Electrification of transport in China is affecting the German automotive industry

The steep decline in sales of vehicles with combustion engines in China is affecting the German automotive industry. While 94% of new vehicles in China were powered solely by a combustion engine in 2020, that figure fell to just 59% in the first half of this year. The information was reported by the international news site Clean Energy Wire.

Electrification of passenger transport in China is gathering pace. According to the country’s Passenger Car Association, July saw more electric cars and plug-in hybrids registered than vehicles powered solely by a combustion engine for the first time in history.

Chinese carmakers are among the main beneficiaries, with domestic manufacturers BYD and Geely accounting for 52% of new passenger vehicle sales in the first half of this year. As recently as 2020, these carmakers held a combined market share of around one third.

German automaker Volkswagen, by contrast, has been negatively affected: its share of passenger car sales in China has fallen from 19% to 14% since 2020.

Another blow to the German automotive industry

The sharp decline in sales of combustion-engine cars in the world’s largest passenger car market poses another problem for the German automotive industry. It is currently facing high investment costs associated with the transition to electric mobility, alongside falling demand for electric cars in its domestic market.

According to Clean Energy Wire, demand for battery-electric vehicles in Germany fell 47% year on year in the first half of this year. Recent estimates suggest that Germany is around five years behind schedule in meeting its electric mobility target of 15 million electric cars on the road by 2030.

Despite the difficult situation, Germany remains the world’s second-largest producer of electric cars, behind China. The German think tank Agora Verkehrswende is increasingly calling for greater cooperation with Chinese suppliers to ensure that the 2030 target outlined above is met.