The President of the European Commission, Ursula von der Leyen, recently announced an anti-subsidy investigation into imports of new passenger battery electric vehicles from the People’s Republic of China. This insight focuses on analyzing the performance of China’s new energy commercial vehicle exports to Europe in light of the European Union’s announcement.

Market overview for China’s commercial vehicle exports in August

In August, China’s commercial vehicle exports experienced a decline for the first time in nearly three years, registering a 1.5% year-on-year decrease to 57,000 units, and a 17.5% month-on-month decline. Total export value reached CNY11.3 billion for the month, representing a 28.5% year-on-year increase and a 23.9% month-on-month decrease. From January to August 2023, China’s cumulative commercial vehicle exports reached 480,000 units (year-on-year growth of 25.2%), totaling approximately CNY93.9 billion (year-on-year growth of 77.7%).

Looking at exports by vehicle type, in August 2023, the export of trucks decreased by 4.1% year-on-year to 50,000 units, of which towing vehicle sales continued to grow rapidly with a 70.6% year-on-year increase, accounting for 24.3% of overall truck exports. Over the same period, exports of heavy-duty trucks increased by 6.8% year-on-year to 9,000 units, while medium- and light-duty trucks experienced declines of 21.5% and 21.7% respectively. Bus exports reached 7,000 units, marking a 23.6% year-on-year increase. In terms of powertrains, exports of diesel vehicles almost stabilized at 40,000 units, accounting for 71.1% of the total. Gasoline vehicles, on the other hand, experienced a 10.6% year-on-year decline to 12,000 units. New energy vehicle exports reached approximately 5,000 units, with a year-on-year growth rate of 5.7% outperforming the overall export market.

The top ten destination countries for commercial vehicle exports accounted for a combined share of 55.2% of China’s total export volumes in August 2023. Commercial vehicle exports to Russia increased by 112.2% year-on-year, maintaining its position as China’s largest destination country with a 15.5% market share. Mexico held the second position with 9.9% share of the exports in August. Australia ranked third with a 5.2% share, while commercial vehicle exports to Vietnam increased by 22.4% month-on-month, moving it from eighth position in July to fourth position with a 4.4% share. By export value, the top ten destination countries collectively accounted for a 56.2% share of total export value, with Russia (25.1%) and Mexico (7.2%) the top two countries.

New energy commercial vehicles exports surge

From January to August 2023, cumulative sales of China’s new energy commercial vehicles reached 165,000 units, with a penetration rate increasing to 8.7%. Chinese new energy commercial vehicles are not only thriving in the domestic market but also developing rapidly in the global market. According to China Customs data, for the eight months to August 2023 exports of Chinese new energy commercial vehicles saw a significant year-on-year increase of 91.6% to 48,000 units, almost equivalent to total exports for the entirety of 2022 (96.8%). New energy commercial vehicles now comprise 10.0% of China’s overall commercial vehicle exports, up 1.8 percentage points from 2022. Furthermore, the total export value of China’s new energy commercial vehicles from January to August reached 11.4 billion yuan, marking 133.6% year-on-year growth.

During 2021 the export volume of new energy buses far exceeded that of new energy trucks, accounting for 87.2% of total export volumes of new energy commercial vehicles. However, in 2022 the export volume of new energy trucks saw a significant increase, surging nearly 9.3 times year-on-year to 29,000 units, surpassing new energy buses and accounting for 57.9% of overall new energy commercial vehicle exports. In the first eight months of 2023, China’s cumulative exports of new energy trucks increased by 166.1% year-on-year to 31,000 units, exceeding total export volumes for the whole of 2022. New energy trucks accounted for 64.3% of overall new energy commercial vehicle export volumes during the eight months to August 2023.

As of August 2023, China has exported new energy commercial vehicles to 140 countries worldwide. The APAC and European regions overtook Latin America and Africa, becoming the two major regional markets for China’s new energy commercial vehicle exports, with shares of 32.3% and 30.9% respectively. Furthermore, the top ten destination countries collectively accounted for 54.3% of China’s total new energy commercial vehicle exports. Peru, which ranked third in 2022, become the largest export destination for China’s new energy commercial vehicles. By August, China had exported 4,200 units to Peru, a 64.7% year-on-year increase, accounting for 8.7% of the total. Uzbekistan came in second place, with China exporting approximately 4,000 units to Uzbekistan, marking a 218.7% year-on-year rate of growth. Among the top ten destinations, the Netherlands and Austria had the highest growth rates, with increases of 40.8 times and 15.6 times, respectively. The top ten countries together accounted for 57.8% of total export value, with Peru, Uzbekistan and South Korea leading the way.

The thriving new energy commercial vehicle market in Europe

In recent years, European countries have taken proactive measures to promote electrification. In June 2022, the European Union officially passed a resolution planning to halt the sale of conventional ICE vehicles (both passenger cars and trucks) by 2035. To achieve this goal, European countries have swiftly responded, accelerating their transition to battery electric vehicles. (As of February 2023, the EU has modified this agreement to allow the sale of new vehicles with e-fuels synthetic fuels, in addition to pure electric new energy vehicles, after 2035.)

The data reveals that in 2022 total registrations of new energy commercial vehicles (including battery electric and hybrid) in Europe (including EU member states, the European Free Trade Association, and the United Kingdom) reached 143,000 units, representing a growth rate of 30.1% compared with 2021. In the first half of 2023, registrations of new energy commercial vehicles in Europe reached 96,000 units, a remarkable 55.2% year-on-year increase and accounting for 67.3% of the total registrations for the whole of 2022.

From a vehicle type perspective, cumulative registrations of new energy light commercial vehicles in European countries reached 87,000 units as of June 2023, with a substantial year-on-year increase of 50.2%, constituting a dominant share of 90% of the whole new energy commercial vehicles market. New energy medium-duty trucks exhibited the fastest growth rate, with cumulative registrations surging 3.5 times year-on-year to 20,000 units. Heavy-duty trucks also saw significant growth, with registrations totalling 20,000 units, marking a 220.1% year-on-year increase. Buses also experienced notable growth, with registrations
increasing by 77.8% year-on-year to 5,000 units.

Europe is the headquarters for many major commercial vehicle manufacturers, including Germany’s Mercedes-Benz, the Netherlands’ DAF, Sweden’s Volvo and Scania, France’s Renault, and numerous others. Currently, these local manufacturers dominate the European new energy commercial vehicle market in terms of sales volumes. With the rising trend toward electrification, European manufacturers are actively responding to market demands. In September 2023, Volvo initiated bulk production of electric trucks in Ghent, Belgium. Scania, established a battery assembly plant in Södertälje, Sweden, in order to meet the demand for heavy-duty electric commercial vehicles. In addition, manufacturers from the United States, such as Freightliner, Canadian truck and bus manufacturer Lion Electric, and Japanese companies like Nissan and Fuso, have also introduced new energy vehicle models, expanding their presence in the European market.

Rapid Expansion of Chinese New Energy Commercial Vehicles in Europe

Chinese new energy commercial vehicles started to be shipped to Europe before the pandemic, and in 2022 exports entered a fast growth trajectory, with volumes increasing significantly from the fourth quarter of 2022, reaching a cumulative volume of 13,000 units for the entire year. In January 2023, exports reached a record high of 4,000 units. Over the eight months to August 2023, China’s exports of new energy commercial vehicles to Europe increased by 321.7% year-on-year to a total of 15,000 units, surpassing total export volumes in 2022. Among these, new energy trucks had an overwhelming majority, accounting for a market share of 94.9%.

China’s new energy commercial vehicles were exported to 29 European countries. In the first eight months of 2023, the Netherlands replaced the United Kingdom as the top destination for China’s new energy commercial vehicle exports to Europe, totaling 3,000 units and accounting for 17.5% of the total. Belgium followed closely behind as the second-largest destination, with a 16.4% share. Norway, Austria and the United Kingdom came next, with battery electric trucks dominating sales. New energy buses were primarily exported to Russia and Romania, accounting for 69.1% and 19.8% of total new energy bus exports respectively.

Industry data shows that Chinese brands accounted for 14.5% of total registrations of new energy trucks in the European region, while the registered volume of new energy medium- and large-sized buses accounted for 10.2%. Leading bus manufacturers from China, such as BYD, Zhengzhou Yutong, and King Long Motor, have committed to developing their presence in the European market for many years. Truck manufacturers are also making efforts to expand into the European market. For example, Geely, through its Farizon subsidiary, is set to introduce light-duty commercial electric vehicles in the European market as early as 2024.

Will EU anti-subsidy investigation affect China’s exports of new energy vehicles?

Interact Analysis predicts that by 2030 sales of new energy commercial vehicles in Europe will reach 1.9 million units, making it one of the crucial regional markets globally and a key market for China’s new energy commercial vehicle exports.

The EU announcement of its anti-subsidy investigation into Chinese electric vehicle subsidies has attracted widespread attention. The European Commission will have 13 months to assess whether to impose additional tariffs beyond the standard EU 10% tariff on Chinese electric vehicles. Although the anti-subsidy investigation focuses on new energy passenger vehicles (new battery electric vehicles designed for the transport of nine persons or fewer), China’s exports of new energy commercial vehicles present both opportunities and challenges when facing the complex international macroeconomic environment.

As the global market for new energy vehicles continues to grow, it is inevitable that Chinese automotive companies expand into overseas markets. However, as governments around the world increasingly protect their domestic automotive manufacturing industries, Chinese brands going abroad will also need to prepare to localize their operations.

Over the past few years, Chinese commercial vehicle companies have explored overseas markets, while building service networks and local supply chains. Shifting from product exports to localized manufacturing and operations in key markets may become a major trend for China’s new energy vehicle exports. For example, BYD partnered with the British bus company Alexander Dennis Limited (ADL) to produce electric buses as early as 2015. Since 2015, over 70% of electric buses introduced into the UK have come from BYD & ADL. In 2022, BYD & ADL became the second-largest pure electric bus manufacturer in Europe.

Furthermore, China’s new energy commercial vehicles are exported to a wide range of countries and regions. As energy efficiency and emissions reduction become global priorities, more countries and regions are expected to introduce stricter emissions reduction rules and gradually transition to electrification. This provides potential opportunities for China’s new energy commercial vehicle exports. While focusing on key regional markets, Chinese OEMs also strive to diversify market development by expanding into emerging markets in order to reduce reliance on a single export market, thereby lowering risks and achieving broader and more stable development in global markets.

To learn more about our research and forecasts for China’s NECV market, get in touch with Shirly Zhu or Yvonne Zhang directly.

 

Notice:

¹According to the latest customs code classification, we have updated the vehicle type classification in our Chinese commercial vehicle export database this month, primarily involving new energy vehicle models.

²In European commercial vehicle classification, vehicles are categorized into different types based on their total weight. Light commercial vehicles refer to those with total weight not exceeding 3.5 tons; medium-duty trucks refers to those with total weight between 3.5 and 16 tons; heavy-duty trucks refers to trucks with total weight over 16 tons. Buses refer to medium and heavy buses and coaches over 3.5 tons.