China set for surge in electric vehicle adoption in Q2 2024: Fitch

May 03, 2024 (MLN): China is poised for a significant increase in electric vehicle (EV) adoption in Q2 2024, with EVs’ share of sales to climb further from the 42% in March, propelled by Chinese EV makers’ aggressive sales and marketing strategies, says Fitch Ratings.

The intensifying price war and escalating marketing expenditure may squeeze the near-term margins of EVs, while the declining utilization of production capacity for conventional internal combustion engine vehicles may further strain the profit outlook for Sino-foreign joint ventures.

The entry of Xiaomi Corporation (BBB/Stable) highlights the intensifying battle within China's EV sector. The company's highly anticipated debut model garnered more than 70,000 orders within a month of its unveiling.

The surge in demand, boosted by the media coverage from the 2024 Beijing Auto Show, is set to heighten the competition among EV manufacturers, as well as boost consumer interest and the market momentum for EVs in China.

China-based automakers’ passenger vehicle (PV) deliveries rose 11% yoy in 1Q24, led by a 13% rebound in domestic PV demand and a 34% surge in exports, especially to emerging markets, including Russia, Mexico and Brazil.

However, EV exports to Europe slowed, dampened by the logistical challenges caused by the Red Sea conflict, a dip in demand and looming regulatory uncertainty.

Leading Chinese car manufacturers such as BYD, Chery, Chang’an and Great Wall Motors reported significant export growth in 1Q24, reflecting their competitive edge in the international market.

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