by 2035, with the corresponding replacement of gasoline and diesel combined estimated between 410,000 b/d and 1.9mn b/d, which will bring challenges to the refining sector, according to the latest forecast by Sinopec's Economics and Development Research Institute (EDRI) think-tank. The EDRI earlier said it expects Chinese diesel and gasoline demand to peak by 2021 and 2025 respectively , citing the impact of electric cars and the Covid-19 pandemic.

But the latest research from the institute shows demand for chemical products like ethylene, propylene, butadiene, benzene, toluene and xylene will increase at a higher growth rate of 6 pc/yr versus 2 pc/yr for gasoline, diesel and jet combined from 2021-25.

This will help support an increase in refining capacity from 17.6mn b/d in 2020 to 20mn b/d by 2025 and ethylene capacity from 35.2mn t/yr to 63mn t/yr over the same period, according to EDRI's latest forecast.

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