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EVs set to plug into the mainstream in China
High acceptance across age groups, environment, improved technology top reasons
The Asset 11 Jan 2023

The adoption of electric vehicles (EVs) is accelerating in China, thanks partly to technological advancement that boosts the driving experience, according to a recent survey.

China is already the world’s biggest market for EVs based on annual sales volumes, but the survey – by Fidelity International of more than 2,000 people aged between 19 and 65 from 49 Chinese cities – suggests that the penetration rate for EVs in the world’s most populous country could be set to accelerate significantly, gaining a much bigger share of mainstream auto sales going forward.

When asked about purchasing intent, around 60% of current car owners in China and 84% of non-owners responding to the survey say they would prefer an EV to an internal combustion engine (ICE) model for their next purchase. Only 25% of owners and 10% of non-owners opted for ICE vehicles, while smaller proportions selected hybrid as their top choice.

Perhaps surprisingly, the survey highlights that this is not just a trend for the young. Instead, Chinese buyers of all ages appear to be gravitating towards EVs. While 69% of respondents below the age of 35 indicated they are “most likely to buy” an EV, 73% of those aged 35 to 65 say they are as well. Overall, there was high acceptance of EVs across age groups in China.

When asked about reasons for buying an EV, environmental factors (49%) came up on top, followed by car performance and technology. An improved driving experience brought by technological progress in EV design and development also emerged as a key factor for the rising popularity of electric models. Other popular reasons included trendiness, high-fuel prices and government policies favouring EVs.

Interestingly, performance and technology are also listed by those who are not ready to embrace EVs as the top reasons for their reticence. Their answers revealed worries about technological limits affecting battery life, charging, driving range and mileage.

Brand loyalty, the survey notes, is not the main motivating factor in the Chinese car market, with people looking for a new experience when they buy. In fact, some respondents say they would specifically reject a brand if they had previously bought it, as they would prefer to explore new brands instead. At the implicit level, consumers are most likely to choose a car based on factors related to technology, experience and design.

“China is definitely a front runner in the EV race, thanks in large part to the country’s policies,” says Victoria Mio, head of equity research, Asia-Pacific, Fidelity International. “For years, China has provided tax cuts, subsidies and funding to promote EV adoption. At the same time, Chinese battery and lithium companies have also been buying upstream mining resources globally. However, this is still an extremely competitive space and other countries could catch up by offering incentives for the local industry to develop their supply chains until they are competitive at the global level.”

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