[Correspondent Diary] Why the Investment Boom in China's Electric Vehicle Market?

Stock Prices of Chinese Electric Vehicle Companies like BYD Soar Vertically
5 Million Unit Market Expected Within 5 Years... Bus Electrification Rate Already at 60%

[Asia Economy Beijing=Special Correspondent Jo Young-shin] An investment boom in electric vehicles is sweeping across mainland China.

As of the closing price on the 13th (local time), the stock price per share of BYD, a leading Chinese electric vehicle company, was 175.900 yuan. After soaring to 184.83 yuan on the 5th, it slightly adjusted and is now preparing to rise again. BYD's stock price has nearly tripled since the beginning of the year.

Performance also supports this trend. BYD's electric vehicle sales in October reached 14,919 units, a remarkable 96.6% increase compared to the same month last year.

Chen Xinhua, Deputy Secretary-General of the China Association of Automobile Manufacturers, said, "Sales of new energy vehicles in October set the fourth monthly record this year, indicating growth in the new energy vehicle market."

The market value of Chinese electric vehicle companies listed in New York is also skyrocketing. As of the closing price on the 12th (local time), Nio's stock price was $44.56 per share. Nio's stock price, which was under $10 per share at the beginning of the year, surged sharply after September and has surpassed the market capitalization of U.S. GM ($58.956 billion). Xiaopeng and Li Auto have also seen their stock prices nearly double within a month, showing strong interest in Chinese electric vehicle companies.

The Chinese leadership decided to expand the new energy vehicle industry at the 5th Plenary Session of the 19th Central Committee, which established the 14th Five-Year Economic Development Plan (14·5 Plan).

The primary goal is to achieve sales of new energy vehicles, including electric cars, at around 20% of total new car sales by 2025. This is estimated to be about 5 million units (South Korea's annual new car sales are around 1.2 to 1.3 million units).

They have also presented detailed technical plans to reduce the average power consumption of electric vehicles to 12.0 kWh/100km.

The Chinese leadership has decided that starting next year, all public institution old vehicle replacements in national ecological civilization pilot zones and key air pollution prevention areas will be switched to new energy vehicles. Additionally, buses, taxis, and logistics delivery vehicles in these areas will also be replaced with new energy vehicles.

The electrification rate of buses is already approaching 60%.

Zhao Yingmin, Vice Minister of China's Ministry of Ecology and Environment, recently stated after a State Council meeting, "Since 2010, China's new energy vehicles have grown rapidly, raising the national bus electrification rate from 20% in 2015 to 60% currently."

The Chinese leadership also plans to increase annual sales of new energy vehicles so that by 2035, 50% of new cars sold will be electric vehicles. Considering China's annual new car sales of 26 million units (as of 2019), this means a market of 13 million electric vehicles will open.

The Chinese leadership has been promoting electric vehicle development plans since 2012 and appears to have gained technological confidence.

A source in Beijing said, "Notices warning of electric vehicle fire risks can often be seen in parking lots, and it seems that electric vehicle fire incidents are not uncommon in China. However, given the Chinese leadership's strong interest in new energy vehicles, the Chinese electric vehicle market is expected to grow even larger."