July Market Overview

China’s new energy bus and truck market saw sales grow by more than two-thirds year-on-year in July, accounting for over one in eight sales of commercial vehicles during the month. In July 2023, sales of new energy commercial vehicles increased by 69.6% year-on-year, exceeding 28,000 units, equivalent to approximately 12.7% of total commercial vehicles sales in the month. As of July, total registrations of new energy commercial vehicles reached 132,000 units, registering year-on-year growth of 59.1%, and sales in the first seven months of 2023 have already reached 55.8% of last year’s total.

By vehicle types, sales of new energy trucks and buses in July increased by 96.0% and 52.7% respectively compared with the same period last year, reaching 13,000 units for trucks and 16,000 units for buses. At the same time, sales of battery electric vehicles exceeded 27,000 units, marking a year-on-year increase of 68.9% and accounting for 95.0% of the total. Over the same month, sales of fuel cell and hybrid vehicles increased by 43.5% and 201.0% respectively.

The top 10 OEMs together accounted for 75.8% of total new energy commercial vehicle sales in China this July. Geely’s sales doubled compared with the same period last year to take its market share to nearly 25.0% and secure the top sales spot for the 15th consecutive month.

Battery installation for commercial vehicles totaled 11.7 GWh

The continuous increase in sales of new energy commercial vehicles has driven strong growth of battery system installation. Our data shows installed battery systems for new energy commercial vehicles reached 17.1 GWh in 2021 and exceeded 26.5 GWh in 2022, representing a remarkable year-on-year growth rate of 55.3%.

In the first seven months of this year, the battery systems market for commercial vehicles has continued to grow, with cumulative installations increasing by 19.0% compared with the same period last year to reach 11.7 GWh and account for 44.3% of the total installations in 2022. LFP batteries constitute the dominant battery type, accounting for approximately 97.0% of ins, while other battery types include NMC battery and titanium battery.

New energy truck and bus battery installation rates are climbing YoY

Light-duty commercial vehicles become the leading application for battery systems

The performance of battery system installation is significantly influenced by vehicle sales volume and battery capacity per vehicle. As mentioned earlier, the cumulative sales of new energy commercial vehicles increased by 59.1% in the first seven months of this year, while the growth in the installation of battery systems was only 19.0%. The reason for this lies in the higher growth rate of light-duty commercial vehicles with relatively lower battery capacity per vehicle – the year-on-year increase in sales was 92.7%. The proportion of light-duty commercial vehicles in overall sales of new energy commercial vehicles rose from 57.4% in 2021 to 81.1% in the first seven months of 2023. This led to a fall in average battery capacity within the new energy commercial vehicles market. Taking July as an example, although the sales of light-duty commercial vehicles surged, sales of heavy-duty trucks and buses grew below the market average, resulting in the average energy capacity per vehicle of new energy commercial vehicles standing at 87.8 kWh, down by 17.8 kWh compared with the same period last year.

Average battery capacity of new energy commercial vehicles falls as demand for light-duty vehicles grows

*There is a noticeable negative correlation between the average battery capacity per vehicle and the proportion of light commercial vehicles (including light-duty truck, small-sized bus, and mini truck).

Despite the lower sales volume of new energy trucks compared with buses, their higher battery capacity means that the battery installation for new energy trucks has remained higher than that for new energy buses in 2023. From January to July, new energy trucks accounted for 55.7% of total battery installation, an increase of 4.7 percentage points from 2022.

When it comes to specific vehicle segments, despite a lower average battery capacity (51.7kWh), the significant surge in sales of light-duty commercial vehicles has driven a rapid increase in battery installation. Small-sized buses and light-duty trucks accounted for 11.1% and 15.5% respectively of total battery installation in 2021, rising to 24.1% and 21.3% in the period from January to July 2023.

Meanwhile, although year-on-year sales growth of new energy heavy-duty trucks was 15% in the first seven months of 2023 (significantly lower than that of light commercial vehicles), the expanding applications for new energy heavy-duty trucks has led to an increase in average battery capacity, from 303 kWh in 2022 to 314 kWh this year. In the first seven months of 2023, battery deployment for heavy-duty trucks accounted for 33.1% of the total, marking a 7 percentage points increase from 26% in 2022.

The new energy large- and medium-sized bus market has been relatively lackluster, with cumulative sales dropping by 28.1% in the first seven months of this year. As a result, battery deployment for these vehicles has plummeted from 54.8% of total installation in 2021 to 20.3% in the first seven months of 2023.

Large- and medium-sized buses have seen a drop in battery installation since 2021

The commercial vehicle battery installation market is highly competitive

From January to July, over 70 vendors saw their batteries installed, and the top 10 companies accounted for 94% of total installations, down by 2.7 percentage points year-on-year.

There is a lot of movement within China’s new power battery market

The battery market landscape is highly dynamic with an influx of new power battery system manufacturers into the market. As shown in the graph above, the top ten rankings of battery system manufacturers have been changing over the past three years. While CATL has remained firmly in the lead, its market share has decreased slightly from 70.6% in 2022 to 66.1% (January to July 2023). The rankings of manufacturers from second to tenth place have shifted significantly, largely influenced by the sales performance of their OEM partners.

For instance, Slan Power, a subsidiary of Yutong Group, has seen a drop in installations due to reduced sales of large commercial vehicles within the group. This has caused Slan Power’s ranking to decline from second position in 2022 to fourth place. Affected by poor sales of OEM partners and limited customer scale, Dongfeng Haibo (primarily supplying Dongfeng Group) and Shanghai Electric Gotion (providing batteries for large and medium-sized buses to SAIC Motor and Wanxiang Motor) have both seen battery installation volume decline and dropped out of the top ten rankings in the first seven months of this year.

On the other hand, Gotion High-tech has benefited from supplying batteries to light-duty commercial vehicles from Geely and Chery, leading to a 267% year-on-year increase in cumulative installations from January to July. This has propelled Gotion High-tech from number four in 2022 to second place.

Vremt, a newcomer to the industry, recorded its first installations in October 2022. However, thanks to strong sales by its parent company Geely, Vremt’s battery installations secured a place in the top ten this year.

The continuous rise in sales of new energy commercial vehicles is driving growth of the installed battery system, particularly influenced by the emergence of light-duty commercial vehicles, which is reshaping the battery supply landscape. Furthermore, technological advancements are leading to gradual increases in the single-vehicle energy capacity of heavy-duty trucks.

*Note: Battery installation includes battery electric and hybrid vehicles but excludes hydrogen fuel cell vehicles.

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