Thematic Spotlight: Chinese EV Demand Returns With a Bang

One of the most prevalent market narratives in 2024 has been the slowing adoption of electric vehicles. Indeed, there are multiple temporary headwinds that plague the industry ranging from US politics to China’s ailing economy. However, the latest round of reports from China’s leading EV manufacturers suggests that the “death” of EVs may have been over-exaggerated. The world’s largest maker and consumer of EVs has returned with a bang, bringing with it new enthusiasm for the EV industry.

BYD Co., the world’s largest EV manufacturer, kicked off Q4 with record global monthly sales in the peak season for car purchases in China.1 The Tesla competitor sold 500,526 vehicles in October marking the first time its sold half-a-million units in a single month. Plug-in hybrids, which use smaller batteries than traditional battery EVs (BEVs) were responsible for the majority of the growth. 310,912 of the new deliveries were plug-in hybrids, while the remainder were fully electric models.2

BYD wasn’t the only EV brand hitting records in October. Fellow Chinese manufacturers such as Geely, Zeekr, Nio, and LeapMotors are all on track to hit or surpass targets this year due to unprecedented demand.3 Even Tesla, which has suffered under the intense price competition in China, recently reported a blowout quarter of Chinese shipments.4 Together, EVs and hybrids reached roughly 53% of total new Chinese monthly car sales in September – October data is yet to be released.5

While the surprisingly strong performance is welcome news for EV enthusiasts, it is worth noting that these figures likely reflect a series of national and local subsidies in China that have been designed to encourage drivers to swap out gasoline cars for newer, cleaner models.6 These incentives have contributed to seven consecutive months of sales growth in hybrid vehicles in 2024, while gas car market share has continued to erode in China.7 Nonetheless, such strong sales numbers indicate a willingness from consumers to switch from gas to electric and bode positively for future demand in improved economic conditions.

Access EVs & Battery Tech with ACDC.

Looking for more ETF Express? Check out this week’s Market Moves and Commodity Calls.

 

Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 05/11/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

Brokerage commissions will reduce returns.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.