Chinese to buy more than 10% of global EVs - study

Shanghai– May 21, 2009 – A far-reaching consumer survey of more than 4,000 urban car owners in China, Asia, Europe and the US finds that worldwide electric vehicle (EV) sales could surpass 1.5 million in the near future, with Chinese consumers accounting for almost 200,000 of the total.

The survey was used to answer three primary questions: Who are the customers for electric vehicles? What is the market potential for electric vehicles? Which automakers will emerge as winners in the race for EV supremacy?

Bain finds that demand for electric vehicles globally falls is categorized four ways: premium customers, environmentally-friendly ‘green innovators,’ budget-conscious ‘cost shoppers’ and risk-averse ‘laggards.’ Although premium customers constitute the majority of the market and demand for electric vehicles in the US, Europe, Japan and South Korea, they are a negligible in China. Conversely, ‘cost shoppers’ constitute the largest segment in China and distinguish themselves from other customers groups by stronger requirements in terms of price and pragmatism (recharging time, socket availability). “Through our survey, China has once again showed it distinctive nature,” said Marc Lamure, a Bain partner based in Bejiing and a co-author of the study. “But it’s no surprise that Chinese pragmatism is underpinning the anticipated growth of electric vehicles in world’s largest car market.”

Bain also found that the price likely to attract the most cost-shoppers in China is RMB 100,000: at that price, sales of up to 200,000 electric vehicles are possible over time. “China is already the largest passenger car market in the world, with almost three million units vehicles sold over the first four months in 2009, and our study shows China will also be one of the largest global markets for electric vehicles,” said Raymond Tsang, a Bain partner based in Shanghai and a co-author of the study. At a lower price of RMB 50,000 sales could even reach 300,000 units. For now, Chinese OEMs have announced plans with prices ranging from RMB 60-70K to more than RMB 200K as early as 2009-2010. In addition, global exports could mean more volumes produced in China.

Competition will be intense in the domestic market. A number of Chinese OEMs are scheduled to introduce EV models in the next 18 months, with already a lot of buzz around BYD’s E6 or Chery’s S18. Local OEMs will be well positioned to meet customers low price requirements, however, MNCs are also eager to participate in this market and will play on their strong brand perception. Bain’s survey, which also probed on customers’ perception of current manufacturers, revealed that in China as well as in Europe, German automobile manufacturers have the strongest brand position in electric vehicles, while Chinese brands rank lower, closer to Japanese and Korean brands.

Several important obstacles however still need to be cleared before EV really takes off : battery technology remains critical for performance and autonomy, overall price point and potential subsidies will command customers’ decision to switch and the supporting infrastructure remains to be built.

“The race to bring down EV battery costs is increasingly intense,” said Serge Hoffman, a Bain partner based in Hong Kong and a co-author of the study. “Access to the much coveted small car market in China awaits the winner at the finish line.”

To schedule an interview with Raymond Tsang (Shanghai), Marc Lamure (Beijing), or Serge Hoffmann (Hong-Kong), please contact Tong Wu, email tong.wu@bain.com or phone 86 21 2211 5585.

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About the 2009 Electric Vehicle Survey

Bain & Company’s 2009 EV study is based on 4,000 interviews across China, the US, Germany, France, Italy, the UK, Japan and Korea. In China, 500 customers were interviewed. Bain used advanced customer analysis, including Latent Cluster segmentation to identify customer segments with individual EV-affinity, MaxDiff scaling to identify differentiation needs of customer segments and Conjoint Analysis to assess price sensitivities and determine future EV-potential.

About Bain & Company, Inc.

Bain & Company, a leading global business consulting firm, serves clients on issues of strategy, operations, technology, organization and mergers and acquisitions. The firm was founded in 1973 on the principle that Bain consultants must measure their success by their clients' financial results. Bain clients have out performed the stock market 4 to 1. With offices in all major cities, Bain has worked with over 4,150 major multinational, private equity and other corporations across every economic sector.