How China is strengthening its electric vehicle market during Covid
While COVID-19’s impact to China’s car market has been dramatic, there are already signs of a recovery. The country’s reaction to the crisis shows a commitment to new technologies, signaling how the crisis could build resiliencies moving forward.
Impact to the economy
The negative impact brought by COVID-19 is becoming more and more significant. As of 28 May, there have been 5.7 million confirmed cases of COVID-19, including 356,000 deaths, reported by the WHO. According to a forecast from International Monetary Fund in April, public health measures to prevent the spread of virus have severely disrupted business activities and international travels. As a result, the global economy is projected to contract sharply by -3% in 2020 while China sees 1.2% growth.
The automotive sector is one of the top pillar industries for China’s economy and a major employer. In 2019, for example, the automotive sector contributed 9.6% of the total retail sales of consumer goods. The sector also accounted for around 10% of total employment in China (when the entire value chain is considered).
In China, the so-called “5-6-7-8-9 Characteristics” describes the private economy, which comprises approximately 50% of tax, 60% of GDP, 70% of technology innovation, 80% of urban employment, and 90% of total companies. For light passenger vehicle market, roughly 70% of new car buyers in China come from the private economy sector, mainly small and medium sized enterprises (SMEs), according to the data from State Information Center.