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Steady Government Support to Remain Crucial for Development of China NEV Taxi Market, says TMR

Posted on Aug 16, 2016

The China new energy vehicle (NEV) taxi market is largely consolidated with a handful of companies that dominate this market. Transparency Market Research (TMR) reports that in 2013, the two leading companies, BYD Motor Company and Anhui Jianghuai Automobile Co. Ltd., collectively held more than 45% of the NEV taxi market in China. Other leading players in this market are Beijing Automotive Industry Holding Co. Ltd., FAW Group, and Dongfeng Nissan Passenger Vehicle Company. 

Research and development activities are the primary focus of top companies in the China NEV taxi market in the bid to offer advanced NEVs to the government and taxi companies. An excellent example is BYD Motor Company. The company has undertaken extensive research in battery technology with the objective to lower production cost of new energy vehicles and steal a march over competitors in the electric cars segment.

Alliances, joint ventures, and aggressive acquisition constitute the key growth model that top companies in this market are adopting. Companies are also focused on maintaining strong associations with local governments and international educational institutions. Expansion of production facilities and the establishment of specialty units for the production of core components is also what top companies in this market are adopting for business expansion.

Concerns about Air Quality Deterioration in China Fuel NEV Sales

A TMR analyst says, “Government support in the form of favorable policies is one of the major factors driving the growth of the NEV taxi market in China.” Increasing greenhouse gas emissions, depleting fossil fuels, and rising energy demand have necessitated the use of alternate energy sources to support the economic development in China. To address this, the Chinese government has been promoting the use of new energy vehicles and has set a target of five million electric cars to be on the roads by 2020.

Increased traffic congestion leading to deterioration in air quality is another factor fuelling the growth of this market. At present, several large cities in China such as Beijing, Shanghai, and Guangzhou are battling traffic congestion, which in turn, is affecting air quality due to increased energy consumption and CO2 emissions.

Increasing oil prices and need to safeguard energy security in the long run is also boosting the growth of China NEV taxi market. With increasing vehicle numbers in recent years, the rising fuel consumption poses a threat to China’s long-term energy security.

High Cost of New Energy Vehicles Mars Adoption as Consumers Look for Alternatives

The lack of a comprehensive charging infrastructure is challenging the growth of this market. Despite advancements for vehicle electrification, inadequate and uneven distribution of charging stations are restraining the growth of this market. While some cities in China completely lack the infrastructure for supporting new energy vehicles, some other cities have excess infrastructure for the same.

The high cost of new energy vehicles and the cost and performance factor of components is also limiting the demand for these vehicles. Thus, the relatively high cost of NEVs in comparison to conventional vehicles is limiting the penetration of these vehicles in the price-sensitive Chinese market.

The China NEV taxi market is expected to reach a valuation of US$560.5 mn by 2020, states TMR. Company-owned NEV taxis dominated with 91% of the market in 2012. The segment is expected to dominate in the coming years as well.

The information presented in this review is based on a Transparency Market Research report, titled “NEV Taxi Market - China Industry Analysis, Size, Share, Growth, Trends and Forecast, 2014 - 2020.”

The China NEX taxi market is segmented as follows:

China NEV Taxi Market, by Ownership

  • Company owned
  • Individually owned

China NEV Taxi Market, by Taxi Range

  • Short range
  • Long range

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