Sales of new energy vehicles in China are expected to surpass 2 million units in 2021 thanks to the country's peak emissions and carbon neutrality targets, said Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, to Securities Times in a recent interview.
Technology advancement as well as extended ranges have contributed to larger NEV sales, he said, adding problems such as chip shortages and rising raw material prices still urgently need addressing.
China's new energy vehicle sales grew 159.7 percent to 217,000 units in May, according to the latest data from CAAM. Cumulative sales totaled 950,000 units through May, up 224.2 percent on a yearly basis, with whole year sales expected to reach 2.4 million, Shi said.
Supportive policies from the government, as well as increased ranges and more charging spots, have made new energy vehicles the first option of more consumers. However, product stability and reliability are still the top concern of NEV manufacturers, the deputy secretary-general said.
"If auto chip shortages become the norm, it will definitely affect the industry's development," Shi said. Given the large investment and comparatively long R&D period, it is critical for OEMs to reduce intermediate business and improve the supply environment of chips.
Price hikes for raw materials such as iron ore and steel in recent months has further increased costs of auto manufacturers, especially the power battery industry. Larger battery manufacturers can still stabilize prices, but medium and small battery makers have correspondingly suffered from recent market volatility, an industry insider said.
The rising prices of raw materials will not affect price tags of automobiles in the short term, as the industrial chain of automobiles is comparatively long, Shi said. However, certain auto suppliers have experienced a tough time as they are squeezed by upstream suppliers and downstream OEMs.
"Coordinated cost-reduction throughout the industrial chain will be a way out," he said.